Estate Planning – FUNDING matters® Inc.

Family Discussions – Don’t Wait Until It’s Too Late

I have the opportunity to speak with people of all ages, professions, and interests each year about their estate and philanthropic planning. I usually begin by asking them questions about themselves and their family. If the client is retired, I’ll ask what they did when they were working, how many children they have, and so on.

To simply ask how to divide their possessions, or to give directly to charity, invites problems. They will most likely answer: “I would like to leave everything to my children equally after we’re gone.”

Once I was having an interesting conversation with new clients, spending time asking them questions about their history, children and grandchildren. The husband stopped me to ask why was I spending so much time trying to learn about his family members.

I said to him, if I don’t know this information how can I create a philanthropic plan that’s going to work for you and your children?

Let me give you an example. Suppose Johnson has built a family business over the course of many years. The equity and value in the family business makes up a large chunk of Johnson’s family net worth. Let’s assume Johnson has three children, only one who works in the business. Johnson tells me that there is some acrimony between the son who works in the business and another son who does not.

If Johnson simply divides his net worth among the three children, what problems might occur? What is the likelihood of Johnson ever making a current donation or a charitable bequest?

In working an estate with a current donation and/or estate bequest, an appropriate solution can only be found if everyone is willing to have difficult conversations and potentially, disagreements. It’s okay to have disagreements during the planning stage. What every family doesn’t want is to have disagreements once it’s too late.

Please contact me to discuss how to initiate these discussions with your family, develop a healthy relationship, and leave a legacy that everyone will be pleased with.

William Petruck
President and CEO
FUNDING matters Inc.
Toll free: 1-800-856-1354

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https://www.theglobeandmail.com/investing/globe-wealth/article-family-meetings-emerging-as-a-new-facet-of-financial-planning/

Estate Planning As A Part of Strategic Philanthropic Giving

Estate planning can be your unique selling proposition to encourage philanthropy. When you look at individuals who are significant donors to charities, many of them have already written wills and established financial plans. This type of planning allows them to support their favourite causes by following their strategic philanthropic plan.

Strategic philanthropy usually takes place between family members, financial advisors, tax and legal planners. Just as important as retirement planning, a philanthropic plan can be drafted in tandem with the development of an estate and financial plan to include charitable giving in the present and in the future.

Recently, Imagine Canada made recommendations in their Personal Philanthropy Project. The aim of the study was to look into philanthropy among affluent donors. The key recommendations within the Imagine Canada report highlights four areas for action. I will address one of the recommended action items – the development of a giving calculator which enables individuals to understand the best ways to give. The other three action items have been applied by charities over the years to increase giving to major gift campaigns with consistent levels of donor engagement such as “predetermined giving tiers” and “peer influence”. Unfortunately, these actions bring success, usually occurring in larger organizations with well trained volunteers and senior staff helping to guide the process. What happens in the small to medium sized charitable organizations, how can they compete? The great equalizer is education through illustration of different donation scenarios.

I classify the majority of charity donors as “transactional donors”. The word “transactional” refers to charitable giving in the form or cash, check or credit card. This is typically in the comfort zone for most donors.

Meanwhile, a giving calculator can benefit the following groups: 1) the individual donor and their families; 2) the individual’s advisors (tax planner, financial advisor and legal advisor); 3) the charity and its leadership team because it can illustrate the best ways to give from assets that are highly taxable. To name a few, assets such as stocks, mutual funds, and registered investments are good vehicles that provide the donor with the maximum tax relief of assets with taxable capital gains. The integrated approach of estate planning, guided by the demonstrations in the giving calculator, will result in a larger philanthropic donation.

Check out our very own giving calculator, Giftabulator®, for the best ways to give by visiting www.giftabulator.com

– Bill

Visual Planned Giving by Dr Russell James III

Dr. Russell James has gone and done it again, creating a meaningful book, which reinforces the importance of why visualization is essential in major charitable giving both as a major and planned gift. Visual Planned Giving: An Introduction to the Law and Taxation of Charitable Gift Planning.

A must read for anyone who spends time planning out how best to market to donors !

Anaheim NCPP 2014 – Disneyland, the Angels and Philanthropy

The Imagineering of Disneyland has transformed the landscape for families across generations. Who hasn’t experienced the magic of Disney or been touched by its amazing storytelling? This was always Walt Disney’s dream. Today Disney is a global brand recognized and loved by children and adults alike. When asked by football players after winning the Super Bowl where they want to go, it has become a familiar reply – Disneyland.

