Die charitably: gifts after death assist heirs and community.

• Author: Mcculiough, Scott M.
• Position: Legal Brief

An Annapolis, Md. woman recently died tragically in a house fire, caused by a portable electric heater, leaving a $7.6 million gift to the Juvenile Diabetes Research Foundation (JDRF) through her will. During life, she had contributed $27,000 to JDRF on behalf of her brother, who had Type 1 diabetes. This gift will fund an enormous amount of diabetes research, accelerating efforts to find a cure. At the local level, James LeVoy Sorenson recently bequeathed his considerable personal fortune to the Sorenson Legacy Foundation, which is governed by several family members who will continue his legacy of philanthropy.

The concept of leaving assets to charity upon death, or planned giving, was traditionally utilized only by the wealthy for the benefit of large institutions such as universities and hospitals. However, a greater number of charities are now encouraging donors to consider using a variety of planned gift techniques to extend their support beyond their lifetimes.

On average, 75 percent of Americans give to charity annually, with an average donation of $ 1,800. The IRS reports that in 2004 (most recent data available) Utah ranked second in the nation for average charitable contribution per tax return.

It is estimated that the largest intergenerational transfer of wealth in history (more than $41 trillion) will occur by 2055, with 91 percent of the transferred assets being real property, life insurance and retirement assets. These assets generally are not available to make lifetime gifts, but can be used to make posthumous gifts in a way that benefits both heirs and charity. These planned gifts use all assets accumulated during one's life (cash, land, life insurance, securities, business interests) resulting in contributions that dwarf lifetime giving.

With careful planning, donors can maximize the value of their estates to charitable beneficiaries and family by designating tax burdened assets such as retirement plans for philanthropic purposes. Retirement assets are included in the gross estate and therefore are subject to estate tax. In addition, distributions from inherited plans are subject to income tax on the required minimum distributions. Philanthropic minded individuals can eliminate this double tax by designating charitable organizations as the beneficiary of a portion or all of a retirement plan.

Many donors are intimidated by the complexity and costs associated with planned giving vehicles such as charitable trusts and...