Crazy Lady Gives Everything To Charity Family Upset

When Nicole first came to see us she was 62 and had just retired from a career of teaching. Most of her investment accounts, of about $2 million, consisted of assets in a 403(b) plan and several annuities that her previous financial advisor had sold her.

As a result, just about everything she owned was in tax deferred accounts. She was single, had no children but had several nieces and nephews who she wanted to leave her estate to when she died. At the time the maximum estate tax exemption was $650,000.

While taxes shouldn’t drive your estate planning decisions, it’s our duty to help you make smart choices about your estate planning decisions by recommending the most tax efficient ways of accomplishing your goals. Nicole’s problem was that almost all of her money would be subject to both income and estate taxes when she died. The IRS could end up with over 70% of her estate!

When we asked about her charitable giving objectives she told us that she always wanted to do more but she “never got around to it.”
We asked her if she would be open to a strategy that would provide for charitable bequests at her death but would not affect the money she wanted to leave her nieces and nephews.

She wanted to know more so we described how a charitable remainder trust might work, if she named the charitable trust as beneficiary of some of her annuities. We told her that she could name several charities or just one. She was still interested, so we ran the numbers for her.

Our “number crunching” showed that the present value of the income her heirs would’ve received from the trust would’ve been $3,093,000 - only slightly less than the $3,143,000 under her present plan.

However, 20 years after her death, the charities would receive $3,773,000. These numbers were very compelling and Nicole decided to have her attorney prepare the necessary documents. At one of our meetings she asked us for suggestions for charitable beneficiaries. We told her to be observant and think about causes or organizations that she had an interest in helping. She eventually settled on three organizations which were named in her trust.

What Happened Afterwards Is Remarkable!

Several months later Nicole asked us if she could begin to donate money to those charities now, and started to do so. About a year after that she decided to change the beneficiaries on several of the annuities so that the charities would get some money immediately at her death rather than waiting for 20 years after her death.

About another year later she changed her entire estate plan leaving smaller specific bequests to her nieces and nephews. The rest of her assets (including her IRA) going to endowments for the benefit of her favorite charities.

What happened to Nicole to cause her change in thinking? We think she caught the “giving bug.” She also realized that she was providing money for her relatives not because they needed it but because she felt obligated to do so.

How about you? Does your estate plan leave money to friends and family because you feel obligated to do so, or because you feel it’s the proper inheritance for them to receive from you?
Well, while your story might not be the same as Nicole’s, you shouldn’t take that to mean your planning needs aren’t just as critical! PLANNING BEFORE TAKING ACTIONS IS THE MOST FUNDAMENTAL, AND IMPORTANT ELEMENT OF FINANCIAL SUCCESS! So make sure you call us BEFORE making any moves! We’re here to help you make smart choices about your money so you have the best shot possible of enjoying a “Worry Free Retirement”. Doing What You Want, When You Want, Where You Want!