Your Gift Can Teach Philanthropy to Your Children While Maintaining Their InheritancePosted December 2016
J. C. Penney once asked, “How can we expect our children to know and experience the joy of giving unless we teach them that the greater pleasure in life lies in the art of giving rather than receiving?”
The most effective parent-teachers are those who are themselves generous—but some parents are in a dilemma because they would like to convey their philanthropic values to their children but not at the expense of financial legacies to them. You can accomplish both objectives by making one of several different types of planned gifts.
Your children can benefit from and help with your charitable trust
A charitable remainder trust can provide payments to your children for life or for a term of years and then pay the remaining principal to one or more charities such as our organization—charities that you and your children have discussed.
Another method, which is the reverse of the first technique, is for you to establish a charitable lead trust that would make payments to one or more charities for a certain number of years and then pay the remaining principal to your children. Again, you could consult with your children about the recipients and purposes of the annual charitable payments. Your children thus become engaged with their communities while awaiting a financial inheritance.
Small-percentage bequests and beneficiary designations can also be teaching tools
Another strategy is to leave a fraction of your estate—10%, for example—to our organization and the balance to your children. This can be done either through a charitable bequest or by naming us as beneficiary of a percentage of remaining funds in a retirement fund. You can explain to your children that a gift to charitable organizations that promote a healthy community is, in a sense, part of their inheritance. And you can encourage your children to consider doing the same with a portion of their own estates.
Children can help with family foundations and donor advised funds
If you are sufficiently wealthy and have adult children who are interested in operating an organization, you could establish a private foundation and name the children as board members. Eventually the children would run the foundation and thereby become attuned to their communities—and have more frequent contact with each other.
If creating a private foundation is impractical, an alternative is to establish a donor advised fund at a community foundation. You and your children could discuss the charities you would like to support and then convey your wishes to the foundation. Your children could carry on this tradition for the next generation, continuing to bring your family closer together through philanthropy.
Modeling philanthropy makes children more philanthropic
An impressive 71% of adult children with philanthropic parents became philanthropic themselves, according to a study by two economics professors at Indiana University and the Lilly Family School of Philanthropy. While at home, these children likely observed their parents volunteering and donating, were exposed to the work of charities, and perhaps saw their parents being recognized for their generosity and service.
You may have already set a wonderful example of philanthropy for your children, and you are proud of the generous and caring adults they have become. If you now want to reinforce the lessons you have taught—and do it in a way that saves taxes and is financially beneficial—we would be pleased to provide some ideas for your consideration.
|Share This Post:|
For More Information
- Contact Elizabeth Halajian at (312) 334-2460 or firstname.lastname@example.org for additional information on designating your gift.
- Seek the advice of your financial or legal advisor.
- If you include the Harris Theater in your plans, please use our legal name and federal tax ID.
Legal Name: Music and Dance Theater Chicago, Inc.
Address: 205 East Randolph Drive, Chicago, IL 60601
Federal Tax ID Number: 36-3930153
© Pentera, Inc. Planned giving content. All rights reserved.