Cheri L. Elson and Allen G. Drescher, Retired
SERVING ASHLAND AND SOUTHERN OREGON SINCE 1973
21 S. 2nd St. ● Ashland ● Oregon ● 97520
Info@AshlandOregonLaw.Com
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What is Planned Giving?

“What exactly is ‘planned giving’?”  As both a Board Member of the Southern Oregon Repertory Singers and a Legacy Giving Legal Partner of the Oregon Shakespeare Festival, I am often called upon to explain what this is and how it works. 

In its simplest form, planned giving enables individuals to make larger gifts to non-profits than they might otherwise be able to from their ordinary income.  Planned giving can occur during life, at death, or a combination of the two.  

There are three basic types of planned giving, each with their own benefits. 

1) Outright Gifts.  These are typically made with cash or appreciated assets, such as securities or real property.  When appreciated assets are gifted to charities, the donor receives a charitable deduction for the full market value of the asset at the time of the gift and no capital gains taxes are triggered.  However, once an outright gift is made, it is gone and irretrievable.  Care must be used when making large outright gifts – we never know what is around the corner and if/when we may find that we need those assets to pay for our own care.

2) Gifts that Return Income to the Donor.Examples of these are charitable gift annuities, or charitable remainder trusts.  Annuities provide fixed payments to the donor, starting at the time of the gift or at a later date.  Charitable remainder trusts are a type of irrevocable trust providing the donor income payments during life, with the remaining assets passing to the charitable organization(s) named by the donor at the donor’s death.  A tax deduction is available for the full, fair market value of the asset, less the present value of the income interest retained. And, as with all gifts of appreciated assets, no capital gains taxes are triggered by the transfer of the asset to the annuity or trust.

3) Gifts Payable at the Donor’s Death.Also called “Legacy Giving”, these are gifts made through the donor’s Will, Trust, or beneficiary designation.  They may be a set dollar amount, or a percentage of the overall estate’s value. It is important to remember that gifts of specific dollar amounts are distributed before those set by percentages, and care must be used if making large monetary gifts so as to not unintentionally consume the estate, leaving little-to-nothing for the “residuary beneficiaries,” those we typically think of as receiving the bulk of our estate.  No charitable deductions are available for this type of gift; however, it may affect one’s estate tax liability, especially for Oregon residents.  The nice thing about this type of giving is that it does not affect one’s financial situation at all during life and is fully changeable until death.

It is imperative to seek professional tax advice before any type of planned giving is put into place.  Working with a team involving both estate planning specialists, tax specialists, and financial planners will ensure that your ultimate strategy not only helps a charitable organization but protects your needs as well.

Why an Estate Plan?

We’ve spent the last year and a half or so discussing various aspects of estate planning and how to put together a comprehensive plan.  I thought it might be a good time to review just why an estate plan is so important. Estate planning is something most Americans avoid and often never get around to.  The excuses range from “Estate planning is too confusing” to “I don’t have anything to leave behind” to “I will get around to it next year.”  Having an estate plan, however, offers one’s family members peace of mind during a difficult period. The four main documents in an estate plan are: Will, Trust, Durable Power of Attorney for Finances, and Advance Directive for Health Care. A Will is a legal instrument permitting a person to make decisions on how their estate will be distributed after death.  With no Will, the person dies intestate and State laws dictate distribution of the estate.  Wills do not avoid probate; however, they will ensure your assets are distributed to the people and in the manner you desire. One of the simplest ways to avoid probate is through a Trust.  In a conventional Trust, the three main “players” (Settlor, Beneficiary, and Trustee) are initially the same person. The Settlor never changes and is the only person who can change the Trust document. If the Settlor becomes unable to handle their own financial affairs the successor Trustee (chosen by the Settlor) takes over management of the Trust for the benefit of the Settlor, with the remainder beneficiaries receiving an interest in the Trust only after the Settlor’s death (the same way that a person’s estate passes to their beneficiaries under a Will). The Durable Power of Attorney for Finances (DPA) names the person responsible for managing your personal finances in the event you are unable to manage them yourself.  Even in a Trust-centered plan, the DPA plays an important role, governing the assets held outside the Trust. An Advance Directive for Health Care combines a power of attorney for health care and a living will into one document.  It allows you to name an agent to speak with the doctors and make health care decisions for you if you are unable to make them on your own. Estate plans are designed to grow and develop with us and should be reviewed periodically.  I recommend reviewing plans annually – changes may not be needed each year but reviewing the plan will help keep it fresh in your mind, as well as help ensure any necessary changes are caught and addressed quickly. When properly drafted, an estate plan is a powerful tool not only in the event of person’s death, but also during one’s life.  Engaging the services of a professional who specializes in this area of law to assist you in drawing up your estate plan will help ensure your plan works effectively under any circumstances.
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