Impactful Giving: Estate Planning Strategies with MICOCF 

Estate planning strategies are critical to financial management, ensuring your assets are distributed according to your wishes after death.

People usually decide to include charities in their estate planning for several reasons that reflect personal values and practical benefits. Many people are motivated to make a lasting impact on the causes and organizations they care about, viewing it as a means to extend their legacy and influence beyond their lifetime. Financial considerations often accompany this philanthropic impulse as charitable contributions can significantly reduce estate taxes, providing a tax-efficient way to transfer wealth.

We at the Miami County Community Foundation (MICOCF) have witnessed firsthand the importance of careful estate planning. It is a beautiful way to leave a lasting legacy and, at the same time, support vital services for the entire community, making a significant impact on the causes you care about.

Statistics highlighting the growing trend of charitable giving in the United States underline the benefits of including charities in estate planning. According to the Giving USA 2022 report, Americans donated approximately $484.85 billion to charity in 2021, a 4% increase from the previous year. 

Additionally, the Tax Cuts and Jobs Act of 2017 impacted estate planning strategies by doubling the federal estate tax exemption, making it even more advantageous for individuals to incorporate charitable giving into their estate plans. This legislative change benefits donors through tax benefits and significantly impacts charities by providing them with crucial funds to continue their work.

10 Estate Planning Tips and Strategies

The best estate planning tips are those that effectively secure an individual’s legacy, ensure the well-being of their heirs, and, where applicable, support charitable causes. Here are ten estate planning strategies that stand out for their ability to meet these objectives:

1. Comprehensive Will Creation: A will is fundamental to any estate plan. It dictates how your assets should be distributed, who will care for minor children, and can even provide instructions for your digital legacy. Comprehensive will creation is not inherently complex but requires careful consideration of your assets, dependents, and how you wish them to be distributed. Knowing the full extent of your estate and having clear intentions for its distribution is essential. Will-making is relatively common in the USA, especially among older adults and those with significant assets or dependents. However, statistics indicate that many Americans—including those who could benefit from a will—do not have one. 
2. Establishing Trusts: Trusts are versatile tools that help avoid probate, manage taxes, protect assets, and provide for heirs according to specific criteria or timelines. Trusts come in various forms, broadly categorized into living (inter vivos) trusts, established during the grantor’s lifetime, and testamentary trusts, set up through a will to take effect after death. Living trusts can be revocable, allowing the grantor to retain control and make changes, or irrevocable, offering tax benefits and asset protection but limiting control over the trust assets.
3. Beneficiary Designations: Ensuring retirement accounts, life insurance policies, and other accounts have up-to-date beneficiary designations is crucial for smoothly transferring assets outside the will. To do beneficiary designations, you typically fill out a form provided by the account custodian (e.g., for retirement accounts and life insurance policies), where you specify who will inherit the assets upon your death. You’ll need to provide the beneficiaries’ names, relationships to you, and the percentage of the assets you want each to receive, ensuring these designations align with your overall estate plan. Reviewing and updating these designations after significant life events like marriage, divorce, or the birth of a child is essential.
4. Durable Power of Attorney (POA): A POA allows someone you trust to manage your affairs if you become incapacitated, ensuring decisions are made in your best interest. In Kansas, to create a Durable Power of Attorney (POA), you must complete a POA form that complies with Kansas law, specifying the powers granted to the agent. The principal must sign the document in the presence of a notary public to be legally valid.
5. Healthcare Directives: Advance healthcare directives, including a living will and a healthcare power of attorney, specify your wishes for medical treatment and designate someone to decide on your behalf if you’re unable. Despite their importance, many Americans may not think about them due to discomfort with discussing end-of-life issues, a lack of awareness about how to create these directives or the misconception that they’re only necessary for older adults or those with chronic conditions. This oversight can lead to challenging situations where family members must make difficult decisions without guidance.
6. Annual Gifting: Utilize the yearly gift tax exclusion to reduce the size of your taxable estate while providing immediate benefits to your heirs. Annual gifting works by taking advantage of the IRS’s yearly gift tax exclusion, allowing you to give a certain amount ($18,000 in 2024, for example) tax-free to as many individuals as you wish each year without counting against your lifetime gift and estate tax exemption. This strategy reduces the size of your taxable estate while immediately benefiting your heirs or others, such as charities. 
7. Life Insurance: Life insurance can provide liquidity to the estate, cover potential estate taxes, and ensure financial support for dependents or beneficiaries. Life insurance proceeds can quickly offer cash to an estate, helping to pay estate taxes and debts without selling other assets. They also directly benefit named beneficiaries, offering financial support and income replacement after the policyholder’s death.
8. Charitable Giving: Including charitable donations or setting up charitable trusts can reduce estate taxes and allow you to leave a lasting legacy aligned with your values.
9. Family Limited Partnerships (FLPs): FLPs can manage and protect family-owned business interests or assets while providing tax advantages and facilitating the transfer to the next generation. They allow families to pool assets or business interests into a partnership. Senior family members typically manage the partnership while gradually transferring shares to younger members, thereby reducing the taxable estate and facilitating asset transfer at lower tax rates. This structure also offers protection from creditors and can provide a framework for managing family assets collectively.
10. Regular Review and Update: Estate plans should not be static. Regular reviews and updates in response to changes in laws, family circumstances, and personal goals are essential to maintain effectiveness.

