Legacy planning is never easy. In my role as the head of the Jewish Funders Network, I try to facilitate conversations about how to approach it thoughtfully as a deeply meaningful and Jewish act.
Accountants, lawyers, and philanthropists have been discussing estate tax and charitable giving quite a bit recently. The recent signing of the American Taxpayer Relief Act of 2012 (signed into law on January 2, 2013) codifies federal estate, gift, and generation-skipping transfer laws. It increases rates (from 35 percent to 40 percent) but it maintains exemptions at the $5 million level. It also contains changes to federal income tax laws that relate to charitable giving. Many welcome the passage of this act because, without it, the estate tax rate would have reverted to its previous level of 55 percent, and the exemption would have shrunk to $1 million. The law makes “generation skipping” easy and enables deductions between spouses to be portable. It also extends the “unified treatment,” which allows exemptions to become lifetime gifts or bequests at death. This provides affluent families with tremendous flexibility to transfer wealth to children and grandchildren in a tax efficient manner. Besides the technicalities, and despite the slight increase in rates, these regulations are generous toward taxpayers and — according to many — will have a positive impact on philanthropic and charitable giving.
There are, of course, ethical questions surrounding estate taxes. Many ask what sort of tax is “fair” and what will contribute more to the society as a whole. While the halakhot on the issue of inheritance are not always compatible with civil law, technical details of civil law and certain legal pirouettes have helped make the two legal systems more compatible. Biblical Judaism doesn’t dictate estate taxes as such, but it is concerned with fairness and exaggerated accumulation of wealth, and it seeks to ensure the protection of the family.
Giving is complex, and planned giving — what happens to a family’s wealth after death — is even more so. So I would like to focus on the connection between estate planning, philanthropic giving, and Jewish values. Add in the differences and challenges of each family — made up of unique and complex members, and you get the idea. Done well, it raises questions that are intertwined with values, ethics, and identity. In the end, the exercise — and especially thinking about the complexity legacy planning involves — provided unmatched opportunities for several deep and meaningful conversations in a few not-so-minor areas.
The first conversation is probably the deepest and scariest. Delving into legacy issues inevitably touches on the issue of death. When we talk about legacy, we’re talking about mortality — that of those near to us, and our own. A conversation about a family’s legacy is nothing less than a conversation about the meaning of life: our intrinsic limits and deepest needs to transcend physical existence through actions and symbols that express our values and commitments to others. Instead of confronting these important questions, we often ignore them.
But legacy planning can be the subject of a critically important family conversation. Almost any serious reflection on the meaning of life refers as well to death. Overwhelmed and distracted by the technical and mechanical aspects of estate planning, we sometimes overlook the richest aspect of the conversation. By tackling the scariest issues straightforwardly, we can convert the process into a springboard to more meaningful and deeper relations with those around us. In the context of estate planning, a conversation about philanthropy is more than a way to look for fiscal efficiencies; it is a conversation about transcendence.
The second conversation skirts an issue many of us have been conditioned to avoid. Out of “politeness,” we don’t discuss money. Talking about money, for many, raises an array of anxieties, traumas, and cultural baggage.
Our different approaches to money influence our thoughts about philanthropy. Legacy planning means having conversations that make meaningful decisions possible, and our traditions offer a wealth of ideas (pun intended) about how to approach money. Judaism has never been an ascetic culture; rather, wealth can be viewed as a sign of blessing. At the same time, Judaism teaches us about the transient nature of material possessions; we’re taught to use everything — including money — as a vehicle for sanctity and for the improvement of the world. Our sages cautioned about excessive materialism and about disconnecting wealth from ethics.
Values and Goals
Legacy planning needs to be, first and foremost, a vehicle to transmit values, which should be the essence of a third conversation. Judaism is obsessed with the transmission of values. Thoughtful philanthropy is not about fiscal efficiencies; rather, it creates an avenue for transmitting values and fulfilling value-laden goals.
For values to be translated into action effectively, they must be understood as a specific set of goals. This conversation is twofold: What are my values, and what do I want to achieve? My values may dictate that I want every child to have a free education; but what specific philanthropic goal shall I set? Shall I ensure access for all children to a Jewish education in a specific city? Shall I focus on disadvantaged children?
At JFN, we’re often asked to give advice on the best legal and financial structure for a family’s future giving: a private foundation established as a corporation, a donor-advised fund, a charitable trust, etc. Legacy planning begins before answering these questions about the financial structure; it guides the answer. The most important element to consider is what vehicle of giving — or, more commonly, what combination of vehicles — is best aligned with the values of the family and the goals they want to accomplish.
Legacy as Memory
Will my children and grandchildren share my values? Will they identify with my philanthropic goals? The ultimate goal of these conversations is alignment within the family and between the family’s values and goals. Rather than impose an agenda or structure on the next generation or restrict their freedom of movement through bylaws and “donor intent letters,” it would be much better if the next generation followed the values of their elders because they share them.
While it’s never too late to have a meaningful conversation, the deathbed is certainly not the optimal place to have a calm and thoughtful conversation about these issues. Ideally, the legacy conversation is not an isolated one, but rather one that follows a lifetime of conversations that flow through regular rituals and daily practices. It is not an event but a process.
Every family situation is unique and there are no universal recipes. Approaching decisions about legacy and estate planning offers opportunities to address meaningful questions and begin meaningful conversations. As Elie Wiesel said, questions are more important than answers, because only the questions can be shared. Indeed, it is for each of us to find our own answers.