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WHEN WE UPDATED our wills last year, my wife and I attempted to cover every imaginable scenario, including the future state of our children’s marriages, grandchildren, step-grandchildren and the like. Still, we and our lawyer missed one outlier scenario: What if our whole family was wiped out simultaneously? Think airplane or car crash.
This risk crossed my mind when our small family took a flight together for a recent vacation. Our core family is just six people: us and our two children, plus one child’s spouse and the other’s significant other. Because our tight-knit family spends plenty of time together, a catastrophic event could impact all of us.
Since we’d all be gone, you might ask, “Why even worry about your estate?” One concern is our multitude of distant relatives who could potentially raise a fuss. We’re not close to our cousins and feel no obligation to leave them a windfall. With no heirs, our estate would become “intestate,” with state law deciding its distribution—which is what happens with the two-thirds of the population who don’t have a will.
We’d prefer that our estate help people of our choosing, rather than going to our cousins’ or the state’s coffers. But who? This provides the same vexing philanthropic challenge as many billionaires have, but on a far smaller scale.
Our charitable giving has primarily been to local community organizations which may not be equipped to make good use of a large donation in one tranche. National charities can handle any size bequest, but some large charities seem burdened by administrative bloat. The everything-must-go scenario demanded further research.
Ultimately, we chose four charities: a trusted community organization from our previous Maryland residence that we’ve supported for decades, a new-to-us community foundation here in New Hampshire, a national forest foundation aligned with our hiking interests, and our college alma mater.
This diversification ensures we’d have a positive impact across multiple causes. Limiting to four charities also helps the third-party executor keep the time involved—and hence the cost—in check. At least we now have a plan, even if we feel a bit of remorse about all the worthy charities we passed over.
Both the New Hampshire foundation and our college make it easy to establish endowed funds. These endowed funds then enable grants in perpetuity, and we directed these grants toward regions, community needs and scholarship areas of personal interest. Likewise, we targeted the forestry bequest toward conservation and environmental support for any of our Virginia to New Hampshire favorites. That said, we were careful not to over-prescribe, because we know our causes’ needs may change.
Our law firm quickly updated our wills by adding these charities as contingent beneficiaries, should we no longer have any heirs. Our lawyer indicated most wills don’t include this extra contingency coverage, but that multi-layered contingencies are more common with trusts. Still, such contingencies might be a good idea for readers with a small circle of beneficiaries, as well as shorter lists of possible executors or trustees. Adding the contingency clause would have been cost-free if we’d requested it when we drew up our wills, rather than adding the wording later.
In all this, choosing the charities was the tough part. Still, there was a silver lining: We’ve identified a new community charity for future giving, including for qualified charitable distributions and charitable gift annuity purchases once we’re in our 70s.
John Yeigh is an author, coach and youth sports advocate. His book “Win the Youth Sports Game” was published in 2021. John retired in 2017 from the oil industry, where he negotiated financial details for multi-billion-dollar international projects. Check out his earlier articles.
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You definitely improved your estate matters by naming those nonprofits. However, I would contend even better would be making them primary beneficiaries or heirs for some of your funds. Hopefully it should be on the table for all of us to consider.
Thanks, John, and all the commenters. I will pick up my updated will today to proofread. I didn’t designate any charitable bequests because I’m planning to set up a charitable distribution fund through the company where my IRA’s are. Thanks, Dick Quinn, for suggesting more articles about donating to charities. I’m still trying to decide which of my current ones I want to benefit after I’m gone. How many? What percentage? I agree with John that a smaller number of well-chosen charities is a good idea.
This raises the question of what would happen to the money if all the beneficiaries on my IRAs were wiped out. Ditto those inheriting through TOD on my brokerage account. Unlikely in my case as they are all younger and scattered. My will does designate contingent beneficiaries but very little will pass via my will.
Good question. We have Vanguard and Fidelity which enable only 1 level of contingent beneficiaries (children after spouse is common) which can be managed and changed digitally. I believe they allow people, a trust or a charity as input, but we only have listed people. Any more complexity requires coverage in separate documents, a will or trust.
Nice article. It is just difficult for me to consider donating anything to my alma mater with present circumstances. A couple years ago, I personally witnessed at my alma mater the terrible culture that has been well documented in the media recently. Until that culture changes for the better, I have a very difficult time making any donation to my alma mater.
Hear, hear! I have two alma maters, having earned a B.A. at one and a Ph.D. at the other. Both were wonderful places when I attended as a student. Today I wouldn’t give a dime to either one.
Great article John. I think it’s important to remind everyone of establishing and keeping estate documents current and to your wishes. We need to update ours since we’ve moved to a new state. This will give us an opportunity to speak with our sons and their wives about their estate planning. Thanks for sharing this.
My wife and I recently updated our wills and did include this provision even though our immediate family including us contains 10 adults and 8 grandchildren. We’ve never traveled together, but vacation together at the same location at least once a year. You just never know. We designated our church and 4 other charities that are important to us.
Somebody needs to write an article on chartable giving and priorities for giving. It’s so personal perhaps there is no one answer.
Personally i do not understand giving to an alma mater. I am becoming more cynical about colleges and their use of money.
We favor local soup kitchens, other local organizations and church, but also places like St Judes and the Williamsburg Foundation.
Like I said no one or right answer, but interesting issue.
We do give to one of our alma maters—the one where we met as undergrads—but in a targeted way. We give regular donations to the student food pantry (for students with food insecurity) and to a program that supports students who have aged out of foster care with supplies (laptops, bedding, etc.) and mentoring. I’m not very happy with the current leadership of the university and don’t want to throw money at their general fund, but I’m happy to help needy, deserving students who are trying to improve their lives.
Dick, Charitable giving is definitely personal, and we’ve given it much thought. We allocated the majority to the MD and NH local charities which include soup kitchens. Our college and forestry conservation get less.
Our college did provide both of us a positive foundation for early employment in the tough 70’s, and note that our support is specifically to engineering and not the broader social programs. At least we now have a plan which is sensible to us.
Good thinking, John. There’s an added benefit—as a planner, you get the enjoyment of the planning process.
Indeed. While I certainly hope this situation never comes to pass, my wife and I do feel good about closing this gap. Our attorney told us that surprisingly, no heir situations are common, and unallocated estates regularly end up in the state’s coffers.
We’ve also protected against high executor fees by limiting and specifying the charities. I’d bet frugal and charitable Terry Kahn’s estate ($13 million) required plenty of fees to sort as it ended up going to 13 different charities after several years of proposal considerations.