Q+A
Questions from the audience, with responses from Julie Schuldner, Shauna Scherer, and Julian and Kathy Donahue. Edited by Victoria Wright.
How often should we update our will or other estate plans?
Julie Schuldner: It’s generally recommended that you review and update your will or estate plans every 3 to 5 years. However, certain life events may necessitate a more frequent update of your estate plans, including the birth or the adoption of a child, changes in your financial status, changes in your health, an inheritance, starting a new business, or acquiring substantial assets. The death of a beneficiary or your executor may also require you to update your estate. Additionally, if you move to a different state or country, you may need to review your estate plans to ensure they comply with the legal requirements of that new location. In 2025, we will see the estate tax sunset, so changes in the tax law may necessitate you look at the tax implications of your estate plans. It is crucial to keep your plans up to date to avoid any potential conflicts and to ensure your assets are distributed according to your wishes.
Could you talk more about the difference between probate assets and non-probate assets?
Julie Schuldner: Probate assets are assets that are solely owned by the deceased person (cars, jewelry, real estate, etc.) and do not have a beneficiary designation. Your will provides instructions for how you want your assets to be distributed, and that process usually needs to go through probate. There are several advantages to probate, including oversight from the courts. Probate provides a structured legal process and helps prevent any disputes among heirs while ensuring that the deceased wishes are carried out. It also provides clear title transfer and legal protection. However, probate is expensive and time-consuming. There’s also a loss of privacy. Probate proceedings are typically public records, and so details about the deceit’s assets, debts, and beneficiaries are all made public. That’s why some donors form a trust where a trustee is assigned to distribute their assets.
Non-probate assets are financial accounts, retirement accounts, and investments that do not need to pass though probate. Non probate assets allow you to transfer wealth through beneficiary designations without having to go through the probate process.
Could you explain a little bit more about charitable gift annuities and their benefits?
Julie Schuldner: A charitable gift annuity is an agreement between the donor and the organization that provides the donor with payments for life, while also providing a generous charitable donation to Population Connection. The donor makes a gift to the organization upfront and, in return, they receive payments for life. It can be for one or more beneficiaries. A charitable gift annuity is a great option for individuals who are interested in the financial security of annuity payments, while still supporting one of their favorite charities.
Shauna Scherer: I also want to mention that you receive a charitable tax deduction in the year you create your charitable gift annuity. And that reflects the amount that should ultimately fund Population Connection’s mission.
How do you envision your planned gift impacting Population Connection’s mission long-term? How did you decide that a planned gift was best for you?
Julian and Kathy Donahue: We always make our donations to charities without conditions and without specifying any particular fund, program, or project. Because Kathy and I have worked in the public sector for a long time, we know how restrictive designations can be and how expensive it is just to operate a charity or an organization. So, all our gifts are unrestricted. We trust them to use the money where it’s most needed and can be most useful. Deciding on a planned gift was a simple next step for us. As I mentioned before, we had a huge capital gain from selling our property in Los Angeles, a house we’d owned for 41 years. So, the main reasons we decided to make a planned gift were, first, because there were substantial tax savings, and second, we wanted to help benefit an organization that we’d been supporting a good part of our lives, past our lifetime. Also, when I discovered the charitable gift annuity, I learned it guaranteed payments for as long as I’m alive. It’s lifetime income, and much of it is tax-free. So, it’s just a great investment while also helping Population Connection.
Can a stock be a planned gift? Would you put that in a will? Or is there another way to do that?
Julie Schuldner: Yes, you can leave a gift of stock through your estate! The most common way of doing this is to make Population Connection the beneficiary of any stocks you might own. This allows the organization to receive those stocks automatically once the donor passes away.
However, giving a gift of stock can be a great way to donate from a tax planning perspective during your lifetime. You may benefit from a charitable deduction equal to the value of the stock, and you would not have to pay any capital gains tax on the donated stock either. So that’s a nice benefit if you’re looking for a tax advantage.
Why is it better to leave your retirement account to a nonprofit as opposed to a loved one?
Julie Schuldner: It is better to leave your retirement account to a nonprofit for the tax benefits. When you put money in your retirement account, it’s pre-tax, so at some point, you will need to pay taxes on that money that you’ve earned. You are taxed when money is taken out of your retirement account. Therefore, if you did leave the remainder of your retirement account to an heir, they would have to pay taxes on the money that comes out of the account. However, if you make a charity the beneficiary of your retirement account, they do not have to pay taxes on it because they are a tax-exempt organization. So, if you do have multiple gifts and you want to include your heirs, think about making a charity the beneficiary of the retirement account and gifting your heir something else.
Do I have to include Population Connection in my will if I use the FreeWill service?
Shauna Scherer: No, you do not. You can use the FreeWill service to create your will without having to include any charitable beneficiaries. Of course, we hope you include Population Connection in your will, and we strongly encourage you to! But you’re welcome to use our link to create your will for free online regardless. And, I believe, once you create your will, you also have the option to make any changes through the FreeWill website in the future. So, maybe you’ll decide to include us in the future!
Senior Vice President for Advancement, Population Connection
Members of Population Connection, ZPG Society
Senior Consultant, Sharpe Group
Director of Planned Giving, Population Connection