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Family Inc. by Douglas P. McCormick

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CHAPTER 27

Maximize Your Charitable Legacy

For most people who can, the most logical time to make major gifts to charity is late in life.

We established in Chapter 1 that legacy management is a distant third priority for Family Inc. after providing for the family’s consumption and investing to build net worth for retirement. Unless you have been fortunate enough to accumulate significant wealth early in life, those goals are likely to take decades to accomplish.

We have discussed the many uncertainties a family faces. Late in life many of the answers are known—How good were my investment returns? How good is my health and how much longer do my spouse and I expect to live? Do we require long-term care? Are the kids healthy and financially secure? With the benefit of clarity on such critical issues, older families can make better-informed decisions about their need for contingency capital.

Furthermore, if you follow the investment guidelines offered in this book—indexing with low fees, low taxes, and high equity exposure—your investment returns are likely to be better than those of many of the charities you choose to support. Charities generally have to take low risks in their investment portfolios, partly because they may have a relatively short time horizon for needing the money and partly because persuading donors to support the cause is doubly challenging if there has been a history of investment losses.

In sum, by giving significant gifts later in life, you can do so with ...

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