The More Things Change, the More the Fundamentals Endure | Sharpe Group
 
Posted December 10th, 2021

The More Things Change, the More the Fundamentals Endure

By Professor Christopher P. Woehrle, JD, LLM

During the last two years, the United States has endured a world-wide pandemic, unprecedented tumult in the capital markets and a change in the Oval Office. Despite all the current noise about what the tax laws will or will not look like, there are evergreen concerns of potential donors that may be the ultimate drivers of philanthropic decisions.

Unprecedented wealth has been created alongside undeniable loss of life. Two recent articles underscore the importance of bequest discovery and staying connected to supporters who may be nearer to their “monetizing event” than your organization may believe.

How much is enough?

Unmarried supporters or married and childless supporters are often terrific potential supporters of your institution through their estate plans. Married supporters with children should not be dismissed. Do not assume all of their estate goes to children or other family members.

Can one ever be “too rich or too thin” according to the cliché? For many parents, the answer is at least “yes” to the first question. A recent survey of 2,000 individuals with a net worth of $1million revealed insights about leaving large inheritances.1 The major concern of the surveyed was that wealth would be used irresponsibly or weaken the drive of heirs to achieve in school and in the workplace. Many of your most capable donors are not planning to “leave it all” to children or grandchildren. Also consider that some of your supporters may now have resources they could never have envisioned because of the substantial growth in the S&P 500 stocks since January.

Man plans while the fates laugh

Often, I hear local business owners wish they could make much larger gifts, but most of their current wealth is illiquid. Development professionals need to be alerted that their monetization event may be much closer than they thought. These owners are likely closer to realizing their philanthropic goals as their retirement and succession planning have been accelerated.

Financial Advisor magazine recently noted COVID’s accelerant effect on the succession plans of business owners. These owners had a net worth ranging from $2 million to $10 million and investable assets of $5 million.2

Citing a “Success and Succession” study, writer Jacqueline Sergeant noted that “21% of wealthy business owners had either sought Paycheck Protection Program loans, closed offices or laid off workers.” Half indicated they planned to sell their business, and over a third indicated retiring earlier than planned. Development professionals should also know their supporters as well as humanly possible in order to assist when they are ready for potentially the gift of a lifetime.

Endnotes

1. Vega, Nicolas, “Nearly 70% of millionaires are worried about leaving ‘too much’ money to their kids, survey finds, CNBC, September 19, 2021.

2. Sergeant, Jacqueline, “Covid Forcing Wealthy To Speed Up Business Succession Plans, Retirement,” Financial Advisor magazine, September 17, 2021.

Christopher P. Woehrle is professor and chair of the tax & estate planning department at the College for Financial Planning in Centennial, Colorado. As one of Sharpe Group’s technical advisors, Chris is a frequent contributor to Sharpe Insights and authors Sharpe Group blogs.

The publisher of Sharpe Insights 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 Sharpe Insights 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.

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