Bequests

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!

What moves people to add any charities to their estate plans?

blog post version_069As promised in my previous post, I plan to slowly release different data points from Russell James’ recent webinar “WHAT THE DECLINE OF WILLS AND ESTATE PLANS MEANS FOR PLANNED GIFT MARKETING” (click to view webinar) which looked at data from a long-term (15+ years) health and retirement study that also tracked attitudes and actions regarding charitable estate intentions.  The study involved over 25,000 respondents who answered questions every two years about a series of health and retirement issues; over 10,000 respondents passed away during the study giving us plenty of pre- and post-mortem data points never seen before in the planned giving world.

Look at the top ten factors to cause someone to put charity in their estate plans.  7 out of 10 have to do with coming to terms with one’s mortality.  In other words, testamentary planned giving (bequests) happen when people realize they will not live forever.

Now take a look at the top ten factors for REMOVING charity from one’s will:

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The exact same 7 factors for adding charities were in the top ten for removing charities!  Basically, this seems to tell us that anything that causes someone to address their estate plans – most likely coming from a realization of one own mortality – is a cause for potential change.

What does this mean for nonprofit planned giving programs?  Well, these data points should at a minimum teach fundraisers about when they should talk to prospects about planned giving.  The problem is that waiting until these death awakening moments happen may be too late.  Lots to think about here.

Stay tuned for more interesting findings to come!

Results in from bequest counting poll!

Thank you to the 30 or so people who took our informal poll on the counting of bequests!!

Now, you might say that 30 people is not much of a poll statistically.  True.  But, the results are useful in that they reflect the ranges of practices out there and options to consider.  And, I believe the results are actually a nice representation of the whole picture.

Here are the results, with my comments to follow each slide:

blog question 1

I am actually surprised at this result. I just assumed everyone, or almost everyone, includes realized  bequests in their annual fundraising totals.  Maybe the question was confusing as I should have asked “whether your org includes realized bequests in  your annual fundraising totals?”

Blog question 2

I would like to see this at 100% YES but at least this tells us that not every organization will use the so-called “irrevocable bequest” to pad their campaign numbers.  Bottom line: campaigns need the flexibility to include irrevocable bequest intents as long as reasonable age guidelines are used (i.e. over age 65 or 70 or older!) and this is not overly relied upon (will land your org into not welcomed litigation).

Blog question 3

OK, nobody went over 50% of their campaign with irrevocable bequests – not surprising.  But, most being less than 5% of their campaigns shows that irrevocable bequests are not overly popular.

Blog question 4

Who counts “revocable” bequests intents in their campaigns?!  Well, some do but it is certainly not the norm.  I am surprised that so many of the voters said they did – 8 out of 25 voters on this particular question.  That is 8 more than I expected but I am guessing that institutions are using their campaigns as springboards for their planned giving programs. In that case, I think it is a great idea to give some recognition in your campaigns for these revocable “gifts”.

Blog question 5

I had assumed that most charitable bequests are overwhelmingly unrestricted.  Either I am wrong or the respondents are not so representative of experiences I’ve seen.

Blog question 6

Lastly, I like the answers to this question – meaning the policies run the gamut.  And, that is fine because this is purely a policy question!  Your organization’s choice and even when your board decides to put unrestricted bequests into endowment, the funds are not permanently restricted and can be realized by board at any time!

Thank you to all who participated in this informal poll!  Please share this post with others – we are on a membership drive to push our subscribers over a 1,000 and reach 100,000 visitors to the blog.

$6.7 Million Bequest from 1891 Alumni (1891, not 1991) received by McDaniel College!

I thought that I had seen the oldest planned giving case stretching back into the 1800’s when Huguette Clark (daugher of William Andrews Clark – U.S. Senator/copper baron from late 1800s) lived in the hospital I worked for (she voluntarily lived her last 20+ years – to age 104 – at Beth Israel Medical Center in NY).

gI_82602_dorseyWell, Philip Henry Dorsey – an 1891 graduate of Western Maryland College (now McDaniel) – topped my oldest planned giving story by leaving a bequest that is just reaching the college now!

Here is a synopsis of the story: http://www.prweb.com/releases/2013/4/prweb10680290.htm

This gentleman passed away in 1945 with a provision in his estate to create a trust that would pay for “family descendants” to attend the college.  My guess is that the trustee and/or family finally realized that sitting on $6 million+ (and waiting for relatives to decide to go to this particular college) didn’t make sense anymore and they worked out something with the college to take the principal, create a scholarship fund, and still somehow offer scholarships to his descendants.

What can we learn from the story, besides hoping that attorneys will guide their clients away from unusual arrangements like this?  It seems to me that – and I have given this advice out to surprised colleagues and clients – any unusual, outdated trust or will provision CAN BE CHANGED!  Courts love fixing these kind of things, especially if there is agreement among the parties.

The only question I have here – what took them so long to fix this one?