Great Wealth Transfer Is Back?

I am going to admit that throwing around the idea of Trillions of dollars in Wealth Transfer going to Nonprofits over the next 46 years actually makes my brain a little tired. Actually, just seeing an email from Paul Schervish this week got me a bit sleepy.

Want to read the latest Wealth Transfer predictions from Boston College and Mr. Schervish, here you go:


How about the headline?

New Report Predicts U.S. Wealth Transfer of $59Trillion, With $6.3 Trillion in Charitable Bequests, from 2007-2061
Additional Lifetime Giving of $20.6 Trillion, Say Boston College Researchers

How about the highlights?

  • Through estates, heirs will receive $36 trillion.
  • Federal estate taxes will claim $5.6 trillion.
  • The sum directed from final estates (for which there is no surviving spouse) toward charity is estimated at $6.3 trillion.
  • Total gifts to charity during the study period are vastly greater, according to the study, which estimates that lifetime giving will yield an additional $20.6 trillion for charity from 2007-2061

I know it sounds like a lot of money for nonprofits, through Planned Giving no less, but it still gets me weary looking at this stuff.

What do you think?

No charitable IRA rollover, no problem.

I love that title.  Not mine though.  It is the title to an article in Investment News (click to see it) that picks up on a recent theme of mine of encouraging donors to go ahead and use IRA funds (under various caveats) for charitable giving (with or without the IRA giving provision!).  The author of the article is Andrew Hibel, president and founder of The Advise Us Fund, a donor-focused donor-advised fund (cool website that has me a bit jealous!).

He has an interesting suggestion for donors.  He suggests that a donor withdraw from his IRA whatever amount he plans on giving.  Then, donate long-term appreciated securities of an equal value to a donor advised fund to offset the income incurred by the IRA withdrawal.  A pretty nifty idea.  Donor also avoids the capital gain on the securities and now has DAF flexibility to grant fund as he wishes.

He throws in one more idea.  If donor likes the stock he just donated, why not buy it back with the cash he just received from his IRA withdrawal?  That puts donor in a better tax position with that stock.  I am not sure we need this last suggestion – I think the idea up until that point works fine but I guess it might work for some that last step.

Of course, all of this talk of multi-step transactions may not be very practical.  I mentioned in a previous post that I was recently involved in a situation where a donor planned on making a significant IRA transfer gift (this year).  He would instruct the IRA administrator to send the funds to the charity.  If the IRA law passes, it qualifies as an IRA rollover gift.  If not, the gift counts as a taxable withdrawal but there would also be an offsetting income tax deduction.  The real cost to the donor of the law not passing would have been $0 (i.e. no negatives either way). I thought we would be seeing a check any day.

Nope.  Donor’s accountant told the donor to wait to see what happens with the law, in any case.  It sounded simple enough to me but it may have been a bit too complex. In fact, the more complex a gift situation, the less likely it will ever happen.  At least that is what I have seen throughout my career.