Burwell: The gift of a lifetimeWritten by Keith Burwell | | Keith@toledocf.org
There are numerous stories like this, of donors and friends of Toledo Community Foundation. Nancy Flick (not her real name) and her husband owned a bakery and enjoyed a great deal of success and prominence in Toledo. After her husband passed away two years ago, Nancy decided it was time for her to update her will.
Part of her plan was to give something back to the community the Flicks had loved as residents and business owners.
“Not only did Tom and I love our town, but we felt as though we owed it a lot for the success of our business,” Nancy said.
With the help of her professional adviser, Nancy revised her will to include an inheritance for the Flicks’ college-age niece, with the remainder creating their family fund at Toledo Community Foundation, a Field of Interest Fund designed to support community development efforts.
Because it will be endowed, her gift will provide a growing source of community funding for neighborhood revitalization, publicly accessible artwork, and other community improvements.
“I like knowing that when I’m gone, our legacy will be one of helping others strengthen our community,” Nancy said.
Why plan your estate?
The important part of this story is that the Flicks had a plan. When planned giving comes to mind, many think of charitable bequests made through wills or trusts. And while bequests make up about 90-95 percent of all planned gifts, there are several other lifetime charitable vehicles that you can consider in light of your estate and financial plans.
Including a charitable bequest in your will is a simple way to make a lasting gift to your community. And when you make this gift through your community foundation, we establish a special fund that benefits the community forever and becomes your personal legacy of giving. With few exceptions, everyone has an estate — even the young child with a custodial account in his name and the granddaughter who received a lovely piece of jewelry for her 16th birthday. Bottom line: If you own something of value, you have an estate. Whether you know it or not, you also have an estate plan. If you don’t plan for the distribution of your assets, the federal government has a backup plan.
Some assets bypass a will entirely and go directly to the beneficiaries listed. Otherwise, the state decides who gets what. Each state has a prescribed order for the distribution of property of those who die with no will.
This is why estate planning is so important, no matter how small your estate may be and especially if you don’t have any heirs. It allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want and when you want. It permits you to save as much as possible on taxes, court costs and attorneys’ fees; and it affords the comfort that your loved ones can mourn your loss without being simultaneously burdened with unnecessary red tape and financial confusion. Further, a well-planned estate or will can help reduce estate taxes.
Estate and gift taxes are part of a transfer tax system that is separate from the income tax system we all know and love so well each April. Gift taxes apply to certain transfers of assets or interests in property that a person (donor) makes to another (donee) while still alive. Estate taxes come into play after a person’s death. Under U.S. tax law, whatever you own at your death is subject to the federal estate tax.
However, under the Economic Growth and Tax Relief Reconciliation Act legislation passed in 2001 for the year 2010, a deceased person’s estate is free from the federal estate tax. That means no one has to worry about estate tax diminishing what they leave to their loved ones if they die during 2010.
But unless Congress acts before the end of 2010, the estate tax will come roaring back in 2011, as the 2001 legislation included a provision that a stricter estate tax would return in 2011. If no legislative action is taken before the end of 2010, next year a federal estate tax of 55 percent will be assessed on estates of more than $1 million.
Further, it is believed that whatever version of the estate tax is agreed upon will be permanent. As Congress continues that debate, you can give the gift of a lifetime to your heirs by being proactive with your estate planning. It is your personal opportunity to make decisions concerning your assets, finance and health care. It is both a way to assign your assets to heirs, make a gift to the community and a way to perpetuate your legacy.
At Toledo Community Foundation, we encourage everyone to plan for their estate — estate tax or not, large or small — it is important for your family. It is important for your community. And with less than 6 percent of Americans having a will or any estate planning, this is the precise opportunity to do it. Do it for your family and do it for your community. Need help? Contact the Foundation. Our goal is to help the community grow and you are the community.
Keith Burwell is president of Toledo Community Foundation. To learn more, contact Philanthropic Services Officers at (419) 241-5049 or e-mail Bridget Brell Holt at Bridget@toledocf.org or Kris Theisen at Kris@toledocf.org.