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Planned Giving – "Principles of Social Capital"
by George Bass (from the July/August 2002 issue)
Planned giving, as the name indicates is a form of giving that is planned. This may sound over simplistic but the key word here is PLANNED. The Honorable Learned Hand, a U.S. Appeals Court judge observed, “There are two systems of taxation in this country, one for the informed and one for the uninformed.” The purpose of planning is to become informed!
The estate of the late Joe Robbie (former owner of the Miami Dolphins) paid 55% of the estate for federal estate taxes. This forced the family to sell the team to pay the tax debt. In contrast the estate of the late Jacqueline Kennedy Onassis paid less than 2% estate taxes on a transfer of $164 million dollars. How could this happen? Planning!
CONTROLLING YOUR SOCIAL CAPITAL. Don Hartmann of Hallmark Consulting Group, Inc. in his book The Principles of SOCIAL CAPITAL says, “Social capital is that part of your total wealth, consisting of income plus assets, that you have earned but aren’t allowed to keep. You aren’t allowed to keep it because the Unified Federal Gift and Estate Tax law decrees that once your total wealth exceeds $675,000 ($1,350,000 for married couples) a portion of the excess must be shared with society. That portion which you must share is your social capital.”
Without a PLAN the government decides what happens to your hard earned Social Capital. With a PLAN you control what Mr. Hartmann calls the power of Social Capital and he defines this power as:
• It is the power to capture the “dollars you can’t keep” and use them to increase your income and leave more to your heirs.
• It is the power to personally direct “the fruits of your labor,” empowering you to shape the future in the way you believe is best.
• It is the power to achieve lasting significance. “What man fears most is not so much extinction, but extinction without significance.” This quote, from a famous American psychologist, identifies the depth of motivation people have for lasting personal significance. The social capital you create, if directed solely by the government, is simply a default on your part to someone else’s agenda; you have no input and no direct impact. On the other hand, if you capture and self-direct a portion of the social capital you created, you directly, personally and powerfully affect the future and leave a lasting legacy.
THE TOOLS OF SOCIAL CAPITAL
The same Internal Revenue Code that established the Unified Gift and Estate Tax, also established the tools that allow you to minimize, or even completely avoid the tax. These tools include:
• Charitable bequest
• Charitable lead trust
• Charitable bargain sale
• Charitable remainder trust
• Charitable gift annuity • Private family foundation
By structuring an estate distribution plan that incorporates just one of the tools of social capital described above, it is possible to significantly reduce the tax burden on your estate. In some cases, it is even possible to establish a zero tax estate plan and effectively self-direct 100% of your social capital.
For information on how to gain more control of your “Social Capital” contact George Bass glb@christianhealingmin.org or see our website, www.christianhealingmin.org and navigate to “How You Can Help” … “Planned Giving”.
Tax laws are complicated and you should seek the advise of a trained, qualified professional.
