By Cary Castle
As the director of Development for United Spinal Association, I’m frequently asked by donors and friends about estate and financial planning.
Frankly speaking, many people are worried about having enough money to maintain a decent standard of living for as long as they live. Today, chances are, you will be living a longer life than your parents and grandparents. Of course, you should always consult a professional financial advisor as this issue is just too important to leave to chance.
With the above in mind, however, my recommendation is to diversify where you put your money. The investment universe is uncertain, so do not put all your eggs in one basket. Especially for retired or soon-to-be retired individuals, you should try to be conservative for the most part, but also try something a little more risky with a small portion of your funds that you can afford to lose.
You should also include charitable giving in your plans. While not everyone can afford to leave a bequest to a cause they support, it is a great way to reduce your taxable estate and help an organization that you believe in.
If you’re interested in supporting a particular organization but are worried about having enough money, think about contributing to a charitable gift annuity (CGA). For as little as $5,000, you will receive income for life. The interest rate you would receive is based on age (for example 5.7% at age 55 and 8.0% at age 80). You can also defer payment if you are younger (at age 50 you would receive over 12% if you defer the first payment until you are 65). You can also contribute to a CGA for one life or two (you and another loved one). You are eligible for an immediate tax deduction on a portion of your gift. Plus a substantial portion of each quarterly payment to you may remain tax free for a number of years. If you use appreciated securities to establish a CGA, you can reduce and defer capital gains taxes. Your money is guaranteed, even on the minute chance that the charity you support goes out of business. Your money is held in an account where the majority of the money that you and other gift annuity supporters donate cannot by law be touched. The charity you support through this type of contribution will benefit by retaining any of the remaining portion of your donation after your lifetime for their tax-exempt purposes.
You can also support a worthwhile charity by making a donation of appreciated assets such as real estate or securities, or by naming the charity as a partial or sole beneficiary of your life insurance policy, IRA, 401k, or any other retirement assets.
As said above, please consult a qualified professional before making any decisions.
As a donor to several charities myself, I always feel very good after writing a check to a deserving cause. And feeling good about yourself, in my opinion, contributes to a longer, more enjoyable, and more fulfilling life.
For more information about CGAs, please e-mail me or call me at 800-4042898, ext. 205.
Cary Castle is director of Development.