Well, Anaheim, California is not only home of the world’s greatest place for family memories, Disneyland, but also home of the world champs in baseball. For decades the Angels of Anaheim were founder and owner Gene Autry’s true passion, long after he rode into the sunset with his horse Trigger. In Autry’s mind, his crowning moment would be winning a World Series championship. Autry never gave up on his team, even when faced with multiple losing seasons. It was in 2002, after Autry had passed to become an angel in his own right, that the Anaheim Angels brought magic to the “Heart of Orange County” by winning the big one for their founder. Autry’s dream of winning the World Series was never realized in his lifetime; however, without his vision and passion for the game, the Anaheim Angels would not have achieved that glorious victory 12 years ago.

The same is true in philanthropy. Giving and making a difference is about making magic happen. In some cases we can see it unfold before our eyes through a major gift and in other cases it’s a waiting process before a planned gift is realized. We’ll have to wait to see magic take place in Anaheim again with the imminent launch of Giftabulator USA.

We look forward to showing you how magic can be created with your donors through Giftabulator USA. Please join us for the launch of Giftabulator USA at the 2014 National Conference on Philanthropic Planning on October 14-16, 2014 in Anaheim to see how transformative funds can be created for your organization.

William Petruck

www.giftabulator.com

Peter Gilgan – Power Donor® Extraordinare

Why do I call Peter Gilgan a Power Donor®?

It’s simple, just imagine a world where everyone donated 1% of their net worth; if you are worth $1 million that would be a $10,000 donation to charity.

Now, imagine donating 8.3% of your net worth in your lifetime to charity using the same net worth calculation – your donation would be $83,000. Well that is just what Peter Gilgan, the founder of Mattamy Homes in Canada did today, adding to his philanthropic record by donating $30 million to St. Michael’s Hospital in Toronto. This donation brings his lifetime giving total to $150 million against his $1.8 billion in holdings.

What can Peter Gilgan’s giving teach us?

It shows that he could never conceive of how much to give if he did not undertake any planning for his finances, his estate and leading to his philanthropy. The same can be said for a recent donor to a local charity who took the time to understand that she lacked personal financial planning. She spoke with us at FUNDING matter inc. to say that she didn’t understand if she had enough money to live the lifestyle she was accustomed to while still providing for her heirs and leaving something to her favourite charities. After walking her through an illustration of a proper estate and financial plan, she quickly understood and saw first hand the looming tax that could be used for charitable giving. In the end she became a Power Donor®, actually donating more than 1% of her net worth to her favourite charities.

Each professional advisor can leverage their client relationships to help achieve them establish unique and inspiring legacies through philanthropy, much like Peter Gilgan’s recognized legacy of landmark donations to the charitable sector.

William Petruck

www.giftabulator.com

Grow A Relationship – Agree About Money

Money is often cited by relationship experts as the number one reason for relationship failure, in particular marriage. Why is money such a strong factor in determining one’s success in marriage, longevity and health?

Maybe it really isn’t money that is the major factor but that the underlying issues which relate to the money that are the problem.

How can couples get on the same page?

It is important for each partner to understand why the other feels the way they do and develop a mutual understanding. Whether it’s generosity or thriftiness, communication is the key to understanding one another’s views and unspoken preferences and bias.

When gifting is made, how are the spouse, children and charity taken into consideration?

Discussing money topics in detail is the beginning of the process. When I meet with lawyers, they tell me that couples often don’t have an idea of how to split up or allocate their life’s assets to family and community. In many cases this is the first time that the couple has given thought to who gets what. It’s not surprising then that 70% of individuals don’t have a current will.

I recently had dinner with an accountant who is acting as trustee for an estate that is being contested by two sisters in their 60s. They are not talking because they can’t agree on how to divide their mother’s antique teacups and fairly apportion her funds to her grandchildren. These sisters are literally throwing 60 years sibling friendship out of the window by failing to communicate.

Plan your estate through effective communication to ensure minimal headaches and heartaches for your loved ones and to minimize legal fees and taxation to benefit family and community.

wpetruck@fundingmatters.com
www.giftabulatorusa.com

www.giftabulator.com

www.fundingmatters.com

What Does Wall Street Know About Charitable Giving that Main Street Charities Don’t?

