How to Avoid Bogus Charities and Bottom Up Planning

Sometimes there are good topics to discuss that do not take up the entire column. This month, I want to share two short but important ideas with you, neither one of which would take up the whole space.

Estate Planning from the Top Down

On occasion, I will encounter an estate planning case where the clients are focused on the details of their estate plan at the expense of the big picture. I call this planning from the bottom up.

Folks can get all wrapped up in how their money will be handled after they die, instead of concentrating on who gets it and how much the heirs are to receive. Sometimes they want to exercise control over their heirs from beyond the grave, and that sometimes stems from not having enough control during their lives.

In one recent instance, a man came to see me about writing his will, and he wanted to use the will to teach his son a lesson. It was a basic life lesson of right versus wrong, which either the father had failed to teach or which the son had failed to learn. So instead of taking the life lesson a few steps further while he was alive to help his son see the light, the father tried to show his son the consequences of going the wrong way by leaving him a paltry inheritance. My guess is that when the son sees that his father essentially disinherited him, he will still not understand the lesson that his father was trying to teach him, but will simply become bitter at his father and angrier at the world.

In another case, my clients were intent upon doing good with their money. They intended to leave a substantial amount to charity, which is certainly an altruistic approach. But by putting their charities first, they overlooked the needs of their children. Once the hard numbers were laid out in front of them, they realized that their children were going to need more money to reach their goals and that they had planned their estate from the bottom up.

When you’re thinking about how your will is going to be executed after you’re gone, think from the top down. Think about your spouse, your children, your siblings and so forth. Family first! If there are good reasons to skip people, then so be it. And if there is anything left after you take care of the family, consider leaving it to charities that perform good works. Your estate planning attorney can help you research charities to be sure they are legitimate so that your money really does go to a good cause.

The New Junk Mail

As you age, your mailbox will begin to fill up with new and different junk mail. You will be asked to give to ‘charities’ that claim to support older people, older veterans, disabled people and disabled veterans. You will be asked to send money to ‘charities’ that claim to support our environment and that claim to protect endangered animals.

I encounter this phenomenon when I have the mail of my deceased clients forwarded to me and I begin to handle the administration of their estates. Their volume of mail is awe-inspiring when compared to mine, but that is because each time they make a contribution to a ‘charity,’ their name and address gets sold to a hundred other charities, each of which begins to solicit money from them.

By the time I wade through all of that junk mail, I have cut their true mail by two-thirds. When people become elderly, they slow down everything that they do. Among the things that slow down is the repetitive motion of throwing junk mail in the garbage. If you have not heard of the charity during your first 70 years or so, and if you have not supported it in the past, take an envelope in each hand, reach out with both hands until the envelopes are above the garbage can, and release. Your arms will feel better, and so will your checkbook.