Vernon W. Holleman III first learned about the power of charitable giving from his father.
When Holleman was 29 years old, his father passed away at the age of 63. Thanks to charitable arrangements set up before his death, his life insurance proceeds were able to fund the Holleman Travel Fellowship at his alma mater of Washington and Lee University in Lexington, VA, as well as a processional banner at the National Cathedral in Washington, D.C. and a scholarship for sons of alumni at his high school, St. Albans School, also in D.C.
“He was not at a point in time in his life where he was giving his money away — he still had plenty of living to do and plenty of expenses ahead,” Holleman said. “When he died, he was able to give several very nice gifts through life insurance that he had designated to places he cared about as beneficiaries.”
Today, Holleman is the president of The Holleman Companies, the company his father started in 1978. The Chevy Chase, MD firm focuses on business succession planning and executive benefits, as well as managing financial security for individuals and families.
In the course of setting up estate plans for his clients, Holleman makes it a practice to determine if there is any insurable interest between the client and an organization, school, church, or other potential beneficiary of life insurance proceeds and suggest a planned gift to his clients. And while only a small percentage of his clients actually engage in charitable giving — although those who are philanthropic tend to bequeath large sums — he gains a huge amount of satisfaction from the practice.
“What I think is happening now because you’ve had so many front-page examples of investments gone wild, if you will, that it’s a great time to be talking to clients about planned gifts that are not necessarily going to impact their cash flow and retirement savings and other things,” he said. “And using life insurance as a tool enhances that even more because you’re talking about small premiums compared to the ultimate benefits.”
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Holleman recommends first simply striking up a dialogue with clients about their interest in planned — as opposed to immediate or annual — giving. He asks clients questions such as, “What charities would you like to give something to?” The more direct and less vague you can be, he said, the better.
He also cautioned that there must be an insurable interest in order for a client to set up a planned giving arrangement with life insurance. Typically, he said, you would need to be able to demonstrate that the beneficiary would be suffering a loss upon the donor’s death, which would be the case if the client had already donated a healthy amount of capital or time.
In the end, Holleman said, this is actually the best time to be talking about planned giving with clients.
“Because people are going to be a little tighter with current gifts and cash flow,” he said, “and they’re not going to want to make commitments right now while we’re still in the financial woods a little bit, I think it’s a terrific time to get those conversations going with both existing clients as well as prospective clients.”
For four case studies featuring actual charitable planning scenarios and their ideal outcomes, please visit Charitable Planning: 4 Case Studies
Christina Pellett is the editor of the Agent’s Sales Journal. She can be reached at 800-933-9449 ext. 226 or ASJeditor@AgentMedia.com.