Kansas and Missouri Estate Planning

How is Sheryl Sandberg Donating Her "SurveyMonkey" Shares?

Donating shares is ones way to aid charities.

Not all successful individuals are household names.

Chances are you do not know the name Sheryl Sandberg.

Who is she?

Sandberg is a board member for SurveyMoney as well the COO of Facebook.

Why is she in the news now?

According to a recent CNBC article titled “What you can learn from Sheryl Sandberg's plans to donate her SurveyMonkey shares,” she has committed to the Giving Pledge.

What is the Giving Pledge?

This is a pledge taken by a number of the wealthiest individuals in the world—including Bill Gates and Warren Buffett—to donate most of their wealth to charity.

How is Sandberg acting on this?

She plans to donate all of her SurveyMonkey shares or the proceeds of those shares to the Sheryl Sandberg & Dave Goldberg Family Foundation.

She has already made donations of her Facebook shares to charity through a donor-advised fund.

What is a donor-advised fund?

It is a philanthropic fund established at a public charity.

A donor-advised fund, or DAF, allows donors to make a charitable contribution, receive an immediate tax benefit, and then recommend grants from your DAF immediately or over time.

A DAF also simplifies monitoring your charitable donations.

How?

All of your charitable donations come from a single fund. 

A DAF also provides another layer of anonymity to your giving.

When Gretchen and I established our own DAF back in 2009, we gave it a name unrelated to our own.

Consequently, the charities we regularly support (or even one-off gifts) cannot be traced back to us unless we choose to do so.

For example, we may let a charity know a given contribution is from us if made in fulfillment of a pledge.

On the other hand, do you have significantly more wealth than the humble Krull household?

If so, a private foundation may be a good option for you.

You can set up scholarship and grants from your own private foundation.

You can also allow family members to be employed.

Unlike donor-advised funds, these are typically more public.

Setting up a foundation should include a starting gift of several million and the help of an experienced attorney.

While giving to charity can have tax benefits, this should not be the sole reason you donate.

If you are passionate about a mission or about the work a particular charity, support it.

Be smart.

Some means of donating or more efficient and effective than others.

Working with an experienced attorney and financial advisor is a wise decision.

Reference: CNBC (October 4, 2018) “What you can learn from Sheryl Sandberg's plans to donate her SurveyMonkey shares”

Should I Use a Donor-Advised Fund for My Charitable Giving?

Donor-advised funds can be a wise way to make charitable contributions.

You are wanting to give money to charity.

Wonderful!

But how can you do it in the most tax-efficient and practical manner?

According to a recent Kiplinger’s article titled “Are Donor-Advised Funds the Best Charitable Giving Vehicle for You?,” donor-advised funds (DAFs) are a popular charitable planning tool.

Why?

A donor-advised fund can give the donor enhanced control over the distribution of the charitable contributions, but even more important, the timing of those distributions.

Also, the IRS does not require any minimum annual distributions from DAFs as with private foundations.

What exactly are donor-advised funds?

Typically, these funds are managed by major financial institutions that take care of the investing, tax-reporting and record keeping on your behalf for a fee.

When you make a contribution to your fund, you have options regarding the fund investments which then grow tax-free.

How does the giving work?

The IRS treats direct securities donations as if you were giving cash.

The charity you select must be capable of receiving private or publically-traded securities.

The tax code limits deductions on securities and appreciated asset donations to 30 percent of adjusted gross income, while cash donations are limited to 50 percent.

 

Are there payout requirements for timing or funding?

Nope.

Could there be any other benefits?

Actually, yes.

With DAFs your giving can be as public or as private as you desire.

In fact, we established our own donor-advised fund with the National Christian Foundation in 2009.

Since then, virtually all of our charitable giving has been done through this fund.

Not only is the record keeping nice and clean, but we enjoy the ability to give anonymously (we gave the fund a name unrelated to our own) to causes important to us.

In addition, we like the flexibility of making a charitable contribution on December 31, and then having time make the distributions without pressure on or after January 1.

If you are interested in using a DAF for your charitable giving, work with an experienced estate planning attorney and financial advisor to determine if it works in conjunction with your goals.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Kiplinger (November 2016) “Are Donor-Advised Funds the Best Charitable Giving Vehicle for You?”

