Doing Good Redux!
In the last edition of Lake Lifestyles ( Winter Edition, available online at http://lakelifestyleliving.weebly.com) I wrote about how developing a family culture of philanthropy, or "doing good", was a worthy goal with many benefits to your family.
The response to that column was beyond anything I ever expected. I am still hearing from many readers of how thought provoking itwas.
Quite a few expressed to know more about creative ways to accomplish this. Building on that idea, I would like to unveil some useful planning ideas to be considered for "intentional" philanthropy.
One of the most straight forward ways (and one that can be a lot of fun for you and the family) is to create what are known as endowments (or endowed funds) with a charity or foundation of your choice. The nice thing is it doesn't take great wealth to dothis.
As an example, you can set up an endowed fund through our local affiliate of the Arkansas Community Foundation for as little as $,. Further, it does not have to be funded all at once, but rather for over as long as years, according to Brenda Hill, Executive Director.
The way an endowment typically works is money, securities or other property of value is contributed to set up the fund. It can be a one time gift or added to over time. That gift is invested and each year some of the income earned from the fund goes to support a charitable cause. In effect, once established, your giving goes on in perpetuity since the principal of the fund remains inplace.
Such endowments can be set up to support a specific charity, as a scholarship fund, as a "field of interest" fund (i.e., to support a broad area of need or favorite cause without having to name a particular charity) or even as an unrestricted grant-making fund that allows the foundation to support charitable causes or meet community needs at its own discretion.
Now here's where it gets fun! There is a type of fund known as a "donor advised" fund, which allows you to play a role in deciding which charitable causes are supported, and these can be different every year if youlike.
What a great way to get the family involved by having family gatherings to discuss and decide what to support!
I've known parents and grandparents who establish endowments, annually gather their prodigy, make "gifts" to them that will be donated to the endowments, discuss worthy charitable causes and goals, and make decisions about what to support thatyear.
You can even establish multiple funds honoring and in the name of your family members that will be a source of family pride for generations. Talking about a legacy of doing good to leave to your family that's it!
There are several other ways of making lifetime gifts of varying complexity but many benefits. For instance, a charitable lead trust (CLT) is an excellent way to pass assets to your heirs while making a significant gift to charity.
When you establish a CLT, you fund a trust that will pay an income stream to the charity(s) of your choice for a specified term. The assets are invested and managed by a trustee. At the end of the term, the assets revert to you or to one or more beneficiaries you choose.
What if you would like to make a "gift that gives back"? You can set up a charitable remainder trust(CRT).
A CRT makes it possible for you to make an irrevocable gift of cash or property to charity, while retaining an annual income stream for yourself from the trust. This income stream can vary based on the value of the assets in the trust and/or the amount of income the trustearns.
Sounds complicated I know, but the computations can easily be made by the charity or foundation involved.
Another creative gifting tool is a charitable gift annuity (CGA). A CGA is a contract between you and a charity/foundation. It gives you the opportunity to make a charitable gift and secure a stream of income forlife.
Under this contract, you transfer assets to the charity in exchange for a commitment by them to pay you, and a second annuitant if you choose, a fixed and guaranteed payment for the remainder of your (or your second annuitant's) lifetime.
The total annual payment, which can be paid monthly, quarterly, semiannually or annually, does not change once established. On the death of the annuitant, the remaining principal and any income that may have accrued is retained by the charity/foundation to carry out your charitable intentions.
There are other creative gifting techniques you can use during life or at death I could go on and on about it is after all one of my favorite topics but space limits me. Hopefully, this discussion has whet your appetite again for "doing good" and including your family in the process.
