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Paying It Forward –Charitable Giving & Senior Housing

As investors get further along into retirement, it is common to reflect on what impact they have made on those around them, their community and the world at large.  We focus less on what we have accumulated for ourselves, and more on how assets and resources can be deployed for the benefit of others.  While leaving a legacy to family is often a priority for retirees, remembering individuals and organizations who have provided care for us or a loved one is also a consideration.

Non-profit Communities and Endowments Funds

According to specialty investment bank Ziegler, 78% of the continuing care retirement communities in the US are established as non-profit organizations1.  These are mission-driven communities, many of which have grown out of faith-based roots.  While most of them are private-pay communities, they typically will have endowments or “benevolent” funds similar to any other charity.  These funds can be used to support senior residents who may deplete their own financial resources.  This is often the backstop that allows communities to fulfill the “care for life” promise they promote.

Residents at communities may be motivated to provide financial resources to these endowments as a way to support their neighbors, and future generations of residents.  As Wealth Advisors, we help clients to determine their capacity to be charitable after first making sure a client is financially independent.  Planned giving, or identifying how assets are gifting during life and after one’s death, may be an important goal of one’s individual or family financial plan.  Children who serve as executors of an estate of a deceased resident may want to leave a gift in memory of a resident who received care during their retirement.

Other Legacy Giving Opportunities

While it is important to support and maintain a healthy benevolent fund to provide for community residents, there are other ways seniors can provide support to their communities and caregivers.  Two challenges that communities face include maintaining and improving facilities, and also providing career opportunities for caregivers.

It is important to provide upgraded facilities within communities to attract the next generation of retirees.  This helps to maintain high occupancy and financial health for current residents.  For those looking for a visible and tangible gift to last for decades, naming rights has become a popular way to support the construction and development of new facilities, such as fitness centers, theaters or dining facilities.

Caregivers are drivers of communities, and labor shortages in senior housing have made it difficult to adequately reward and retain good caregivers.  Many communities set up holiday gift funds for their staff to which residents can contribute, but there are ways to make a more lasting and meaningful impact on caregivers.  Some communities maintain scholarship funds for their staff. This may help defray the cost to pursue educations in the fields of healthcare, nursing and social work.

Supporting senior care communities is very similar to the way philanthropic retirees might consider supporting an alma mater.  If first starts with realization of value derived from the experience (whether that be education or caregiving.)  From there, the idea of donating towards an endowment, naming a building or providing a scholarship is the next step.

Fulfilling Gifting Goals with Smart Tax Planning

Costs associated with senior communities may already provide benefits related to entry fees and monthly fees in the form of itemized medical deductions.  Adding charitable giving to a financial plan may add additional tax benefits to offset current income.  Identifying the appropriate assets to gift, or strategies to employ, can further enhance the tax benefits while achieving gifting and legacy goals.

We often hear the phrase “cash is king,” but that is often not the case when comes to charitable giving.  For retirees, it might make sense to look at qualified charitable distributions (QCDs) from IRA accounts as a way to make gifts with pre-tax dollars to reduce current taxable income.  Additionally, we can look at concentrated appreciated stocks to donate to minimize capital gains taxes.  Finally, if we want to control the timing of deductions and distributions, we can utilize a donor-advised fund if appropriate.  These varying approaches and their effectiveness are dependent on a retiree’s unique mix of assets and income sources, and implementing one or more should be discussed with your Wealth Advisor in conjunction with your accountant.

In summary, if a retiree is charitably inclined, they should first determine through financial planning if they have the means to achieve gifting goals while maintaining financial independence.  From there, they may want to take into consideration if the community where they or a loved one has resided has endowment funds or gifting opportunities to pursue.  If they further determine that the opportunities align with their gifting and legacy goals, discussing how they can gift most tax efficiently should be a conversation with their wealth advisor along with their accountant.

1 Source – Ziegler and Company, 2018

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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