Tag Archive for: philanthropy

Harvard’s Charles Collier on "The Practices of Flourishing Families"

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 “The critical challenge you face is not financial,” said Charles Collier, senior philanthropic adviser at Harvard University in his presentation on “The Practices of Flourishing Families” to an audience composed mostly of wealth managers at the Boston Security Analysts Society on December 15, 2009. He believes “The most critical challenges are relationship-based and family-based.”

Of course, money plays a role in these challenges, so this is a topic that should concern all wealth managers. Whether it’s scarce or abundant, money is a challenge in every family, said Collier.

Three questions are critical to addressing family challenges, said Collier.

  1. What topics are easy or difficult for your family to discuss?
  2. How do you manage yourself in life’s transitions?
  3. Is family harmony an important principle for you, and, if so, why? 

Collier’s interactive presentation focused on Question 1 and raised the following difficult questions around finances:

  1. What is an appropriate inheritance for your child?
  2. Who gets the money, and when? Do they get equal shares?
  3. Who gets information about the money and when?
  4. How much will go to philanthropy?
  5. What do you think will be the impact of unearned money on your child’s life?
  6. How can you encourage your children to find their life calling?

Collier did not suggest how financial advisors should raise these questions with their clients. So, I’m asking you, how do YOU address these questions with clients? Do you address them at all?

The charitable trust that’s best in a low-interest rate environment

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Now is a great time to create a charitable lead trust, assuming it would further your client’s estate planning goals.

That’s according to Nadia Yassa, Director of Estate and Gift Planning for the Boston Foundation. She spoke on “Tax Benefits of Charitable Trusts” to the Boston Security Analysts Society on May 13.

Why now? Because when interest rates are low, the IRS will value the non-charitable remainder interest at a lower value, using the IRS discount rate in effect when the trust is established. That’s regardless of what the actual value is when the transfer occurs. The bottom line: Ultimately, more of your assets will reach your beneficiaries because any growth in the trust above the discount rate passes free of gift tax to heirs. As Yassa explained, “A low Section 7520 discount rate allows donors to ‘freeze’ estate and gift values to minimize overall transfer tax liability.”

A non-grantor charitable lead trust provides income to one or more qualified charities for a preset period. At the end of that period, the assets of the trust transfer to non-charitable beneficiaries. People often use this kind of trust to contribute to charity, while ensuring that their assets end up with family members at a lower cost in taxes.

On the flip side, low interest rates mean this is the least favorable time for creating a charitable remainder trust. However, in any case, taxes should not be your only consideration when establishing a charitable trust.

Want to learn more about planned giving, including charitable trusts? Check out the Planned Giving Design Center, suggested Yassa. “It’s a free on-line resource sponsored by the Boston Foundation. Go to www.tbf.org and click on the Professional Advisors section/Planned Giving Design Center. Advisors can register and have access to technical outlines, articles, rulings, news reports, and receive periodic emails with legislative updates, as well as the Section 7520 rate as it is announced each month by the IRS.”