Sources of Charity

By: Richard Carnes

Suppose a person has a total estate of $1,000,000 but only $200,000 of it is governed by his will. If he includes in his will a charitable bequest of 10 percent of his residual estate, the charity would receive no more than $20,000, which may be far less than he intended.

Such a scenario is far more likely than one might imagine. Consider what the following assets have in common: 

• Real estate and bank accounts held in joint tenancy. 
• Bank and brokerage accounts transferable on death to a beneficiary. 
• Life insurance proceeds payable to named beneficiaries. 
• Retirement benefits payable to a spouse, children, or others. 

The answer is that none of these assets is controlled by your will. They all transfer directly to the joint tenant or named beneficiary. If you neither owned nor had an interest in assets other than those on this list, your will would have no effect—and the intended beneficiaries of your will (charitable and otherwise) would get nothing. Of course, most of us do own other assets that are governed by our will. 

When developing an estate plan, it is essential to coordinate probate assets (those that pass under your will) and non-probate assets (those that pass outside your will). Failure to do this can result in unintended inequities.

If you are planning an end-of-life gift to your church or other Christian ministry, you should consider which assets might be the source of that gift. Keep in mind that there are numerous ways of planning a gift besides providing a charitable bequest. Here are three: 

• You could name your church as a beneficiary of remaining retirement funds (a type of gift that has significant tax advantages). 
• You could make your church a beneficiary of a life insurance policy. 
• You could sign a transfer-on-death beneficiary form for a bank or brokerage account. 

To make intentional plans to care for your family and ministries God is inspiring you to support, call upon the Kentucky Baptist Foundation as a helpful partner. You may contact us at our toll-free number (866) 489-3533.

Richard Carnes is the president of the Kentucky Baptist Foundation, P O Box 436389, Louisville, KY 40253; (866) 489-3533; KYBaptistFoundation.org

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.