Estate Planning Case Study: Charitable Giving

Television and movies often open our worlds to fantasy and plotlines – oftentimes portraying fictional settings. However, sometimes, the actors and actresses who play these characters open their personal lives and offer us a view into real-life scenarios for analysis.

Take for instance Doris Day, famous for her roles in Calamity Jane (1953), Lucky Me (1954), and The Man Who Knew Too Much (1956). She was an actress, singer, and animal welfare activist. Doris Day died in 2019 at the age of 97. She was widowed at the time, and her only child, Terry Melcher, had died in 2004. During her life, Ms. Day established the Doris Day Animal Foundation (DDAF), a grant-giving 501(c)(3) public charity that supports other non-profits around the country that care for and protect animals.

Ms. Day’s example demonstrates the satisfaction that charitable giving can bring during a lifetime. She found a cause she cared passionately about and surely found personal fulfillment from making a difference. At death, she also had the knowledge that she was leaving behind a life-saving legacy for animals.

Now, not all of us have the time or money available to establish our own non-profits. And, for many of us, the desire to make a difference may run in numerous directions. Lifetime charitable gifts and testamentary bequests are important components of tax and estate planning. Through contributions large or small – made during life and at death – we can all make our own grants to the charities we care about.

To take this principle to another level, we often invite our clients to consider a donor-advised fund. It’s like an investment fund to support the charities you care about. You make a donation to a public charity or a community foundation, and the charity establishes a subaccount fund that you name. From this fund, and subject to the sponsoring charity’s approval, you (or your designee) make recommendations for grants to be made from the fund to eligible charitable beneficiaries. So, if you care about, say, fighting homelessness and preserving prairie landscapes, you can direct grants to both charities.

A variety of assets can be contributed to such a fund: cash, stocks, bonds, shares of mutual funds, private company equity interests, life insurance, real estate – even mineral interests. In most cases, you get an immediate tax deduction for the fair market value of your contribution, capital gains taxes are avoided, and growth in the fund continues tax-free. You can also designate the fund as a beneficiary for your retirement account.

At death, you can direct the fund to disburse the assets immediately to your selected charities or designate a friend or family member to continue directing disbursements from the fund. In this way, you can instill in others the same charitable mindset that led you to start contributing in the first place.

To learn more about the Doris Day Animal Foundation, click here.

If you have any questions regarding charitable giving or legacy planning contact our Estate Planning team today.

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