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Did a podcast for Pat Ennis on Charitable Planning for Boomer Business Owners in Transition from Success to Significance. An historic opportunity for advisors, for nonprofits, and for our communities.
The best advisors now say, wisely, that a good legacy plan passes on values as well as valuables. They may have you circle your values in a list of such or sort a deck of values cards.
But take a moment. Step outside for a moment. Ask yourself how your own values were formed, how you inherited them? What role did a religious tradition, a literary or philosophical tradition, a school, a coach, or adult supervised after school activities play, along with the example and admonitions of those who loved you?
How, then, can your legacy planning keep the circulation of love, care, and concern going through the organizations that foster the values without which we would be no better than animals?
The best advisors now say that the goal of legacy planning is not the transfer of assets per se, but a flourishing family. To these advisors and to those they serve, I would like to say: Yes, the goal of multigenerational family governance is a flourishing family. Yet, if you were to list the top ten people or organizations who have helped you “flourish,” does any attorney, CPA, banker or wealth manager make the list? My list includes people who have loved me, or befriended me, and nonprofits like schools and church.
The things we do for money, and the things we do for love. Giving, then, is not peripheral to human flourishing. In so doing we participate in and keep alive the organizations that keep us alive, healthy, and morally sane. Hospitals, colleges, arts organizations, houses of worship, and so many more. If the legacy planner is to help families flourish she will have to pay close attention to the circulation of love as well as money. Money in that economy circulates as a gift. Nonprofits are the banks where debts of gratitude are repaid and reinvested in the give and take of care.
This talk was created for UT Southwestern Medical Center legacy donors. You might ask, as you read it, if there are charities central to your legacy, and how you would like them to treat you. Have you been active or reactive with them? Would they be receptive to your taking charge with respect to your legacy through them? What lives in you because of those organizations and traditions? What in you will live on through them when you are not here?
Legacy donors, and some of the best tax, legal, and financial advisors in Dallas, most of whom hold the Chartered Advisor in Philanthropy designation. Total of 100 in the audience. Gallery of photos from the event.
Light hors d’oeurvres and wine, then a 55 minute event, including an introduction by Kathleen Gibson, who heads the Foundation, 20 minutes on Life, Love, and Legacy by me, 5 minutes from Michael Kahn, and his grandmother, Ethel. They spoke about a gift they made to fund a researcher to cure the particular cancer from which Michael’s mother died. Ethel spoke of courage she learned from a friend who had survived the Holocaust. Then Michael and I took questions. Then there was a 5 minute video of testimonials from others who had made legacy gifts to the Foundation.
The highest priced advisors, the best in world, because they are intelligent and highly educated, say that the goal of legacy planning is not just to transfer assets, but to enable the heirs to flourish. Yet, even at $10,000 a day for years, no tax and legal advisor on earth can accomplish that goal. Flourishing is what our our arts and cultural, health, educational, and religious organizations enable. Unless our planning is grounded in the ethic of care that flows through the organizations that sustain us, our plans will fail, no matter how hard we work on the legal documents.
Some say “You can’t go home again.” But Robert Frost, in his “Death of the Hired Man,” wrote, “Home is where, when you have to go there, they have to take you in.” Home in one of the world’s most famous stories, The Odyssey is a round trip. Out and back over an adult life time. Win a war, get lost, find the way, return. The warrior king was so changed in the journey that when he reached his home only his aged dog recognized him. Barked once and died.
In Britain before the Monks came, but after the Roman legions left, were settlers from Germany, Ireland, and other places, the Angles, Jutes and Saxons. They lived in small tribes (a commitatus) around The Mead Hall. They feasted there, drank, celebrated victories, births and marriages. Their poets were called scops and recited, or chanted, verses to a harp. No writing yet, that had to wait until the monks came to write the songs down. I studied Old English, over two semesters in grad school, and got a B. But I do not remember the title of the poem, I remember only this image: “The bird flies in one end of the Mead Hall and out the other, from darkness to darkness; that is a human life.” That is time as a line, not a circle. Black to bright to black. But the seasons cycle. The liturgies circle. The feast days and holidays come back every year. Some say we do come home.
Headed home is also what they say in baseball when the runner tags third and is headed home to score the run. So think of it now with me as the great American pastime, baseball. The baseball diamond on a green field. Can you visualize it? Maybe a backyard layout, or the Little League field, or the High School field, or maybe stadium with a crowd. Maybe you can recall a time you played, or took a child or grandchild to see the game, or watched them play themselves.
Home plate is where we start and where we end when we hit a home run. Home is where we live as a family. Beyond that is community. The German philosopher of the mid-20th century, Heidegger, said, “We live in society; we dwell in community.” At a certain age we look back and see that we have been faithful to what we love, as best we could. Many of you have given faithfully, almost religiously, to UT Southwestern, and a handful of other organizations for what? Ten, twenty, thirty or forty years? Giving when asked, always. Stepping up when asked, always. For such donors this too is home. Home is where we say, not them and us, but we or even thou. Home is where we stand together; we bow our heads together. Home is where we celebrate the wedding, birth the baby, tend the sick, sit with the dying, worship our God, and mourn our dead. Home is where we sing together, pray, or dance, or cheer, in unison. As when the home team scores, or when the soldiers come marching home again, or when we commemorate their sacrifice on Memorial Day or on the fourth of July.
