The "Extra" Child – Charity!
One of the difficult considerations of many individuals engaging in Estate Planning is the question "how much do I give my family and how much do I give to charity?" The primary wish of most parents is to ensure their children share their assets and possessions at their passing, but often they wonder how to balance that with a heart's desire to continue to support charities and ministries they have given to for much of their lives.
A special concept of legacy planning called the Child Called Charity may help answer your questions. Your Will could indicate that your Estate will be divided between the number of your children….plus one. It’s as though you’ve added one child to your family, but that child is a single charity or a list of charities.
To make things really simple for your executor, instead of naming individual charities in your Will, you may choose to name Provident Foundation as that additional child. Then prepare a Letter of Direction for their files indicating exactly how you would like the monies distributed to charities at your passing. This letter could be changed throughout your lifetime, and this process offers you the opportunity to make these gifts anonymously and confidentially if you so desire.
As an example: If the net value of your Estate was $500,000 after taxes, you might assume to divide that equally between your three children, giving them $167,000 each.
Instead of your Estate being divided among three children, it would be divided among four, giving them each $125,000. Then each of your children can also share in the tax credit to your estate that would result from the donation receipt of this gift, giving each of them an additional $21,000.
As you can see, a relatively small reduction in inheritance for your children can result in generous support for the charities and ministries that are important to you.
The information contained above is very general in nature. A prospective donor should obtain professional advice prior to implementing a sophisticated giving plan. On request, Provident Foundation will be pleased to assist a donor’s professional advisors in this regard.