Baby boomers are arguably the wealthiest class of Americans today.
An Alliance of Missouri Community Foundations report released June 25 estimates benefactors statewide will transfer $135 billion of wealth to their heirs and others during the next decade.
Baby boomers in the Ozarks are estimated to pass on $47.2 billion in accumulated wealth during the next 10 years, according to the study, dubbed Wealth in Missouri and its Counties. Between 2011 and 2060, 4.2 million Missouri estates are expected to transfer more than $1.5 trillion in wealth.
Community foundation officials statewide are working to seize the opportunity.
They say if 5 percent of the wealth could be captured and an annual payout of 5 percent on the endowments is realized – the average payout during the last 40 years – community foundations in Missouri would administer to charities $6.75 billion by 2020 and $75.53 billion through 2060.
The report represents a partnership between the statewide alliance, which includes Community Foundation of the Ozarks, and the U.S. Department of Agriculture with data compiled by the Center for Rural Entrepreneurship.
At a June 25 news conference, CFO Board Chairwoman Jill Reynolds called on baby boomers – those between the ages of 49 and 67 – to act now to support local charities.
“Our nation is embarking upon the largest inter-generational transfer of wealth in our history,” she said of the generation generally born 1946–64. “In an increasingly mobile society, there are no guarantees that the children raised in our communities will stay in our communities. If we don’t educate Missourians about the impact they can make by including a charitable commitment in their estate plan, we may lose that opportunity forever.”
The estimated net worth of all Missouri households was $517.70 billion in 2010, with the Springfield metropolitan statistical area representing $31.5 billion.
With baby boomers representing 26 percent of the U.S. population in 2011, according to the Pew Research Center, CFO President Brian Fogle called on the generation to donate a portion of its wealth to CFO to support nonprofits in the Ozarks.
“If we captured just that 5 percent solution, $322 million would go to charity in the next 10 years,” Fogle said, adding that giving during the last 10 years was valued at $110 million.
“Over 50 years, that’s $4 billion that would go toward charitable institutions. That’s a big deal.”
David Compere, Springfield branch manager for Overland Park, Kan.-based Lawing Financial, said his firm’s clients are mostly baby boomers who are largely focused on retirement planning.
He said the shift from pension plans in the public and private sectors during the last 20 years has caused clients to put off worrying about what they would leave behind.
“They are not overly concerned about how to give their wealth away or transfer it,” Compere said. “They are wondering do they have enough.
“If you’re 60 years old and you’re wondering if you have enough for retirement, I doubt you are spending a lot of time and energy thinking about how much money you are going to give away to charity. You are concerned if you will make it yourself, so you don’t become charity.”
Compere said the baby boomers are actually the beneficiaries of inheritances from their families.
“What we’re seeing is that it is the generation above the baby boomers who are the ones doing the charitable giving,” Compere said.
Fogle acknowledged peak transfers are still beyond the horizon – likely between 10 and 20 years away.
“The communities that capture that wealth will be stronger 10 years from now and 50 years from now than those that don’t,” Fogle said.
Gretchen Cliburn, managing adviser for Springfield-based BKD Wealth Advisors LLC, said most of the firm’s clients have written estate planning into their retirement portfolios.
“We are having those conversations on a regular basis,” Cliburn said. “The way we work with our clients, we focus on long-term planning.
“We don’t know when the end of their life will be, so the advisers bring it up with the clients.Goals would be discussed and some of those goals may be charitable, so we want to take that into consideration when they are discussing their retirement planning and maybe how to achieve gifting during their lifetime.”
She said there are a variety of ways to achieve the goals the clients want.
“If they want to fund their grandchildren’s’ education, and we’ve determined through planning that they can do that, we would help facilitate that through the college 529 plan. Or if we know they are giving to a charity, we would encourage them to give appreciated stock rather than writing a check depending on their tax situation,” Cliburn said. “In addition, another thing that’s available in 2013, donors who are 70-and-a-half or older are eligible to (rollover) up to $100,000 from their (individual retirement accounts) directly to a qualified charity without having to pay income taxes.”
Compere said, generally speaking, those who give to qualified charities, such as 501(c)3 organizations, are eligible for a tax deduction of up to 50 percent of adjusted gross income.
The 5 percent-estate gift, Compere said, might be a shoe that doesn’t fit every foot.
“Personally, I think that is an arbitrary amount. It just depends on people’s circumstances. If I have $100 million, I’m probably going to give away more than 5 percent. If I have $100,000, I’m probably not going to give away more than 5 percent,” Compere said.[[In-content Ad]]
