Choices and changes: Using flexible estate planning tools

Decisions, decisions. We all face them. In fact, we often change our minds after a decision is made. In estate planning, those changes can be expensive if new documents need to be drafted or existing documents must be revised. What if your clients could change their mind about the nonprofits they want to support in their estate plan, without the need for costly revisions? The Community Foundation can do that! Our charitable tools offer flexibility to your clients.

If you’re an estate planning attorney (or work with them), you know how important it is to keep wills and trusts current and in line with your clients’ intentions. And if you’re an accountant or a financial advisor, you’re always looking for frictionless and tax-savvy ways for clients to improve their financial situation.

The community foundation can help you do that. Our team works with attorneys, accountants, trust officers and financial advisors – usually behind the scenes – to help structure charitable giving plans that are easy, flexible, and effective.

When a client executes estate planning documents, frequently the will or trust will provide for bequests to favorite charities. Indeed, more than $43 billion flowed to charitable organizations through bequests in 2022.

What’s challenging, though, is when a client wants to make small changes to an estate plan’s provisions for charitable giving but leave everything else as is. For example, a client’s trust may provide that 10% of the remaining estate be divided equally among five charities, which they list in the trust. What if the client wants to add another charity to that list? Even a small change like this would require an amendment, which can be time-consuming for both the estate planning attorney and the client.

Instead, the client’s trust could name a fund at the community foundation, such as a donor-advised fund or a designated fund, as the beneficiary of 10% of the estate. Then, the client can work with the community foundation to identify a list of the charities that will share the 10%. When the client wants to add new charities or switch out charities from the list, the client can simply reach out to the community foundation and execute simple documentation of the client’s updated intent. This process is fast and simple, and it allows clients to ensure that their bequests are in line with ever-changing needs in the community.

This structure makes it easy for a client’s advisors, too, because frequently the client can make just a handful of gifts (ideally, of appreciated stock) into a fund at the community foundation to carry out their annual giving to charities. The support of individual charities from that fund is documented in the community foundation’s system, but for tax purposes, only the small number of tax-deductible transfers into the fund need to be reflected in the client’s tax filings. 

Keeping your clients’ giving simple and flexible is a big advantage of working with the Community Foundation. Please reach out to learn more about how we can help you incorporate much-needed charitable giving flexibility into your clients’ estate plans. Helping you serve your clients in the best way possible is our goal.