These strategies offer distinct benefits and can be tailored to individual estate planning goals. Consulting with estate planning professionals is crucial to understanding how these strategies can work best for your situation and ensure your legacy is preserved according to your wishes.

Join us in shaping a better tomorrow for Miami County. Your support is more than just a donation. It’s an investment in our community.

Charitable Estate Planning With MICOCF

Incorporating charity work into your estate planning involves thoughtful consideration and strategic actions to ensure your philanthropic goals are achieved while maximizing the benefits for the charity and your estate. One practical approach is integrating charitable giving into your estate planning strategies, allowing you to enjoy some tax advantages.

A key estate planning concept is to utilize bequests, where you specify in your will that a portion of your estate goes to a chosen charity, such as MICOCF. This method is straightforward and ensures that your philanthropic intentions are legally documented.

When considering other estate planning tips, remember to designate specific charities as beneficiaries in life insurance policies or retirement accounts. This is a direct way to support causes important to you, bypassing the probate process and directly transferring assets to the charity.

Another estate planning strategy involves setting up a charitable remainder trust (CRT). This allows you to receive income for a specified period, after which the remaining assets go to your designated charity. It’s a win-win, offering you tax benefits and providing the charity with future support.

A Charitable Lead Trust (CLT) may also be the ideal option for those interested in the immediate impact of their charitable contributions. Unlike the CRT, a CLT provides the charity with an income stream for a predetermined number of years, after which the remaining assets are returned to the donor or their heirs. This strategy is desirable to people who want to reduce their taxable estate while supporting their favorite causes during their lifetime.

Those who include charities in their estate planning should also consider using a donor-advised fund (DAF) as a flexible and tax-efficient way to manage their charitable giving. This allows for an immediate tax deduction and the ability to recommend charity grants over time.

It’s essential to review your estate planning strategies regularly to adapt to changes in your personal circumstances, tax laws, or charitable intentions. Consulting with professionals skilled in estate planning is advisable to ensure that your philanthropic goals are met and align with your overall estate plan.

Estate Planning Strategies: Conclusion

The intersection of impactful giving and estate planning strategies, mainly through the lens of the Miami County Community Foundation (MICOCF), offers a profound opportunity for individuals to leave a legacy that extends far beyond their lifetime. This blend of personal philanthropy and strategic financial management reflects one’s values and desires for a better world and as a practical approach to wealth transfer, maximizing benefits for donors and beneficiaries.

Estate planning strategies have the potential to significantly change the way charities operate by providing them with substantial resources to expand their missions, launch new programs, and ensure long-term financial stability. When individuals include charitable giving in their estate plans, it reflects a commitment to the causes they care about and provides charities with predictable funding streams. This foresight can allow organizations to plan for future projects and operations more effectively, knowing they have the financial backing to support their initiatives.

A famous story highlighting the impact of estate planning on charities is Leona Helmsley’s bequest to the Helmsley Charitable Trust. Helmsley, a real estate mogul, left a substantial fortune to the fund. The fund has since committed millions of dollars to various health and medical research projects, including efforts to combat rural health disparities and save human lives through innovative training programs. And significant contributions to the conservation and care of dogs. 

Incorporating giving into estate planning strategies can significantly alter how the Miami County Community Foundation (MICOCF) operates, enhancing its ability to profoundly support the Miami County, Kansas community. Since its inception in 2007, MICOCF has played a vital role in enriching the local community through grants and scholarships, demonstrating the tangible benefits of philanthropic efforts. As of 2017, the foundation had already awarded more than $50,000 in scholarships and gifts, underscoring its commitment to community improvement.

Planned giving can strengthen the foundation’s restricted and unrestricted endowments, providing a reliable financial base to draw to support various local nonprofit organizations. These organizations, including the Miami County Historical Museum, the Paola Community Garden of HOPE, and the Lakemary Center, rely on MICOCF grants to impact areas such as education, community health, and social services.

Are you interested in learning more or contributing to our cause? Reach out with any questions you may have. With just one click, you can transform lives. Your donation has the power to create a significant change.