“Social capital” is essentially money or other assets which will be used for activities which benefit either the government or society. When you pay taxes, you are involuntarily creating social capital, which will be spent as the government decides. With proper estate planning, you can reduce or eliminate wealth transfer taxes such as the estate, gift, and generation skipping transfer taxes. However, to the extent needed or desired, you can also voluntarily create social capital, by making transfers which will be used by non-governmental organizations for activities or programs which benefit society – i.e., charities. By making transfers to charities, you (or your designees) can decide which programs should be funded, and what social benefits you wish to provide. Proper planning can allow you to realize very favorable tax treatment for gifts made during your life and bequests made at your death under your Will, revocable living trust, or beneficiary designations. You can even use a number of charitable giving techniques to provide for your favorite charity or charities without a significant cost to either you or to your desired individual beneficiaries.
If you have an estate large enough that estate taxes may be owed after your death, you have the option to create potentially significant voluntary social capital (which you or your designees can control) through lifetime planning. If you fail to plan, you may end up creating potentially significant involuntary social capital (via estate taxes).
Even if your estate is not likely to be subject to estate tax, there are some charitable gift planning techniques which can allow you to turn a modest amount of your assets into a significant amount of social capital that either you or your designees can control.
The attorneys at Morgan & DiSalvo have extensive experience in helping their clients consider their options for creating voluntary social capital rather than involuntary social capital. We can help with transactions as simple as setting up a donor advised fund at a charity or considering a charitable gift annuity. We can also help with more complicated transactions, such as charitable remainder trusts, charitable lead trusts, and private foundations.
Finally, for those who have a true passion for a charitable activity, we can even help create a new public charity. Examples of public charities we have helped in the past include a religiously oriented private school, an organization which holds an annual car show to raise funds for charity, and an organization which provides cash assistance to families who include a member with cystic fibrosis.
If you are interested considering charitable transfers and how they might fit into your life and your estate planning, please call us.