If this seems too much, let’s stick with baseball and talk about the other great American pastime, money. Let’s talk about hitting a home run.
First base. To get even to first base with money is not easy. Most people never make it all the way to first. They strike out, pop out, get thrown, out, or stumble on the path. This is the first base question, “Is there enough for me?” Getting to first base is what advisors help us do. All of you, who are advisors here, can handle the client running from home to first. We know where they might stumble and we can get them to first. Gap analysis. Life insurance, disability, health insurance, property and casualty, liability insurance, long term care coverage, retirement savings, asset management, education funding. All of that is getting to first base. Some donors and clients, though, have all that covered. They, with your help, already have tagged first base.
Second base: To get from first to second, advisors can help us do the math. They can show us our projected financial statements to life expectancy. They can help us see what net worth is at first death, and second, if we are married. They can play “what if” with the assumptions about rates of return. For some, maybe 3-5% of this country, even accounting for all expenditures and emergencies on out to life expectancy, even assuming down markets, net worth is rising, always up. Some of you are in that position, for sure. Call it planning for abundance rather than scarcity.
This recognition that we are planning for abundance brings us to the second base question. “Where will it go when we are gone?” Estate taxes for most are not an issue now after tax reform. A couple can pass $22 million without transfer tax, and much more with proper planning. So, the only two remaining places wealth can go, when we are gone, is heirs or charity.
How much to heirs is part algebra and part moral dilemma. How much is enough and how much too much? Every study for twenty years has said this is the question that torments parents and grandparents planning for abundance. So it may be best to use worksheet. (Phil holds up a book of them.) Add up what you want heirs to get. Make a list. A house? As good as your own or bigger? A car? Two cars? A vacation house? Education fund? Retirement fund? Jewelry? Private club memberships? Add it up. Include grandkids. Add it up. And then subtract from current and from projected net worth. On second base, some of us, having set aside enough but not too much to heirs, are still planning for abundance. We see that there will be something left over. We are rounding second, headed for third.
Third base: Here is a quick example to show how it goes. JD and Mary Riley, age 70, have, let us say, $22 million in a business and live on $240,000 after tax. They have three grown kids and decide they want each to get $5 million. I hired a nationally known financial planner to work on the numbers. At death, if they both die tonight, they will have from $5 million left over for charity. If they die in seven years, they have $15 million left over, and if they live to life expectancy it is even more left over. The numbers just get bigger.
JD and Mary’s biggest gift to date to each of their three home base charities is $5,000. The numbers crunched by the famous financial planner say they could do $50,000 a year starting now, for all three of their home base charities, with a kicker on the back end to endow that $50,000 forever for all three charities. Yes, the numbers say that! And I can tell you that JD and Mary are standing on third, with their eyes big, and they are shaking their heads, and their feet are not moving. It is absolutely inconceivable to them that they can do that much. Yet they can!
If I were the Riley’s third base coach, here are the questions I might suggest they ask their home base charities, before they commit. “$50,000 a year endowed is big to us, is it for you? What will we get for that money? How do we know it will not be wasted? What impact? What kind of reporting? Can we meet the program champion who will do something with our money? Will we get recognition? Can we memorialize a loved one? Will we get a gift agreement? What good will come of it? Will it really matter? Can we get started smaller? Test you and work up to giving more?”
Home base: They are running now. They can get home during life, or at death. If they start now they can hear the crowd cheer. They can set a living example for kids. Death time might be safer, for the big gift, since they may want to hold onto the money until then. They can run home, starting now, cross the plate standing up, head to dugout as the crowd cheers, or they can slide in feet first. Either way, they hit the ball out of the park!
Game over? No, the point is that it is not over. The elder generation will sit down. The rising generation stands up. The game goes on, season after season. On that field, at least in our memory of it, the grass is always green. The weather is perfect. The game goes on.
So what is home base for you?
As you are thinking about that, since I still have a few minutes, may I try something? It is risky for me. How many of you happen to love poetry? How many of you hate it? Can I see a show of hands for those who hope I will not under any circumstances recite a poem? On second thought, be polite and don’t raise your hand. This poem is one I heard at age nineteen, on a late summer evening, hearing wind rustle the mountain pines, at a place I still consider home. My father taught literature there. I met my wife there. I grew up there. My mother has a scholarship fund in her name there. I actually did play softball there with Robert Frost batting clean-up in his old age. And we always let him hit a home run, too. That is partly because he was a sore loser.
