Frequently Asked Questions About Legacy Planning
- What is a foundation?
Foundations are grant-making organizations that are regulated by the Internal Revenue Code, which defines what types of activities are considered charitable.
There are different types of foundations, including private, corporate, and community foundations.
Most foundations award grants only to non-profit, charitable organizations.
Foundations are prohibited from lobbying and political activities.
- What is a legacy plan?
A legacy plan names the organizations and causes you want to permanently fund.
The principal remains in perpetuity and earns money.
Annual distributions are made to your beneficiary organizations in the form of grants. The amount awarded each year is based on a spending rate.
The Jewish Community Endowment Foundation of New Mexico (Foundation) Board of Trustees sets an annual spending rate between 3.5 and 5%. For details see #16.
In your legacy plan, you can address concerns regarding the future of your beneficiaries (e.g., What if a beneficiary organization ceases to exist or its mission changes dramatically and is no longer aligned with your vision?)
At the Foundation, fund agreements are an integral part of a legacy plan.
- What is an endowment?
An endowment is a permanent fund that earns money to benefit a charitable organization.
The principal remains in perpetuity — annual distributions are made to the beneficiary from the funds earnings.
Frequently, donors establish endowment funds as part of their legacy plans.
The Foundation also maintains endowment funds for organizations.
- What is a bequest?
A bequest is the act of giving property through a will.
The Foundation can provide sample language for your will to indicate your bequest to the Foundation. It can reference your legacy plan — and then your legacy plan specifies the individual beneficiaries. Therefore, if you want to make alterations to your legacy plan (such as change beneficiaries or advisors), you can do so without making any changes to your will.
- What is an estate?
An estate refers to the assets and liabilities left after one's death.
- Other than cash, what assets can I contribute to my fund?
Bonds, i.e., Israel, Government, Corporate
- Does everything have to be Jewish?
No. You may select any non-profit organization that reflects your values and charitable interests. You may also target a field of interest, such as Jewish education or the arts.
The beneficiaries must simply be recognized as non-profit entities under the requirements of Section 501(c) 3 of the Internal Revenue Code. We can help you determine the 501(c) 3 status of a particular organization.
- Are my transactions with JCEFNM confidential?
Absolutely. The Foundation does not share your information with any individual or organization.
- How do I decide on a funding amount?
This is your choice. You may fund a specific dollar amount or specify a percentage of your estate.
Percentages work well because you may not know the exact assets that will be available in your estate. You can bequeath a percentage of your estate to the Jewish Community Endowment Foundation of New Mexico, and then, in the fund agreement, specify the percentage that each beneficiary will receive. As mentioned in #4, it is easy and there are no fees to change the beneficiaries and/or specific percentages in your fund agreement.
- What is the minimum amount?
There is no minimum dollar amount for a legacy plan.
However, establishing a named endowment fund requires a minimum of $10,000 to assure distributions large enough to support the formal structure.
- Can I change my plan after it is established?
Yes. You can modify your legacy plan as often as you wish.
It does not involve altering your will or trust.
- Can my children decide where the money goes?
Yes. You can name your children as advisors for part or all of your funds. The Foundation encourages this opportunity for a family dialogue about the kind of legacy you want to leave and how your children can help shape it.
The Foundation can help you explore the options for intergenerational legacy planning, to find the best solution for you and your family.
- Are there fees for legacy planning assistance?
No. There are no fees whatsoever until the time of funding. Thereafter a 1.5% annual fee is charged on an endowment fund. This is the same or less than other commercial or non-profit institutions.
- How long does the legacy planning process take?
Some legacy plans come together in the course of a single meeting.
More typically, conversations and analyzing take place over months and often years.
We will work with you at your own pace and we encourage you to get input from your legal and financial advisors.
- What if I move to a different city or state? Is this only for New Mexico?
Your legacy plan can be easily altered to reflect the changes in your life. Your beneficiaries are not geographically limited to New Mexico.
- How does the Foundation manage my funds and investments?
The Jewish Community Endowment Foundation of NM has a Custodial Agreement with the Jewish Community Foundation of Southern Arizona (JCFSA), a multi-million dollar community foundation, to manage and advise us on our funds.
The JCFSA's investment manager, SEI, ensures that funds held are wisely invested for optimum performance over time.
To ensure that distributions to your beneficiaries are not dramatically affected by fluctuations in the market, the Foundation Board of Trustees establishes a spending rate, which is evaluated annually. The rate is based, in part, on a ten-year rolling average of the Foundation's investment returns.
- Should I talk to my lawyer and accountant?
The Foundation strongly recommends that you consult with your own professional advisors regarding your legacy plan.
We will provide sample language and information to assist your advisors, and will work with you and your advisors to ensure that the legacy plan is tailored to best meet your expectations and your means.
We are available to answer your questions in person, too. Please contact us.