Options for physicians to give back with financial legacy

March 25, 2016

Leaving it all to charity.

Bill and Melinda Gates famously pledged to donate most of their wealth to charity, as did Warren Buffett. The merely affluent typically leave their money to family members, but for those who don’t want to leave everything to kids-or who don’t have kids-there are a variety of ways to leave a legacy.

“A lot depends on how much money is involved and the client’s appetite for complexity,” notes Susan Repetti, JD, an estate-planning attorney and partner with Nutter McClennen & Fish, a Boston law firm.

Simply naming a charity as a beneficiary of an IRA – or making lifetime rollovers after age 70 ½ to a charity that will count as a required minimum distribution – can get money to the charity without having it tied up in wills and trust documents, Repetti says. Also, unlike heirs, charities don’t have to pay income tax on the gift. And IRA designations tend to generate fewer legal fights than wills, though that may just be due to lack of awareness that assets have been dispersed, she says.

Also, donors are becoming more savvy about ensuring that their estates are going toward very specific causes they support, experts say.

 

“They are sitting down with representatives of their favorite charities far in advance and coming to agreements on how they want money spent, and the charities are then evaluating whether they are able or willing to commit to that,” Repetti says. Charities are beginning to push back a bit on donors if they find the strings on the money too tight or incongruent with their mission, she says.

Another way to create a legacy during your lifetime that segues into an estate plan is by setting up a donor-advised fund and specifying charities to receive any undispersed funds at your death. Fidelity, Schwab and Vanguard are three of the biggest.

If you do have family or a trusted friend or adviser, another option is to name successors to oversee the gifts after you’re gone, Repetti says.

An additional way to leave a perpetual giving legacy is via a scholarship fund directly with a non-profit organization that uses interest and earnings off of a principal amount to fund annual scholarships, notes Wendi Temkin, JD, an estate planning attorney in Boulder, Colorado.

“You can really pick and choose how you specifically want to benefit people,” she says. “You can hand money over to an organization for general use or really get into the details and craft a legacy. It’s really your last teachable moment.”