Nearly 75 percent of high-net-worth individuals consider charity to be an important consideration in their financial and estate planning, according to a survey conducted in 2013 by
Sometimes charity is overlooked during planning because clients and advisors have to overcome both factu íl and psychological stumbling blocks.
What keeps advisors from haring this important conversation?
* A Focus on the Technical. Even in long-term client relationships, the advisor may nc: have had many conversations about the clients values and charitable interests. Some advisors focus more on the technical aspects of the planning, making it hard to move into more values-based discussions.
* Lack of Knowledge. Some advisors lack extensive training on charitableplanning techniques. Others may have learned about charitable planning at some point, but have not used their knowledge frequently enough in practice to be comfortable starting that conversation now.
* Hesitation to Engage Others. Charitable planning often requires advisors to engage with the whole family rather than just their client. This may concern some advisors seeking to have clear boundaries around who they represent in those interactions.
Oftentimes, high-net worth families put off their charitable planning due to concerns tha: can be surpassed with proper planning and discernment.
* Fears of the Unknown. Some fear that they might outlive their money, causing them to hesitate in taking action. Others worry they will leave their heirs with less than they intend. In reality, charitable deductions can often offset the cost of estate taxes. When planned properly, this can lead to charitable gifts being included in an estate plan without a significant (or any) reduction to what is received by heirs.
* Loss of Control. Clients sometimes feel uncertainty over what nonprofits they want to support They do not want to choose to support an organization and then be unable to change it if their interests change. Most donors find it reassuring when asked to identify their giving interests and document the story of their life experiences as part of their estate and legacy planning process. This oftentimes leads to the development of a flexible giving plan that fits their unique characteristics and yet can be easily changed over time without needing to restructure a will.
* Family Complexify. Each client has a unique family dynamic that can sometimes make it difficult to start a conversation about giving. Through the facilitation of a family meeting, multiple generations have the opportunity to come together to connect to their shared values. Through a senes of exercises, family members can identify and document those values and how they connect to their lives. In addition, the introduction of charitable tools that allow them to give together as a family gives them reassurance that they can strengthen those values now and into future generations.
To get started, we recommend partnering with a chartered advisor in philanthropy (CAP) to conduct discernment conversations with your client or family that identifies what is important to them. From there, you can share best practices for incorporating charity into their plan, which will help to address any concerns about longevity, cost, control, nonprofit uncertainty, and tax benefits.
Family wealth and legacy planning, in the words of