Did you know that major fund companies such as Fidelity and Schwab are now getting into the charity game on behalf of their clients? They are educating their advisors on how to discuss setting up donor advised funds to ensure they continue to manage their clients’ assets for generations to come.

Charities too often take the position that their donors do not care about taxes when they think about giving. I understand this if the charity is simply looking at the $50 or $500 a donor is giving; however, why would a charity give up the opportunity to build themselves into the estate and financial plans of their donors and members?

A lack of initiative by the charity will lead to declining revenues when many of their $500 annual donors pass away. The fact is that most people do not have charity built into their wills. It is then safe to assume that the charity’s donors will unlikely pass on any assets in their will to the charity or move to a higher giving amount without the proper insights and illustrations by the charity.

Clearly, financial institutions have been able to sharpen their focus on this key group of individuals who will be passing billions if not trillions to the next generation.

wpetruck@fundingmatters.com
www.giftabulatorusa.com
www.giftabulator.com

Donate to Eliminate

I was encouraged to see the Laura Saunders’ article Tax Smart Philanthropy Made Easy in the Wall Street Journal (WSJ). This has been a key element of what we have been speaking to advisors, charities and individuals about in getting their estate, financial houses in order to minimize taxation on their capital gains now and in their estates. Tax planning means that advisors and their clients need to take an inventory of all assets now and over time to ensure that what is left over and taxed can be put to other uses like philanthropy.

The WSJ article talks about the increase in popularity of Donor Advised Funds such as those offered by Fidelity, Schwab and Rowe. The other option is to give directly to charity and see the impact of your giving. The Donor Advised Fund model is a very smart approach if you are undecided about which charities you may want to leave your money to, and the taxman is not one of your chosen beneficiaries. It is also a wise strategy for future generations who will invariably be approached to give to charity. Imagine having the luxury of helping society with pre-tax dollars.

An important element in smart tax planning is being able to see or have someone illustrate to you how lowering taxes can be achieved and what is required. All too often, advisors do not spend the time to engage in these types of discussions for a number of reasons including, lack of knowledge or not having the tools to educate and illustrate these concepts to their clients. Not-for-profit organizations are equally guilty of not informing and engaging their members with the information in a concrete manner. That is why historically, the number of bequests to charities has remained in the 4% to 6% range for many years. Guess who is getting the rest after the family? You got it, the taxman.

The solution to this is GIFTABULATOR, an estate, financial and philanthropic planning app with an easy to understand model for planning purposes. GIFTABULATOR easily calculates how much money an individual will be left with, can pass on to their heirs and how much should be donated now or as part of an estate to reduce taxes at any point in the investment cycle. Can you imagine now how much you should give now to reduce your taxes on various assets? Call it Donate to Eliminate.

Laura Saunders’ article in the WSJ hits home about leaving a legacy for yourself, your family and your community.

Connect with GIFTABULATOR at app.giftabulatorusa.com

e. wpetruck@fundingmatters.com

Your Most Important Assets Are Outside Your Portfolio

You might have been advised that the most crucial elements of wealth creation and preservation centres on your investment portfolio. It doesn’t.

As I see each day in our practice at FUNDING matters the huge financial issues in our lives are the success of our marriages, the ability of our children to live productive and fruitful lives and our commitment and engagement to create wellness by healthy eating, exercising and living.

If any of these lifestyle elements aren’t working smoothly or worse, if they are in a destructive mode then there is generally a heap of money going out the door to fix these problems.

If you are glued to your portfolio without paying much attention to your world outside of your financial statements chances are you are setting yourself up for failure, regardless how your investments perform.

Discuss family matters with your children, update your wills, take care of your affairs. Make a provision for charity to benefit society and in the end benefit by reducing your taxes through your philanthropy. Leave a legacy for your family and society.

Challenge for Charities: Less than 1% of Boomers have a Charitable Giving Plan

If it isn’t tough enough to raise money for charities, the largest cohort of individuals set to inherit tens of billions of dollars in the coming decades does not have a plan for their charitable giving – can you say opportunity!

Charities should take the time to education these individuals in terms of the importance of planning. Personal financial plans connect with well thought through estate plans and build in charity to make a difference in society and tax reduction.

Take the time to discuss your estate plans with your professional advisors or take in a Leave A Legacy seminar in your community to find out more about how you can prepare for your future needs and plans.