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Kyle Penney

I had the occasion recently to counsel a couple regarding their testamentary charitable plans. The experience reminded me that there are several tips that others might want to consider for their own charitable planning.

The first and foremost item for charitable planning is to have a will. Caring.com reported from a 2019 survey that 76% of adults indicated that having a will is important, yet only 40% actually have one. It goes without saying that if you have children, you need to have a will prepared as soon as they are born, to name guardians for them and provide for their care in the event anything happens to you. As they grow older and graduate from high school or college, you should revisit your will and make sure it reflects your intentions for your children, but more so, for the disposition of your stuff.

A will is the first place to begin considering and shaping your testamentary charitable giving plans. Early in life, your will might include a simple reference to give any remaining assets to XYZ Charity in the event you have no survivors. When you are young and poor, who needs anything more complex than that, right? But as you grow older and accumulate assets such as a home, personal property, insurance, retirement savings, inheritance from your heirs, business interests, etc., it becomes more important to put some effort into planning for the ultimate distribution of these resources.

For individuals without children or those whose children have successfully left the nest, a will can spell out which of your assets should be directed to various people or charities that are important to you. A will can provide for your interests in painstaking detail. The more detailed your will, the more likely it is to need frequent updating. I think the record in my experience is to implement the charitable intentions described in the 27th codicil of a will. Twenty seven! That is a lot of trips to the attorney to tweak the plan.

Instead of creating a new codicil for your will every time your charitable interests change, what I have suggested for many donors is to keep the instructions in your will broad, and provide the detail in a charitable fund agreement at East Texas Communities Foundation. For example, your will may indicate that a particular piece of real estate or your mineral interests in a certain county should be directed to the John and Jane Doe Charitable Fund at East Texas Communities Foundation. At ETCF, we can draft a document to create the John and Jane Doe Charitable Fund and include all the pertinent details about how the funds will be used to support your charitable interests.

A fund at ETCF can be as simple or complex as you wish. We have many funds that support only one charity and many other funds that support a long list of charities. We have scholarship funds and community funds that take applications and utilize committees to select the annual beneficiaries. We have other funds that follow a strict formula for computing distributions and making grants. We also have funds that plan to spend down over time and other funds that are invested with the intention to make annual distributions to charity forever. In the end, the method you choose to make distributions can reflect your personal giving priorities, even as those priorities change over time.

One of the key reasons to draft a charitable fund agreement for your testamentary giving while you are still living is to keep your charitable plans in sync with your current charitable interests. A charitable fund is a gift agreement and is easily updated without requiring changes to your will or estate plans. Think of it this way: Your last will and testament describes what assets you are leaving to charity, and your charitable fund agreement describes how those assets will be invested and/or distributed to the charities that are important to you. Our motto at ETCF is “Simplified Charitable Giving,” and creating a testamentary charitable fund that coordinates with your estate plans may be your next best opportunity to give well.

Guest columnist Kyle Penney is president of East Texas Communities Foundation and a Chartered Advisor in Philanthropy. Philanthropy builds community and changes lives. ETCF supports philanthropy by providing simple ways for donors to achieve their charitable goals. To learn more about ETCF or to discuss your charitable giving, contact Kyle at 866-533-3823 or email questions or comments to etcf@etcf.org. More information is available at www.etcf.org.

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