Holland Column

Retirement & Financial Planning

Holland Financial

Leaving Money to Charity

Today, I’m answering another PlanStrongerTV™ viewer question from “Diane” in Palm Coast. Diane writes, “I have no individual beneficiaries, and due to my strong love for animals, I am inclined to leave some of my money to animal shelters. How can I assure the money is used for the animals and not being funneled through layers of unnecessary administration? Who would distribute my money and is there remuneration for this service? I hope not, or that at least it’s not a lot.”

Answer: Diane, if the money is going to go to a charity after your death, then it would be handled by either the charity, your executor (personal representative), or your trustee. If you don’t want your monies to go to a potentially inefficient charity, you’ll need to do some homework using a service like charitynavigator.org, which rates charities on financial health, accountability and transparency. The challenge with designating a charity to be your beneficiary, without further screening after your death, is that the organization may have been responsible, well-managed and well-rated when you initially picked it, but its status may have changed over time. While you won’t be here to see the distribution of your money (unless you have a birds-eye view from above!), it may be a better idea to deliver your bequest to the charity through a will or a trust. With this approach, your executor or trustee will act on your specific wishes as to when, how much, how often, and under what conditions, your money is given to the charity.

One of your concerns seems to be the “cost” associated with getting your money where you want it to go. Unfortunately, the old saying, “you get what you pay for,” could not be any more true and applicable. If you’ve worked hard and saved a sizable amount of money, the last thing you should do is pick the cheapest option to get your gift distributed. If you are going to hire someone to be your executor or trustee, you need to be realistic about the costs. Professional trustees, like CPAs, financial planners, banks, etc., will typically charge a fee of between 2 - 3% of the total assets for the work they perform. Of course, you could ask a friend or family member to do the job, but that doesn’t guarantee that there won’t be costs and/or that your money will go where you want it to.

Another great question, Diane; I hope this answer helps!


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