Posted March 1st, 2000

Planning Matters

In recent months, Boston College researchers Paul G. Schervish and John J. Havens released a comprehensive new study estimating that upwards of $41 trillion of wealth will be transferred through estates during the first half of the 21st Century. The new report suggests that America’s charitable organizations and institutions will receive a growing share of the transfer ushering in what could be a new “golden age” of philanthropy.

The most recent figures available are included in the Summer 1999 Statistics of Income Bulletin. The report features data from the estate tax returns of individuals who died with gross estates of $600,000 or more whose returns were filed between 1995 and 1997.

The number of estate tax returns filed increased from 69,755 in 1995 to 90,000 in 1997 – an increase of 29%. Over 78,000 of the returns filed during this three-year period were for persons dying in 1995. In 1995, female decedents passed away at 80.9 years on average, while male decedents lived to 75.3 years.

Stocks, real estate, and bonds made up the majority of decedents’ estates totaling almost 75% of the gross estates. While similar in many respects, there were differences between the estate holdings of men and women. See charts below.

Deducing deductions

The marital deduction and charitable deduction were the two most popular estate tax deductions. For the 78,023 estates for persons who died in 1995, a charitable deduction was claimed in 18.3% of the estates. Charitable deductions claimed on these estate tax returns totaled $10.1 billion, or 28% of net worth.

Factors affecting charitable gifts

Gender and other factors definitely affect giving patterns. Women are significantly more likely to include charitable provisions than men. This is presumably explained by the fact that women normally live longer than men. With married couples, the first spouse to die typically takes advantage of the unlimited marital deduction by leaving the bulk of their estate to the surviving spouse. Of female decedents, 24.3% made charitable bequests compared to 13.4% of male decedents.

Marital status also was an important factor to consider. Single females and males were the most likely to include charitable bequests. Almost half of all single females studied, and over one-third of all single males, included charitable provisions in their estate plans. Widows and widowers were the next most likely group to include charitable provisions in their estate plans, with approximately 25% doing so. On the other hand, less than 10% of married decedents included charitable provisions.

Size matters

The increasing number of larger estates is shown by the rise in the number of federal estate tax returns filed between 1987 and 1997:(See Chart at right)

Historically, the IRS estate tax returns indicate that about 20% of relatively wealthier Americans dying in a given year actually include charitable provisions. One might reasonably assume that growth of the number of larger estates will provide significant future growth of planned gift receipts by charitable organizations.

The IRS figures provide encouragement for all persons involved in the gift planning process. The data provides solid evidence that the growing transfer of wealth will continue to provide a healthy source for increased charitable giving via estates.

However, while some charitable organizations and institutions regularly receive between 25% to 50% of their gifts from individuals in the form of estate transfers, the majority receives little or nothing from this growing source of gifts. Ongoing and effective communications to friends and donors may well be the key to encouraging your constituents to leave a lasting legacy.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

Give & Take

Site Search

Give & Take Archives

2017 Issues 2016 Issues 2015 Issues 2014 Issues 2013 Issues 2012 Issues 2011 Issues 2010 Issues 2009 Issues 2008 Issues 2007 Issues 2006 Issues 2005 Issues 2004 Issues 2003 Issues 2002 Issues 2001 Issues 2000 Issues 1999 Issues 1998 Issues 1997 Issues