A Family Tradition

One of the most rewarding aspects of being a wealth manager is helping people learn how to deal with philanthropic issues, to use their own bounty to give back to their communities. Charitable giving can often become a family tradition, with each generation spurred on to contribute its own gifts by the generation preceding. It’s never too early to instill that philanthropic urge in your children, to get them to see the rewards of giving some of their wealth to those in need.

Of course the most obvious way to teach them about giving is to model that behavior for them. As you make your decisions about which charities to support, involve your children in that decision. While it is not necessary for them to know the amount of your gifts, it is beneficial for them to know the reasons you’ve decided to give to your church’s homeless shelter or the local ballet company. By including them in the decision-making process, they’ll see how and why you chose to support that institution and it will get them thinking about whatever institutions they’d like to support.

The next step is to let them make philanthropic decisions of their own. If they’re still of the age to be receiving an allowance, you might add a few dollars a week for them to set aside for giving. If they’re older and have an after-school job, you could encourage them to earmark 5 percent or 10 percent for giving. In either case, you could offer to match their contribution to reinforce the notion that philanthropy is a family activity.

It’s not just money that families can give – you should also let your children be a part of your giving of your time. As one of my clients put it, “We give money to the church we attend, but our greatest gifts to others have been volunteer activities.” And time is the one thing that your children have more of than you do.

Estate Tools for Giving

You can also set up a family charitable trust, thereby establishing the tradition of philanthropy as well as providing a role for the next generation, whether or not they are now of an age to play a role in the trust. A charitable remainder trust, or CRT, is something you can set up that allows for certain of your assets to go to charity after you are deceased. Obviously, your children will be the ones actually executing the trust, so it makes sense to involve them in its construction. And if you put appreciable assets in the charitable remainder trust, you (or your heirs) will owe no capital gains taxes on their appreciation when the assets in the trust are sold.

A charitable lead trust is an alternative that reverses a CRT to an extent. It provides funds to charitable causes throughout your lifetime, then allocates the remainder to your heirs after your death. A charitable lead trust offers even more opportunity to model philanthropic behavior for your children; they will literally see you sharing your wealth with your community.

These plans are only the tip of the iceberg – there are many different ways in which Bernhardt Wealth Management can help you set up or continue your philanthropic activities. How you give is less important than that you give – and the only way to teach your children about philanthropy is to be willing to give yourself. Children will do what you do, not what you say.

The Big Picture

Whether you’ve got a long history of philanthropy behind you or are just beginning to start your giving, we can help you foster a tradition of giving. Our view of wealth management is holistic, encompassing all of our clients’ financial lives.

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