Many people could easily write big checks, but something holds them back. Most of our clients are age 60 and over and have a net worth generally in the range of one million to thirty million dollars. They could spend hundreds of thousands of dollars more than they spend now, but they can’t bring themselves to do it. When shown that they have excess wealth, they might travel more or perhaps buy a second home, but they’re not likely to do a whole lot more than that. It is just not who they are.
Ask yourself this: How much do I really need for what I’m going to do? Is my goal to see how much money I can pile up? Or do I want to leave my mark on how it is spent, on what my money can do?
Here’s the truth about legacy planning and philanthropy: Including a charity or nonprofit in your planning does not have to mean that you will leave less to your family. One does not need to exclude the other. It can be done through alternative methods that are quite legitimate. It is just not the traditional way that most people plan.
By taking advantage of incentives that are in place – and that aren’t typically employed in traditional planning – you can leverage your money for what you care about. Most people don’t know about these strategies. For example, most people don’t know that at the federal level you can zero out your estate taxes. How? By diverting what would have gone to the government to your chosen causes and organizations. It is a zero sum game: What the federal government loses in taxes, nonprofits gain in legacy-creating contributions.
Let’s emphasize again: Your philanthropy can be voluntary, or it can be involuntary. The government is a kind of quasi-charity. It is a social organization. Through taxes, your money is going into the social capital funnel. In our experience, most families don’t want their hard-earned savings to go there. It is not because they’re unpatriotic – they just don’t think government programs and spending is the most efficient way to get their money to where they believe it is needed the most. They want to maintain control of the impact they have with their wealth.
Why, then, don’t people do more, if these methods are legitimate and well within their grasp? Often it is as simple as this: Most people are under the misconception that every dollar left to charity is a dollar less that their family will receive. They see all their goods and assets as if they were part of a pie, and if somebody else gets a slice of that pie, the other portions will be smaller.
It doesn’t work that way. Through a variety of strategies – financial, legal, tax, and leveraging techniques – we can make the pie and its slices bigger. That is the virtue of the comprehensive strategy we call Life & Legacy Planning. Just one slice of the bigger pie can actually feed more people than the entire smaller pie.
Your children or beneficiaries don’t have to end up with less. Quite frankly, through proper planning, they often can end up with more, if that is what you want. When people come to understand that providing for charitable causes does not require them to shortchange their heirs at all, they feel a new freedom to reach out with a helping hand.
-excerpt from chapter 4
Download a chapter of the book at www.domorethatmatters.com
Ron Ware, J.D. and Greg Hammond, CFP®, CPA are wealth impact strategists and personal legacy advisors who help individuals, families, and business owners enhance their financial standing while discovering a greater capacity to provide for their loved ones and support cherished charities. Contact Ron or Greg.
Greg’s website: www.hammondiles.com Ron’s website: www.wealthimpactpartners.com