Changes Ahead for Planned Giving?

As promised, we are continuing with our follow-up to Dr. Russell James‘ webinar “Wills That Won’t – What the Decline of Wills and Estate Plans Means for Planned Giving Marketing” (click here to see the webinar).  A special thanks to Dr. James, who shared his powerpoint slides with me, and to MarketSmart who hosted the free webinar.

Let’s get right to Dr. James’ headline and feature slide.  Take a close look at this slide and think about it for a few moments:

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This chart shows us a pretty steep decline in the rate of age 55+ U.S. population using Wills or Trusts.  What is going on here?  Less estate plans equals less planned giving dollars.  Correct?

Take a look at this second chart that breaks down the “Will Alone” age 55+ group by age segments (Those using Living Trusts actually saw increased usage by the 55+ population over these years but it was a much smaller group):

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I am seeing one really big issue for planned giving in the future.

To me, this chart is confirming that Baby Boomers are not as tied to Wills as their predecessors.  That is putting it mildly – easily over 60% of this cohort might not rely on standard wills to distribute their estates.

One other point that Dr. James pointed out in his webinar was the increasing use of “transfer on death” deeds for real estate and other things normally covered by wills.

Put these two facts together – decreasing use of wills and increasing use of transfers on death – and we have massive potential change for the planned giving world upon us within a few years.

When I do my training sessions, I usually reserve one or two slides for “pay on death” gifts.  After seeing Dr. James’ presentation, I am thinking that fundraisers need to be better prepared on these options.  Banks accounts, IRAs, retirement accounts, sometimes real estate, life insurance, and so on – all can be transferred outside of one’s will to heirs/charitable interests.  Planned giving is not just about getting into as many peoples’ wills as possible.

Anyway, as Dr. James mentions in the webinar, there are a bunch of reasons why even getting written into a will doesn’t guarantee an actual gift (actually, earlier research from Dr. James suggested that close to 60% of charitable bequest intending individuals never actually saw the charitable intentions come to fruition).

For me, this raises a lot of questions.  Simple bequests have always been the “bread and butter” of  planned giving.  Yet, we see a trend that counters this history and should make us wonder how to market our programs to account for this trend.

Next up for new posts:

  • The Baby Bust v. the Baby Boom
  • What ever happened to the Boston College/Havens-Schervish Wealth Transfer predictions?
  • Rates of childlessness and/or never married among Boomers – maybe Nonprofits will see an explosion in planned giving dollars after all?

Thank you as always for staying tuned into the Planned Giving Blog!

3 comments

  1. It used to be true that fewer than one in five—actually 19.5%—of taxable estates included any charitable bequests at all, indicating that this common-sense philanthropic instrument was underutilized, its philanthropic potential far from realized. What is the equivalent number these days, and if it is still underutilized, has the planned giving profession any remedies to propose?

    1. Click through here for a slide with IRS data quoted in Giving USA 2012 showing different rates for charitable bequests from taxable estates.
      https://plannedgivingadvisors.com/?attachment_id=3825
      19.5% sounds correct for the “lower level” taxable estates but the percentages go up as the size of the estates go up.
      To me, the rates of charitable bequests among taxable estates is so much higher than the rest of population (which is around 5% of all descendants and 10% of all those dying with any estate plans), that I tell fundraisers that they can not ignore their wealthier crowd for planned giving for just major gifts – those with potentially taxable estates have might higher rates of charitable bequests! So to answer your question, I have no answer except to focus on the best populations that your nonprofit has its relationships with.
      Thanks for commenting!

  2. Does this data take into account the concentration of wealth that has been occurring over this same period of time? Is it possible that the percentage of those leaving donations through wills is dropping at least in part because a smaller percentage of North Americans hold greater and greater wealth? If this is the case, then the decline may have less to do with avoiding wills and more to do with lack of funds. Over the same period of time, do you know high-wealth individuals have lowered their funds left through their wills? Curious to know.

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