In Advancement Podcast

Regularly review your beneficiary designations

Planned Giving Officer Keith Johnson discusses the importance of making sure your assets will actually go where you want them to when you’re gone, along with some tips on how to use charitable beneficiary designations to reduce your tax burden.

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Show Transcript:

Hi, my name is Keith Johnson, Planned Giving Officer at Cairn University and Director of The Regency Foundation.  Welcome to our wealth planning podcast series.  Throughout this podcast series we hope to provide some practical ideas on how to establish Godly wealth management habits that can be applied to your life.

Throughout this series we have been focusing on how to properly manage through 13 wealth management issues that most of us will face in our lifetime.  Most of these financial issues result in significant tax consequences.  The one tax savings tool that Congress allowed to remain in the new tax law is charitable giving.  Contributions made to charity such as Cairn University is by far the best way to reduce or avoid paying taxes.  Selecting the right charitable giving technique, however, is really important.

Planned Giving provides a way for people to control where their money will go and how it will be used rather than giving it to the US Government through taxes to spend.

Most people work very hard throughout their entire lifetime to accumulate assets.  For many, their goal is to have sufficient assets to produce income to take care of their family throughout life into retirement.  But a bigger concern is often making sure there are sufficient assets to take care of the family in the event of death of the primary bread winner.

One of the realities we all must face is the fact that there are risks that are outside of our control that can severely reduce or even wipe out one’s wealth.  A natural disaster, a severe economic downturn or a traumatic event can cause us to lose everything we have.  In reality, these are things that are totally in God’s hands and under his control. Even though we can try to protect ourselves against some of these events by purchasing insurance or having significant assets to weather the storm, there are many things that can threaten our wealth, our health and well-being that are simply out of our control.

The Bible is clear that our responsibility as believers is to be faithful in managing all that God entrusts to us.  He also wants us to respond in full faith and trust during the terrible times.

His Word instructs us to plan and prepare, but always be mindful that God is in control and will establish our plans as He sees fit.  He wants us to be wise in managing any risks that are in our control.

One of the risks many people seem to overlook when going through the financial planning process is the risk associated with improper titling of assets and beneficiary designations.

Many people fail to realize that the way property or accounts are titled dictate the way in which they are ultimately transferred at death.   Any asset that is titled to more than one person using a Joint Tenancy With Right of Survivorship designation will pass directly to the joint owner regardless of what your Will says.  But if multiple owners title their property using the Tenancy in Common form, any of the joint owners can sell their share without the authorization of the other owners.  In a similar way, any of the owners can give their portion of the property away by means of their Will.

Another area of risk to be aware of is beneficiary designations on such assets as retirement accounts, life insurance and benefits at work.  Named beneficiary designations always supersede what is written in a Will or other estate plan document.  Make sure you know who your named beneficiaries are on any account that allows them to be named.

The most important take away here is to make sure that your beneficiaries and co-owners of property are correct.  It is a best practice to take a look at them once each year or so.  It is especially important to check and verify any time there is a significant life change.  Some people have mistakenly given property to someone they never intended to include in their estate. Still others have mistakenly disinherited loved ones without meaning to.

Another area that requires careful attention relates to the creation of a revocable living trust.  Some people pay several thousand dollars to create a revocable living trust yet never transfer any assets into that trust.  If property has not been transferred into the trust by changing the actual title, the trust document will have no authority over that asset. Special is needed when a trust is named as beneficiary of retirement assets.  It is almost always better to name an individual rather than a trust or your estate.  You can also name Cairn University as beneficiary to avoid taxes.

Financial planning involves far more than just investing for retirement.  It includes important topics such as properly titling of assets and taking care when naming beneficiaries on accounts.

The Financial Planning process also includes Planned Giving.  Planned Giving provides a way for people to create a lasting legacy.  Planned Giving offers tools that provide a way for people to determine how they want to support causes and organizations they care about both in life and in death.  One important planned giving tool is naming Cairn University as a beneficiary of some or all of your estate.  For example, we are grateful for those who give gifts from their retirement accounts by naming the University as a beneficiary.  Doing so can save significant taxes.

As we go through this series of podcasts, I will continue to offer some unique ways you can support Cairn University.  Many of our alumni and friends have a desire to create a legacy by helping the University in a meaningful way at death.  Through proper asset titling and beneficiary designations, one can make a difference and leave a significant gift.

So, today’s planned giving idea:

  1. Name Cairn University as a beneficiary of some or all of your estate or retirement accounts.
  2. Instruct the custodian of your IRA to direct some or all of your Required Minimum Distributions to the University to eliminate taxes yet meet the RMD requirement each year.

We are so grateful for the significant number of donors who have given to the University through their estate.  Your support provides scholarships and grants to some 90% of our student body.

At Cairn University and The Regency Foundation we want to be a valuable resource of information and ideas you can use in a practical way. To that end, we are offering one hour of financial planning consultation at no charge to you.  If would like to take advantage of this benefit or if you have any questions, feel free to contact me by email at kjohnson@cairn.edu.

Thank you for your generosity and I look forward to sharing next month’s Advancement podcast.

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