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Balancing Charitable Giving and Passing Wealth to Children

Discussions about money, especially estate planning, can be emotionally charged for anyone, and they are often made more complicated by the decision of how much wealth to leave children. Striking the right balance between providing for them and encouraging their own financial independence can be tricky and difficult for many clients.

The Athens Area Community Foundation is skilled in helping parents incorporate charitable giving into their plans and ensuring that their children are not left out.

How Much Is Too Much?

As parents consider what to leave behind, a common concern becomes: How much is too much to gift your children? This question is top of mind for wealthy clients who worry that leaving large sums to their children might do more harm than good. While the financial security an inheritance provides is undeniable, there are concerns that it could demotivate children from pursuing their own financial independence.
For many parents, the fear is that wealth could lead to entitlement or dependency or that children might miss out on the personal rewards that come from building their own financial success. Especially for parents who struggled to make their own way in the world, they hope their children will have the same character-building experiences.

Integrating Charitable Giving into Estate Plans

For these families, the Athens Area Community Foundation can offer guidance and strategies to ensure that wealth transfer aligns with both the parents’ wishes and their children’s long-term well-being. Incorporating charitable giving into estate plans offers way for parents to provide for their children, while also contributing to causes they care about.

Establishing Philanthropic Components in Estate Plans

One option is to create an estate plan where children receive only an amount that does not incur estate taxes. Then, the remainder of the estate is directed to a charity chosen by the parents. This approach both minimizes tax liability and ensures that a portion of the estate is supporting charitable causes.

Setting Up a Donor-Advised Fund

Another option is to establish a donor-advised fund at the Community Foundation, which allows clients support their favorite charities during their lifetimes while also involving their children. The terms of the fund can be set up so that the children step in as successor advisors after the parents’ deaths.As successor advisors to a donor-advised fund, children can work with the Community Foundation to recommend grants to charities, support areas of interest pre-selected by their parents, or both.

Many clients find this favorable, not only because it can help avoid estate tax, but also because it lets children remain connected to their wealth in a meaningful and purposeful way.

Family-Focused Giving with AACF

The Athens Area Community Foundation is here to help families and their advisors tackle these difficult conversations. By partnering with our team, parents can create an estate plan that meets their financial and tax goals while ensuring that their children grow up with a healthy relationship to wealth.