Michael Joseph Haggerty, CPCA, CFP, approached two ultra-wealthy clients with a proposal for leaving a legacy through generational giving. Start planting the philanthropy seed with your grandchildren now, Haggerty urged, by making them insurance policy beneficiaries, and leave a letter explaining that you funded these policies so they can give to whatever charities they become passionate about later in their lives.

“One guy thought I was nuts,” the 17-year MDRT member said. “The other guy just ate it up. He was like, ‘That’s a great idea!’ and he sat down and wrote all his letters. He has seven grandchildren — the oldest was 12, the youngest was 8 months — and we ended up doing seven policies with $10,000-a-year premiums.”

The conversation about leaving a philanthropic legacy after you’re gone can be awkward, but that talk also can be as fluid as simply asking a client, “Hey, do you have a favorite charity?”

“It’s a conversation starter,” said Ryan Hofer, a five-year MDRT member. “If they say no, I’ll say, ‘OK, it’s just something to think about.’ If they say, ‘We have one: My son had cancer and Make-A-Wish was great to us — we got to go to Disney,’ I’ll respond, ‘Oh really. When did you go? Tell me more about this.’”

Legacy planning at any life stage

When Hofer works with clients on their budget and learns where their spending goes, he also discovers whether they’re givers and what they are passionate about. They tithe to their church; they donate to the local school, the United Way and to a myriad of organizations.

“I’m a genuine believer that people want to do good things, and if you plant the seed early on that life insurance is a great way for them to do good for their family, for their charity, their foundation — for whatever it is they want — at least you got them thinking about it,” Hofer said.

Haggerty finds that talking to clients about their favorite charities deepens the advisor-client connection. “When you get someone talking about what they’re passionate about, you can show them ways they can leverage that passion into a real meaningful gift,” he said.

One door for Haggerty’s philanthropic-giving talk is opened by Conquest, a CRM software that identifies, after all the planning for retirement and other goals, whether an estate has a surplus. “One of the things people do the least amount of planning for is the surplus,” Haggerty said. “If you don’t do any planning, there’s an entity — especially in Canada — that will step in and do the planning for you. That’s the government, and you’re going to pay a whole lot more tax.”

That is, he then explains, unless clients pick the two other entities that they can leave their money to after they die — their family and charity. “I’ve never had anyone pick the government,” Haggerty said. Then the conversation moves to talking about how a charitable insurance policy can be leveraged into a meaningful gift for the client’s favorite cause. 

One of his clients with a surplus was a retired university professor who had lots of nieces and nephews but no children of her own. Haggerty discovered that she was passionate about education. She grew up in a family that didn’t have a lot of money, and were it not for scholarships, she would have been unable to earn her master’s and doctorate degrees to become a professor. Haggerty suggested that after allotting the inheritances for the nieces and nephews, she assign some of the surplus to create a memorial scholarship in her name. 

“And then it became an easy sale at that point,” Haggerty said. “If I can show you a way to fund your passion and at the same time cut the government out of some taxes, would that be something you’re open to?” She bought a policy for a $5,000-a-year premium that will annually fund four $3,000 scholarships in perpetuity after she dies.

Doing it now rather than later

Conventional wisdom suggests that clients who are retired and empty nesters are more open to philanthropic legacy planning than are middle-income households trying to pay off debt and save for their children’s education and their own retirement. But for Hofer, when clients already are supporting a charity, linking that giving to an insurance policy is just a matter of showing that there is room in their budget to do so.

“It’s a conversation that advisors have to start,” Hofer said. “When someone buys a house or has a baby, that’s when they say, ‘Oh, I need life insurance,’ and that’s about the only time they bring it up. The ultra-wealthy folks are already figuring out their legacy planning. I don’t think advisors are talking to 30- and 35-year-olds about leaving a legacy that will outlive their kids and even their grandkids.”

Haggerty tells people in their 40s that many of his clients in their 70s wish someone had informed them about this estate planning option when they were younger, and premiums were much cheaper. He also finds that clients with a passion for giving — a fact he’s uncovered because he’s talked to them about what they value — are eager to share what he’s done for them with others and refer prospects.

Philanthropic legacy planning also enables Hofer to stand out.

“When I talk about it, it’s a concept that they never heard before,” Hofer said. “Then they realize they can set aside a ton of money, especially when it’s not going to cost them a lot in a monthly premium and still have a huge impact on the charity they’re passionate about.”