Can You Give Back to Your Community ... Not Just a School in Your Estate Plan?

Certainly. With the proper estate planning strategies, you can leave a legacy within your community.

Charitable giving through your estate plan can go to any non-profit of your choosing.

You can support one specific part of your hometown or select an organization with a broader scope.

Consider this example.

One famous couple died and left funds to provide for needs throughout their state, according to an article in the Honolulu Magazine titled "Hawai‘i Five-O Actor's Legacy Lives on Through His Philanthropy."

Who were these celebrities?

The answer: Jack Lord and his wife Marie.

As the first "Steve McGarrett" on Hawaii Five-O, Jack loved the island and its people.

How did they successfully give back to the entire state of Hawaii?

First, they selected the Hawaii Community Foundation (HCF), an organization whose purpose is to support non-profit organizations across the islands, as the beneficiary of their benevolence.

With this method, Jack and Marie were able to support charities such as Hospice Hawaii, St. Francis Healthcare, Eye of the Pacific Guide Dogs Foundation, PBS Hawaii, the Bishop Museum, the Hawaiian Humane Society, and the Honolulu Museum of Art.

How did they fund their gifts?

While the Jack and Marie were still alive, they began by giving $50,000 to the HCF. However, they left more than $40,000 million, including real estate, to this same organization when they died.

This is just one example of a couple who did advanced planning to care for others.

Although you may not be a celebrity millionaire, you can still leave some money for your town.

If you love your neighbors, you can provide for them with the help of an experienced estate planning attorney.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.

Reference: Honolulu Magazine (May 30, 2016) "Philanthropy: Hawai‘i Five-O Actor's Legacy Lives on Through His Philanthropy"

Inter Vivos* Giving Benefits Giver

If you are giving while you are living, then you are knowing where it is going. 

Are you planning to leave part of your estate to a favorite charity (or two or more) at your death? I mean what turtle finds itself atop a fence post and believes it got there on its own?

Have you ever thought about making that postmortem gift now, instead of then? If no, then there are some valuable benefits associated with your generosity to mull over.

For starters, you get to see the fruits of your contributions in the hands of the charity or charities. Not only is this its own reward, but depending on how those funds are then deployed, you may increase, decrease or eliminate any future contributions.

In short, are your gifts going to pay for the director's corporate car and jet or to the charitable objectives?

Now, here are two financial stewardship reasons to give while you live: income tax deductions and estate tax savings.

These and other benefits were discussed in a recent PR Newswire article titled  “Benefits of lifetime charitable gifts can outweigh bequests.”

For instance, individuals who give cash to public charity typically are entitled to an income tax deduction of up to 50% of their adjusted gross income (AGI) ... or up to 30 percent of their AGI for donations of other "appreciated" assets (e.g., publicly trade stock) held for at least one year. What if you cannot use the entire deduction all at once?

No problem.

These deductions can be carried forward for up to five years. Truly a gift that keeps on giving.

Naturally, there are more than a few factors to evaluate when structuring a giving plan. And each donor needs to weigh the pros and cons tax-wise (and otherwise) when it comes to selecting from various assets to donate, as well as the manner and timing of the giving. 

As the original article notes, there are other ways to give besides writing a check. Are you familiar with planned giving techniques such as donor-advised funds, private foundations, or charitable remainder trusts. 

[Sidebar: Gretchen and I use our donor-advised fund for all of our charitable giving. It affords us anonymity (i.e., the fund is not associated with our family name) when distributions are made and is excellent for record keeping at tax time. The fund was easy to establish and is a cinch to operate.]

These techniques can give you additional benefits, not the least of which are convenience, control, and anonymity. In addition, savvy donors may leverage multiple giving vehicles to maximize the effect of their charitable giving. 

While cash and securities are commonly gifted, you can make a significant contribution with real estate, business interests and even tangible personal property (e.g., your Picasso or Bentley). However, these types of donations may be a little more complicated. Independent valuations are essential.

The timing of your gift or charitable donation should be considered, too. Depending on your financial and tax situation you may elect a single year or a multi-year gifting program.

As you can see, there are a lot of considerations to consider. 

An experienced estate planning attorney will help you evaluate and then implement an inter vivos gifting plan that is most beneficial for you and those whom you seek to benefit.