The poem will only take one or two minutes. It is by an English poet, who was almost a peasant, but got educated, left home and became famous. He was an influence on Frost. His name is Thomas Hardy. You may have had to read his novel, Tess of the D’Urbervilles in High School, at least for some of you, your kids probably did. You may not have liked the novel, but you cannot help liking this poem. Hardy, an aged man, writing about the time of the First World War, is going home; actually, he has just now entered his ancestral home, again, the house he grew up in. And if you have had that experience you know how the home is not the same; changes have been made, to a door, say, or a wall. And you yourself are changed. Many of the people you knew and loved are gone, but it seems as if they are present. You can still see your mother in her favorite chair, even if the chair gone, and she is too. And perhaps you can still hear music playing. In Hardy’s case, a country fiddler.
By Thomas Hardy
Here is the ancient floor,
Footworn and hollowed and thin,
Here was the former door
Where the dead feet walked in.
She sat here in her chair,
Smiling into the fire;
He who played stood there,
Bowing it higher and higher.
Childlike, I danced in a dream;
Blessings emblazoned that day;
Everything glowed with a gleam;
Yet we were looking away!
“Memory fades; remembrances remain.” Found inscribed on a three hundred year-old stone bench in an English park.
Memory, or to use her ancient name, Mnemosyne, is the mother of the muses, including poetry, music, dance, drama, history, all that brings us together in community and tradition across time. Legacy is her daughter, too, I think. In legacy as in poetry, when it works, something uniquely us, something very personal, is fully expressed, so it can go public and live on. Something circulates in community, lives in community, and can only live in community, something like love or inspiration, and does not die. Rather it sustains life. At home, “everything glowed with a gleam. Yet we were looking away!” In legacy we return to the place we started, the place we call home. We commemorate it. In the legacy fully achieved, everything glows with a gleam and we are not looking away.
Let me suggest a book that may help you as it has helped me and wife, Katie: The Legacy Spectrum, by Mark Weber. The book is built around worksheets to help you see, with your advisors, what base you are on. Are you on first, second, or third? Do you have enough for yourself and spouse if married? Are you leaving your heirs what you want them to receive? Do have enough beyond that to leave a significant legacy? If you find you are now on third, then you can talk to your home base charities to see how you could hit a legacy home run. My wife, Katie and I, are working through it together and have found it helpful in clarifying what we want for ourselves, what we want for our children and now our first grandchild, and for the home base charities that mean so much to us, personally, and as a family. To our surprise, working through the book together, we found as deeply as we love each other, and think alike, we actually want two legacies, “his” and “hers,” and that is what we are working on now.
When have you sheets filled in for now, you are ready to make good use of your advisors. They can help you achieve what you now know you wish to achieve.
If you have questions about first base issues, making sure you have enough, you may want to begin with a financial planner, or investment advisor. Credentials like CFP, ChFC, or CPA are relevant.
If you have second base issues, about where you stuff will go when you are gone, an estate planning attorney, JD or JD LLM, or your CPA could be a good place to start. If you are stopped cold by family issues that are painful, you should know there are specialists in family dynamics who work with families to find a way forward. You might look into Family Firm Institute or Purposeful Planning Institute to see the kind of advisors who do this. Well-connected financial and tax advisors may also be able to make a local referral.
If you are headed to third base, contemplating a charitable initiative, a Chartered Advisor in Philanthropy, who often holds other designations in an underlying discipline, like law, accounting, finance, or fundraising, maybe a good place to start. Wherever you start, remember that informed legacy planning is a team activity. Your advisors should work together to make sure your intentions are realized, particularly if you have considerable wealth, complex assets, a family owned business, or special need in your family.
If you have a mission in mind, but not a charity, there are sources of advice. Many online resources like Guidestar can help. A local community foundation can help. And there is a small cottage industry of advisors who specialize in charity selection, grant consulting, and impact analysis. Such advisors, and some community foundations can also help you explore family philanthropy. For a do it yourself approach, see the fine resources at Rockefeller Philanthropy Advisors.
For some, charity selection is, of course, an issue, but it reminds me, too, of the dating software so popular now with younger people. You input your data and it pairs you with the best possible date within driving distance for tonight, tomorrow morning, or lunch tomorrow. I am sure this makes good sense, but I am not in the market for that. I met my wife, Katie, when I was nineteen and we have been inseparable for almost fifty years. What I am in the market for is to be a better husband, a better father, and now a better grandfather.
Yes, charity selection, like the selection of a life partner, is important, but so is fidelity to the organizations and traditions that have formed us, served us, and kept up together as body, mind, and soul. You may already have your home base charities in mind.
This is a choice, and it is your choice! Seldom will advisors work with your charity unless you direct them to do so. And, your charities may not know to work with your advisors, either. If you do decide to create an intentional legacy. it is best that you yourself set the process in motion. Call the charity, rather than waiting for them to call you. Call them, explore options; then, if you wish, authorize them to get in touch with your advisors to help structure what you want done for yourself, your family, and your community.
May your efforts prosper!