When you think American billionaires, two names probably come to mind: Warren Buffett and Bill Gates. Buffett, the renowned “Oracle of Omaha,” seems to make his way into the news with surprising announcements. We saw one of these occasions last year when the Berkshire Hathaway chief and Microsoft CEO and founder Bill Gates stepped out and issued an unusual challenge.
They asked the richest individuals in America to consider pledging to donate at least half of their fortunes to charitable causes. Warren Buffett has made the statement that he will give away virtually all of his wealth as time goes on, so he is certainly willing to “walk the walk” as they say. In fact, he is making yearly contributions to the Bill and Melinda Gates foundation. At the time of his most recent contribution, he had given Berkshire Hathaway stock valued at over $10 billion to the foundation.
Of course billionaires are few and far between, but even ordinary people often want to give something back to charity when they’re planning their estates. Creating a charitable family foundation is expensive, and it costs a lot of money to keep it operational so this option is not practical for the vast majority of individuals. But there is a viable alternative in the form of donor advised funds.
With these funds you make a single initial contribution, but you can then direct the fund how grants will be issued. So in essence, you can give to multiple charities without incurring the hassle of dealing with many different entities. You get an income tax charitable deduction for the year during which the contribution was made even if you don’t make grant recommendations immediately. In addition, donations of appreciated securities are not subject to capital gains tax on those securities. And finally, the taxable value of your estate is reduced by the amount of the contributions that you make into the fund.
These funds are among the many estate planning options available if you plan during your lifetime.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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