Has it been on your to-do-list for some time to make charitable bequests? A recent Urban Institute study found that wealthy people are likely to give to their charity during the course of their life, but rarely do so at death.
Those people who do leave behind charitable bequests tend to make big gifts, according to the study. In fact, their contributions, when they make them at death, are many times bigger than the donations made during the last couple of years during their lives, even though giving previously would have cut down on their total tax bill.
In order to analyze this, researchers looked at estate tax returns and matched them with income tax returns to determine the average charitable giving by a wealthy person at the time of their death, in 2007 compared with the last five years of their life prior to 2007.
The sample comprised people with numerous amounts of total wealth from $2 million to above $100 million. This study period comes just before the giving pledge which began in 2010.
Around 200 people across the globe have already signed a commitment to give most of their wealth away to charity in the giving pledge. The results show that the wealthiest people who have participated in this study, whether they were single or married, were much more likely to give during the last few years of life than choosing to do so at death. There were several different explanations presented by this study’s researchers, and one is that health considerations were a top concern of high net wealth in people who had more than $3 million of total wealth outside of real estate.
These people were hesitant to give money away as they got closer to their death. Other issues raised in this study’s outcome are that taxpayers can quickly consume charitable deductions by only giving away small amounts of their wealth.
This explains low rates of giving out of the total available wealth during life, but not the failure to provide during an estate. Consumption is not a main priority for the people with the most wealth included in the study.