When Jeffrey Jones, an attorney specializing in trusts, estates and probate law, talks to clients about charitable giving, he encourages them to consider charitable giving independently, not just for tax reasons. He also believes in endowments, as he explained in a recent conversation with Ellen Pope, vice president and chief operating officer at the Maine Community Foundation.
MaineCF: When and how do you bring up charitable giving with clients?
Jeffrey Jones: I send a questionnaire, which the client fills out before the first conference. It asks, “If taxes weren’t a consideration, describe your estate plan.” After that it asks them some specific questions, one of which is, “Would you like to give any portion of your estate to charity?” At our first conference I review the answers, which in nearly every case leads to a conversation about charitable giving (even if the answer was “no”).
MaineCF: You place charitable goals before tax considerations?
Jones: My philosophy of estate planning is that you should plan your estate the way you want to and forget about the tax laws. Then my job is to structure the estate plan to accomplish the client’s wishes at the lowest tax cost.
A lot of [clients] don’t have a particular charitable organization that they want to benefit. That’s where the Maine Community Foundation can help, to add focus to estate plans. With a donor-advised fund, for example, clients can fine-tune what they want to achieve and be confident that the fund will be managed the way they want it to be.
MaineCF: You have made a strong case for endowment giving.
Jones: I think that’s the way we can keep the organizations that we think are valuable, going. Here’s a story that highlights that idea. A client of mine, a widower, made annual gifts to his church and to other organizations. He called me a few years ago and said he wanted to make a new will. He wanted to include a charitable bequest of $100,000 to be divided among five organizations. I asked him what motivated this idea and he said, “I give each of these organizations $500 a year. I want to do something to keep that going.” He was endowing his annual gift. I call that "the gift that keeps on giving."
MaineCF: What resources would you recommend to fellow attorneys?
Jones: The Maine Planned Giving Council is an excellent resource. I also like the Planned Giving Design Center on the Maine Community Foundation website. I signed up for the e-mail alerts, so I get notices of new tax laws and other news on a regular basis. I think it’s the best charitable planning resource for professionals on the web.
MaineCF: Are there any recent changes to laws covering charitable giving that you would bring up with your clients?
Jones: The latest thing is last year’s legislative change that allows some limited gifts from IRAs to charities without having a full tax impact. A lot of people with large IRAs have an impression that they’re going to be able to pass them on to the next generation. I have to give them the bad news: not only are IRAs subject to estate tax, they’re also subject to income tax when the money is taken out. If charitable giving is a part of an after-death estate plan, the best assets you can give are IRAs. You’re not only saving the estate taxes on those assets, you’re saving the income tax that any individual would pay.
Jeffrey W. Jones is a counselor at law based in Ellsworth, Maine. He helps clients plan for the protection and transfer of family real estate, businesses and other significant assets to their descendants. A graduate of Princeton University and Rutgers University School of Law, Jones is a founding member of the Maine Planned Giving Council.