AASP: Tips and Traps in Tracking Planned Gifts

Presenter: John Elbare, Forida Philanthropic Advisors

*"Dealing with what the planned giving officer dragged in" -- hilarious!

*90 - 95% of all planned gifts are revocable.

*Proper tracking is a key to good stewardship, which is very important to maintaining revocable gifts.

*Marketability is the primary issue around accepting a piece of real estate. Do a marketability review. Consider liability as well, e.g. pollution. Don't try to handle these issues in-house. It's accepted practice for the donor to pay for the appraisal and environmental survey.

*New community foundations are being set up to accept real estate on behalf of charities, sell it and then give the proceeds to the charity.

*Bequests: Good practice is keeping a copy of the will, in case you are the only surviving beneficiary. It's a donor stewardship issue, not a "prove you left us the money" issue.

*You don't have to accept a bequest, e.g. bad real estate.

*John suggests updating the present value of planned gifts on a quarterly basis.

*Average bequest is $50K. You can conservatively estimate the future value of a planned gift of unknown amount based on this (use $25K). Or, average your organization's bequests, and use that.

*Ask donors to discuss their bequest intentions with their families, to avoid perceptions of undue influence. And stay clear of elders with mental capacity issues.

*Actively monitor probates. Ask the executor for a copy of the will, an inventory of assets, and to be notified of all actions pertaining to the estate. You can also ask for an early distribution of your share, i.e. before all estate taxes are paid.

*Gift annuities: Be on time with payments and 1099-R forms. Watch out for varying state laws. There's an increasing risk of donors outliving their life expectancy, and having the annuity go under water. Beware of restricted annuities: what if the fund doesn't have enough money remaining to fulfill the donor's wishes?

*Charitable remainder trusts: Know whether the trust is revocable. Trusts with the donor as trustee are a red flag -- they are often incorrectly established. Beware of trusts with a payout rate that is too high: 5% is good.

*Life insurance: New policies are most likely to be problematic, since they don't yet have any value. Monitor the cash value on an annual basis. If the cash value is going down, get rid of it. Stay out of monitoring premium payments -- ask the donor to set up an automatic payment. Life insurance is very tricky!