I had the privilege of attending the Carter Center’s Winter this weekend in San Diego.

Carter Center’s Winter Weekend

The Weekend was an opportunity for the many supporters of the Carter Center to gather in a relaxed atmosphere and learn more about the Carter Center and its many philanthropic activities, including: waging peace (through election monitoring and programs to advance civil rights), fighting disease (such as the near-elimination of “river blindness”), and countless other programs. Part of the Weekend consisted of an auction of various donated items and Presidential memorabilia. The auction raised $1.6 million in furtherance of the Carter Center’s activities.

While attending the Weekend, I had the pleasure of attending a replaying of the interview which President Carter gave to Piers Morgan last week on CNN. What was interesting was that President Carter himself was there to narrate the interview and answer questions from the audience. He has incredible energy and drive, especially for someone who, at eighty-eight, could simply choose to coast.

I have the great pleasure of serving the Carter Center as a member of its national Planned Giving Advisory Council. Just as the Carter Center serves the world, the Council serves philanthropic organizations and the estate planning community in general. The Council’s purpose is not just to further the Carter Center and its laudable projects, but the cause of philanthropy and estate planning itself.

The great work of the Carter Center reminds me how important it is to raise the topic of charitable giving during the initial consultation. The estate planning process is foreign to most clients. Even the savviest client may not know that there are options for charitable giving that can reduce the net cost. For example, a charitable remainder trust can provide a tax benefit for the client while benefitting the charity. Raising the issue does the client a service, as well as helping the broader community.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com

Earlier this year, I was appointed to the national Planned Giving Advisory Council of the Carter Center. Recently, I gave a presentation at the Carter Center in Atlanta. The Carter Center is guided by a fundamental commitment to human rights and the alleviation of human suffering. It seeks to prevent and resolve conflicts, enhance freedom and democracy, and improve health. The Carter Center is the vision of President Jimmy Carter and First Lady Roslynn Carter. In 2002, President Carter earned a Nobel Peace Prize for his work through the Carter Center.

The presentation which I gave at the Carter Center focused on the impact on non-profits of a hypothetical estate tax repeal. While a repeal of the estate tax would be welcome news for the less than 1% of the population currently subject to the estate tax, studies suggest it would not be welcome news for charities.

My research shows that people leave bequests to charity for many reasons. They leave bequests due to altruism, for a sense of community, or because they simply have nobody else to whom they would rather leave their wealth. But, a strong motivator for some is the estate tax. It is a motivator because the “cost” of giving the wealth to charity is effectively reduced by the tax they would otherwise pay. For example, if the person were leaving $100,000 subject to a 50% tax, only $50,000 would go to the intended recipient. Thus, the “cost” of leaving the $100,000 to charity would be only $50,000 in that case, due to the charitable estate tax deduction.

Research indicates that elimination of the estate tax would decrease bequests by about 25%. Bequests are only 10% of all giving by individuals. So, even a 25% reduction would not seem catastrophic. However, the research also indicates that repeal of the estate tax would result in a substantial reduction in lifetime charitable giving. In fact, the aggregate reduction in giving to charity (bequests and lifetime gifts) would be greater than all the bequests currently made to charity.

This reduction in overall charitable giving by more than 10% would be particularly difficult for charities to absorb at a time that government is reducing its support for non-profit activities. There is also discussion of limiting or eliminating the charitable income tax deduction. This could be a devastating one-two punch to charities.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com