When I started my career, I thought one’s legacy was how one spent their time while alive. In my case, I knew I wanted to help people in some way. Like many others, my career took different paths along the way in my pursuit of building my legacy of helping others.
It wasn’t until I began working in philanthropy that I began to understand the true meaning of legacy – ensuring your life’s work can continue long after you’re gone. It’s your personal value statement.
There are many ways to leave a legacy. There are creative ways to support an organization you care about so that you, the organization and your loved ones all benefit at the same time.
Planned giving is a technique used to make arrangements for leaving a gift. There are many ways to do this:
• Leaving a bequest in a will,
• Creating a revocable or irrevocable trust,
• Leaving an annuity,
• Leaving a life insurance policy, and
• Leaving retirement-plan assets.
Leaving a gift in your will or revocable trust enables you to support an organization that means a lot to you. A bequest is easy to arrange, will not alter your lifestyle in any way and can easily be modified to address your changing needs. A residual bequest comes after your estate expenses and specific bequests have been paid. Specific or contingent gift language may be used.
There are gifts that pay you income. The benefit of this plan to the charity of your choice is that they may ultimately make a substantial gift to the organization. A charitable gift annuity gives the donor an immediate tax deduction for a portion of the gift, likely no capital gains tax are due at the transfer of appreciated assets and there is a potential increase in the income you receive from your investments. A charitable gift annunity offers a secure, stable income. Your gift can be in cash or stock.
Finally, had you planned on leaving your retirement accounts to your children? Recent changes in tax laws under the SECURE Act have substantially increased the potential income taxes your children could pay on inherited IRA and 401(k) accounts. If you want to make the most of your legacy, you could leave other assets (e.g., cash, stocks) to your non-spouse heirs – they will likely owe no income tax under current law. Then, you can make a lasting difference in your community by designating an organization to receive your IRA and 401(k) assets 100% tax free.
When you think about your legacy, what does it look like? I’d love to listen to your story and explore ways to make it a reality.
Laurie E. Burman is managing director of major gifts at the Jewish Federation of Cleveland
