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creating your legacy - by carole spainhour
 Carole Spainhour has provided focused expertise in Elder Law and Estate Planning since 1996. Ms. Spainhour serves on the governing Council of the NC Bar Association Elder Law Section, serves as Chapter Editor of the NC Estate Administration Manual for the Estate Planning and Fiduciary Law Section of the NCBar Association. Her practice is in Boone, NC.
An incredibly large number of generous Americans — of modest, average, and wealthy means—include charities like the Blue Ridge Parkway Foundation in their estate plans. I know this from my estate planning law practice. Many are concerned about preserving and protecting the lands that the Blue Ridge Parkway travels across.
Your “estate” is the sum of your assets, including your home, insurance policies, retirement accounts and bank accounts. You direct how your assets will pass upon your death in one of three ways - (1) by ownership registration (for example, joint with rights of survivorship) (2) by beneficiary designation or (3) by an instrument such as a will or trust.
In estate planning we “choreograph” the assets to go to the intended beneficiaries in an effective and efficient manner, while minimizing or avoiding probate and taxes. Clients are often surprised to find out about the tax benefits of charitable giving. From the very beginning of our income, gift and estate tax laws, almost 100 years ago, those laws have encouraged charitable contributions. Many tax incentives involve lifetime giving, which I will address in a future article. However most gifts are made in a testamentary fashion, that is at death.
Planning can be fine tuned to meet your requirements. We often use the technique of “collaring” a charitable gift to meet the client’s objectives. If the total estate is under a certain amount, the gift is reduced or skipped altogether so more assets pass to family. Conversely if the estate is large enough to otherwise have an estate tax liability, the gift increases in order to eliminate the estate tax.
You may say “I don’t have any estate tax worries”. This is quite true for most, especially as the estate tax exemption edges up. But have you thought about the income tax consequences of your IRAs and pension plans? These assets (other than Roth plans) have built in income tax liability, which will fall upon your heirs. As the beneficiary withdraws from the IRA, he pays income tax on the distributions. So a $10,000 account may net $6,500 to your family member. Contrast this to naming a qualified charity as a beneficiary of the account. The distribution passes income tax free, and the charity realizes the full $10,000. You can use this technique to “supercharge” a testamentary gift. You may also name the charity as a beneficiary of only part of an account while leaving the rest to family members.
Naming opportunities are offered by many charities, including the Blue Ridge Parkway Foundation, which memorialize your commitment to the charity. Bequests require specific language, and it is wise to consult with a knowledgeable attorney in these matters.
Feel free to contact the Foundation office if you have any other questions. Contact the executive director, or call 336-721.0260
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