*Inter vivos is Latin and means "between the living". In the context of gifting it refers to lifetime transfer as opposed to "testamentary" transfers which occur after death. Actually, I just thought it would be fun to slip a little Latin lingo into this post.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website. 

Reference: PR Newswire (March 12, 2015) “Benefits of lifetime charitable gifts can outweigh bequests”

Donor-Advised Funds Advice / Overland Park, KS

To run the charitable foundation is to have absolute control and discretion over the charity, its goals, its practices, and all the decisions regarding where the money is to go. While this can be richly rewarding, it can be exhausting. Now there is a popular alternative to a full foundation and a move to collapse back into what is known as a donor-advised fund.

As with all things legal and financial, there are some tricks to the transfer and limitations to the donor-advised fund worth understanding.

If you or your family run a charitable foundation and are considering this alternative, The Wall Street Journal has a few points to consider in a recent article titled “Risks to Consider With Donor-Advised Funds.”

For starters, what is a donor-advised fund? Unlike a foundation that is run much like a business, a fund is much more like an investment vehicle run by an expert. As the name suggests, donors give to the fund and then advise it how to ultimately donate the money it takes in. T

here are some ways to more carefully form the fund so as to grant greater or lesser control. Ultimately, however, it is simply a different kind of animal than a foundation.

It also means that there are far fewer administrative burdens (especially on you as the donor), far fewer fiduciary requirements, fewer taxes, and greater privacy. The original article has a helpful chart you might peruse to understand the differences.

So what are the problems? First, to transfer from a foundation to a fund means coming to terms with the new benefits and shortcomings of the fund, and that may be a family activity. Second, the transfer will mean winding up the foundation and this ought to be done with care. State regulations can affect how to wind up the foundation, or how and when to give notice that you are doing so, so there is a bit of red tape.

Then there are the foundation assets themselves. What if some of the assets are illiquid or otherwise difficult to move? Indeed, you need to at least leave enough assets in the foundation to let it get through the expenses involved in the windup.

There are a few more issues addressed in the original article, and even more besides that may affect your particular foundation and/or assets. These are certainly issues to think about, but for many the message is also clear - there are options out there if your foundation has gotten out of hand.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website. 

Either way, how does the foundation or the donor-advised fund fit into the overall plan?

Reference: The Wall Street Journal (April 13, 2014) “Risks to Consider With Donor-Advised Funds”

Donor-Advised Funds For The Savvy Philanthropist

There has been a lot of interest this year in “donor-advised funds (DAF),” as a savvy tool for charitable giving. As we head further into the season of giving (and, with it, year-end tax planning), and 2012 thereafter, it might be a perfect time to consider establishing your own DAF.

As a recent Reuter's article has posed the question, "do donor-advised funds make sense?" They certainly do from a tax standpoint, as you receive a charitable deduction upon giving to the fund, just as you would for giving directly. You then gain the ability to "advise" the fund, along with the other investors, towards worthy charities as you discover them.

The final say comes down to the fund directors themselves, and the other investors may have opinions that vary from your own. It does mean that you can give large amount of money to charity without already having formulated a specific and exhaustive plan regarding to whom and how much you wish to give.

That said, with some DAFs, there may be other detractors, like the administrative costs. After all, these funds are overseen by the major money-management companies and they will charge fees for the service, usually in relation to the amount of your gift. As the thought goes, being charged for a money-manager to make more money for you is one thing, but to be charged from the money that was to go to a good cause might just be something else entirely. There certainly are those would be philanthropists whe don't like the practice for this reason.

Local "community foundations"are an excellent alternative to the DAFs managed by the for-profit major money management companies. There fees typically are much lower and the local community itself benefits by being, well, local.

Several years ago, Gretchen and I set up our own family DAF through the National Christian Foundation. We use it for all of our charitable giving, from our church tithe to supporting other ministries, as well as a few secular charitable causes. [Hint: You can keep your giving anonymous by selecting a name for your DAF other than your own name.]

As with anything financial, it is best to do your own due diligence before proceeding. For more reading you can check out the New York Times article from a little while ago written by a Boston College Professor, Ray Madoff: "Tax Write-Off Now, Charity Later."

Reference: Reuters (December 5, 2011) "Charitable Giving:  Do Donor-Advised Funds Make Sense?"