If you are like many people; you may desire to make a charitable gift as part of your estate plan, a way to give back, when your need for assets is done. This kind of planning is done when retirement is also on our minds.
Most of us hold retirement savings in an IRA, 401(k) or 403(b). Because of the way these funds are used, you may not exhaust all of your retirement money during your lifetime. So, the question is, “What will I do with my unspent retirement savings?”
A Common Solution
Most people designate family members as beneficiaries of retirement accounts. The problem with doing this is that much of your savings may never go to your loved ones. By giving your unspent retirement savings to your family (other than your surviving spouse), your retirement savings will be taxed. First, if you have a taxable estate, your estate will pay tax on the asset. Second, your family members will pay tax at their ordinary income rate resulting in very little of your remaining money actually going to your family.
A Better Solution
When leaving assets to family, it’s best to give your family assets that step-up in basis at death such as stock and real estate, these assets may be received and sold by your family without paying any tax. Your retirement assets actually make a better gift to charity because a charitable organization can receive the entire asset tax free and make use of it to further its mission.
National Kidney Foundation of Hawaii
808-589-5976 | jeff@kidneyhi.org
www.kidneyhi.org | www.kidney.org
Encountering today’s scam artist is very similar to seeing a professional magician perform. He has spent countless hours practicing his act, invested in resources and props, and achieved a certain level of competence that earned him his own show. When the audience leaves the performance, they are often left wondering how the tricks were accomplished. They are not, however, embarrassed that they could not figure out how a particular illusion was accomplished. The same should be said about victims of today’s scams.
A growing portion of my practice involves fixing estate plans prepared over the Internet. The problem with computer-driven estate plans is that in the real world, more often than not, they don’t work. An effective estate plan involves far more than a set of documents, even very well drawn documents that would stand up in any court in the land. For one thing, wouldn’t it be better to have an estate plan that will help you and your family stay out of court altogether? Going to court is not the end of the world, but it can be a royal pain. Most lawyers and judges are good, decent people. But does that mean that your estate plan should provide them with profitable employment? A much better approach is getting your plan right the first time, and then making sure that it continues to work according to your wishes in light of changes in your health, your stuff, the law, and the list of people you trust. If you can accomplish these things without court supervision, you will have reached estate planning nirvana.
While I was growing up, we almost always had a dog (or two) in the house, and they always became treasured family members. You may have had the same experience, and you would not be alone if you have pets today that you consider to be your “children.” I know people who claim to prefer their kitties over their kiddies.
Section 560:7-501 of the Hawai‘i Revised Statutes specifically allows you to create trusts “for the care of one or more domestic or pet animals.” You can even designate a human watchdog who will make sure that your intentions are carried out. In theory, there would be nothing to prevent your terrier’s trustee from making a quick stop at the local dog pound and then pocketing the trust assets that you had intended to be used for your poor pet. However, your 
watchdog could whisk the trustee in front of a judge and make sure the trustee is held accountable for failing to honor your wishes. Of course, if you choose the right caretaker in the first place, none of this will be an issue.
But what if your two-legged children get jealous of your basset hound’s bequest? Is there a way for them to attack your trust? The short answer is “yes,” and if they can convince a judge that you have left “too much” for your toucan, the judge can reduce the amount in the trust to whatever amount is “enough” to provide adequately for the care, maintenance, health and appearance of the designated critter. In any event, if there is anything left when your pooch passes the pearly gates, you get to say where it goes.
Some pets have very long lifespans, such as certain birds, reptiles and fish. Your pet trust will not be subject to the rules that limit the lifespans of conventional trusts, so you can be sure that, as long as the trust assets hold out, there will be provisions for your pet.