Q: What’s the best way of knowing which charities deserve my money? I hate the thought of writing a check and then feeling like it might be wasted. - Brian
A: Brian, good for you for looking at charitable investment!! We should all be planting trees under whose shade we shall never sit.
My first question would be if you have any causes that are meaningful to you. That will help narrow down your options. At the same time, you may want to consider if you plan to do a one-time major gift, and on-going annual gift, or a planned gift through your will or trust.
After that, there are a variety of ways to learn about the fitness of the charity in question. For starters, find out how they secure their donor information. You may not want to have your name publicized in the annual reports. Second, pull their 990. This is a publicly-available form that discloses a wide variety of financial information about any 501c3 non-profit; everything from who some of their largest donors are, to what their CEO’s salary is. If you want more detail, you can also ask to see their financial statements directly. Both of these will give you a good idea of how much of your gift is actually going toward the cause as opposed to “buying the toilet paper”. You can also review their leadership structure, including both the executive team and the Board of Directors. How long have they been there? What other organizations have they been involved with? Next, it wouldn’t hurt to ask for copies of their gift recognition and gift acceptance policies, especially if you’re considering a large or non-traditional gift. And finally, I always like to find out the size of their endowment fund and how they feed it to get a feel for their own view of their longevity. After all, if they aren’t planning for the long-term, why should their donors?
Q: I’m looking into getting long-term care insurance, but we just learned that my husband is ineligible due to some pre-existing health conditions even though he’s only in his mid 40’s. Is there an alternative? - Alexia
A: While I am a firm believer in long-term care (LTC) insurance, my first thought would be to make sure that a policy is right for either of you in the first place.
There is a general “sweet spot” of assets when considering LTC, and the reason for that is two-fold. First, if you have less than $100,000 in assets, you’re probably going to burn through it so quickly once you get into skilled nursing care that it wouldn’t be worth you paying those premiums for so many years. At around $6,000/month in skilled nursing costs, you’re going to end up on Medicaid anyway. And second, if you have more than $2 million in assets, it might make more sense for you to self-insure. Of course, in your 40’s, you really don’t have a great sense of what your assets are going to look like in 30 or 40 years, or what those “sweet spot” numbers are going to become by then, so determining if you’re a good candidate for LTC is going to be difficult.
Either way, if LTC isn’t an option for your husband, we have to figure out how to get some money set aside for health care for him, and my first thought would be to put that money into a health savings account (HSA) instead.
If your husband is enrolled in a high-deductible health plan, is not enrolled in Medicare, and cannot be claimed as a dependent on anyone else’s return, he is eligible to open and contribute to an HSA. So instead of paying premiums on an LTC policy, you’re simply going to direct those funds into the HSA, assuming the total does not exceed $3,450/yr. for individual coverage or $6,900/yr. for family coverage. And those amounts will go up slightly for 2019.
The HSA won’t pay for everything once you get into a retirement community, but it will certainly help. And since the funds roll over from year to year, you’ll have plenty of time to accumulate a substantial balance.
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— Eric Litwiller has spent the last seven years of his professional career helping people achieve their financial goals through the use of budgets, retirement vehicles, and estate planning options. He is a firm believer in the importance of using Earthly riches to fulfill a mission of Christian stewardship. Eric is not a licensed financial planner.