As a consumer-driven society, for many — especially the younger generations, the question isn’t, “Can we afford it?” The question is, “Can we afford the monthly payment?” Also, as a “litigation friendly” society, individuals are caught up in lawsuits, divorces, and entanglement with creditors. So, how does a modern family plan their estate?
Martha was a widow who never believed she had the means to meet her philanthropic goals while meeting the needs of her heirs. Her retirement accounts totaled $268,000 and her assets $367,000 — for a combined worth of $635,000. However, with planning, Martha created an opportunity to make a charitable gift that she never dreamed possible. And, by leaving a portion of her estate to her heirs immediately and protecting the remaining assets, she was able to create an income stream for those whom she cared deeply.
Martha was financially savvy and knew that the money she set aside for the kids would likely grow over time. It’s this growth that she wanted to leave to her favorite charities. So, she used her retirement accounts to fund a charitable trust at her death. By using this charitable trust, it prevents her kids from liquidating her retirement accounts all at once and causing all of these funds to be counted as income in a single tax year. Designed to pay out five percent of the trust assets each year to her children for 20 years after her passing, this trust, combined with her immediate gifts, still allowed her to leave $635,000 to her kids. Additionally, at the end of this 20-year period, the charities she cared most about would share what was left — approximately $268,000!*
While her kids were successful, Martha did not want her kids to have access to all of her worldly possessions at once. She didn’t want them to feel like they didn’t have to work as hard, solely because they received an inheritance. She did want to provide a stream of income that could help them if they fell on hard times. And, she really hoped that her funds could provide a little something extra each year so their families could take a trip together or help with a project around the house. Martha is a good example of how a modern family achieves impactful estate plans.
United Church Homes is pleased to offer our friends and supporters a complimentary, values-based estate planning service from an expert estate planning advisor. Paul Grassmann, from Thompson & Associates, visits Ohio monthly to meet with and assist families or individuals as they navigate through various practical, emotional, and legal issues.