How to establish a charitable giving legacy

How do you go about making charitable giving part of your estate plan? If there’s a specific cause that you’re passionate about how do you maximize the impact of your charitable contribution? Jane Greenfield of Vanguard Charitable and Vanguard estate planning expert Alisa Shin discuss the options you have that would allow you to preserve your charitable interests after you’re gone. 

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Notes:
All investing is subject to risk, including the possible loss of the money you invest.

This webcast is for educational purposes only. We recommend that you consult a tax or financial advisor about your individual situation.

Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency.

Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard. A majority of Vanguard Charitable’s trustees are independent of Vanguard.


TRANSCRIPT

Gary Gamma: Jane, let’s move to the next question. “How should we determine how much of our assets should go to charity, and what options through Vanguard are available for long-term charitable funding?” That came from James, out in California.

Jane Greenfield: Okay, well, I’ll start with the first part of James’s question which is, “How do you determine how much should be given to charity out of your estate plan?” And I would say that really— That the answer to that differs by person. The way we like to talk to our clients to figure out that answer is by asking a different question and that is, “What is the purpose of your wealth?” We find that when clients really step back and try to think about what the purpose of their wealth is, they have a better chance of attacking that. So, for example, there’s really three places that your wealth ends up going to: heirs, to charity, and to the government via taxes. So, we’ve seen a variety of different answers to that question, “What is the purpose of your wealth?” For example, some people may say, “I’ve been very lucky, I’ve amassed wealth, and I really want my kids to get most of it. I want them to really benefit and a smaller amount to charity.” Other people would say the exact opposite. In fact, I met with a client yesterday who has one daughter who he, by the way, loves this daughter. But he said, “I want her to get nothing. I want her to get zero because I want her to really make her own wealth and the purpose of my wealth is to support the causes that are important to me.” He’s very focused on kindergarten K through 12, and that’s his purpose. I have never met anyone who said “the government” is the purpose of their wealth. No one’s in it for paying the taxes. So, that obviously is an informing element. But I think if you stepped back and answered that question, then you’re in good shape to talk to your planner and figure out what to do. And I guess, the second part of the question is, “What options does Vanguard have?” Is that for long-term charitable giving?

Gary Gamma: Exactly.

Jane Greenfield: So, I’ll start by talking about donor-advised funds. So, Vanguard Charitable is actually separate from Vanguard, but we work with Vanguard quite a bit because 80% of our clients are shared clients. I’ll start by telling you what donor-advised funding is because that’s what Vanguard Charitable is. A donor-advised fund is basically a longer-term charitable giving vehicle that is administered by a public charity on behalf of individuals, families, and organizations. And this is the way it works. You give a donation to your donor-advised fund at Vanguard Charitable and that donation could be cash, it could be securities, noncash assets, and because we’re a charity, you get a tax deduction. You give up ownership of your assets, but you retain some advising privileges. So, therefore, you can advise how you invest those assets, you choose the investments, you advise how to donate, and where to donate. You can even tell us whether you want to donate anonymously and you can also set up who your successors to the account might be so that you can start kind of a process of giving with your heirs. So, that would certainly be one vehicle to leverage.

Alisa Shin: Another way that Vanguard can help with a long-term charitable giving is through its trust services that we have. And so, a number of our clients will either use charitable lead trusts or charitable remainder trusts as a way to kind of leverage their exemption, but also take advantage of income tax deduction for the charitable giving. But also more importantly, for a lot of our clients is creating that pot, so to speak, of legacy charitable giving for their family. And so, in that regard, Vanguard does have several services where we can either help manage those charitable dollars in the trust or even in the family’s private foundation as well as serving as trustee of these types of trusts that are involved and helping families make decisions about distributions, charities, and so forth.

Important information All investing is subject to risk, including the possible loss of the money you invest. This webcast is for educational purposes only. We recommend that you consult a tax or financial advisor about your individual situation. Vanguard Asset Management Services are provided by Vanguard National Trust Company, which is a federally chartered, limited-purpose trust company operated under the supervision of the Office of the Comptroller of the Currency. Although Vanguard provides certain investment management and administrative services to Vanguard Charitable pursuant to a service agreement, Vanguard Charitable is not a program or activity of Vanguard. A majority of Vanguard Charitable’s trustees are independent of Vanguard. © 2016 The Vanguard Group, Inc. All rights reserved.