A Note to Professional Gift/Estate Planners and Advisors
One of the most helpful tools in cultivating planned gifts is understanding the problems your client/donors face as they work to shelter assets accumulated over a lifetime of work. Until you can show client/donors how planned giving can be incorporated into their estate and financial plans, you will be an outsider looking in. When you can insert your organization into the planning process, you help donors realize how to become more efficient in conserving their social capital. Instead of asking for resources, as planned giving specialists you need to understand that the tools of financial and estate planning can be made to benefit both the donor's family and your own nonprofit organization. Surveys indicate donors would be more supportive if they only realized how to give without creating hardship on their families or adversely affecting their lifestyle and security. Successful planned gifts can only be made after these issues are fully addressed by the planner. You must show them how their gifts can be made by simply rearranging their assets while addressing the problems of transition.
Would You Expend Your Assets This Way?
In the course of speaking to audiences across the United States, I often refer to farm families I work with in the Midwest. Farm families don't have a lock on estate and continuity problems, but it's useful to look at a basic estate planning opportunity for ideas. As a rule in central Illinois, it takes at least 800 acres of ground to support a family farm operation today. With productive farmland selling for $3,000 or more per acre, that quickly translates into $2.4 million just for the value of their "dirt". But few farmers own just "dirt" today; they also have a tractor, a combine, a residence, a truck, a car, a little savings, maybe a small retirement plan, plus grain in their bins. Add it up, and these family farmers can easily have $3 million in their taxable estate. With estate taxes hitting $1 million on just this farmer's assets, imagine how the heirs feel about writing that check to the IRS. If the family has done some transition planning, maybe they will have adequate liquidity to pay the taxes, but how many of those tax dollars came back to help their community? How much control does the family exert on how those tax dollars are actually spent? Finding ways to manage and control a family's "social capital" is one of the responsibilities of an effective estate planning team and it separates real planners from those who try to solve problems in a traditional and one dimensional approach.
These concepts aren't limited just to farm families. Instead, they apply to anyone who has managed to create personal wealth in a family business or an investment account. When I ask clients how they feel about sending a check off to the IRS and having $150,000 of their $1 million earmarked just to pay interest on the federal debt, a lot of clients say "if it was my money, I wouldn't spend it that way". It's my contention that it is their money, and they should take control of it. Who better to recognize the needs in their local community? Is there a social program, a church or educational mission that should be supported? Would local influence and interest promote more solutions to community problems? If so, why not take the opportunity to redirect tax dollars back to the community and let the family have some influence on the direction those dollars should take?
These are powerful concepts, and in these changing economic times, there is significant value in voting your "social capital" and providing better stewardship of your family's assets. For more information or a sample "zero estate tax plan", contact our office for a courtesy evaluation.
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Vaughn W. Henry
Henry & Associates
Gift and Estate Planning Services22 Hyde Park
Springfield, IL 62703 USA
Phone: (217) 529-1958 Fax: (217) 529-1959
E-mail: VWHenry@aol.com
Last Updated: Jan 4 , 1998
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