Takeaways
SITUATION: When financial advisor Benjamin James met with Winston and Lyla Washington for a semi-annual review, the couple expressed their passionate desire to involve their family in their charitable giving decisions.
SOLUTION: Knowing they had $2 million in appreciated securities, James recommended opening a donor-advised fund (DAF) to provide a giving resource, shield them from capital gains taxes, and involve their children and grandchildren in the process.
IMPACT: The Washingtons empowered their grandchildren to select charities, creating a lasting family legacy of generosity and fostering stronger family bonds through shared philanthropic decisions.
Situation
When financial advisor Benjamin James met with his clients, Winston and Lyla Washington, for a semi-annual review of their wealth plan and portfolio, the Washingtons talked passionately about their desire to make an impact in their community and to include their family in giving decisions.
They envisioned a future where their philanthropic spirit and commitment to community would be embraced and carried forward by the younger generation.
Solution
Knowing they had $2 million of appreciated securities in their portfolio, James recommended that the Washingtons use those securities to open a donor-advised fund (DAF) that would provide a resource for giving and a shield from capital gains taxes.
He explained that they could include their children and grandchildren in the process and even name the family members as successor grant advisors to continue the giving after the Washingtons are gone. The Washingtons loved that idea so much that they convened a family meeting and announced that, from then on, the grandkids would recommend how funds would be distributed from the DAF.
With an annual budget of $50,000, each of the eight grandchildren—from elementary-school-aged kids to college grads—researched charities and prepared presentations about how they would distribute the funds. On Thanksgiving, everyone got together in the Washingtons’ basement to make their pitches, with the grandkids discussing the proposals until they came to unanimous decisions.
Impact
The grandchildren were given a significant voice in selecting charities, instilling in them a profound sense of ownership and responsibility in their philanthropic journey. This empowerment was not only about choosing where the money would go but also about understanding the importance of giving back.
Winston and Lyla established a timeless family legacy of generosity and community service. By actively involving their grandchildren, they ensured that their values of kindness and altruism would be perpetuated through the generations, creating a ripple effect of positive impact.
The process of making philanthropic decisions together strengthened family bonds, cultivating a shared commitment to making a difference. It fostered deeper relationships and a collective sense of purpose. The family not only grew closer but also united in their mission to create a better world.
Through the thoughtful use of a DAF, Winston and Lyla were able to craft a living legacy that extended beyond monetary contributions. They nurtured a culture of giving within their family, demonstrating that true wealth lies in the ability to make a lasting difference together. This heartwarming story illustrates how DAFs empower investors to leave a profound legacy and involve their loved ones in the beautiful act of giving.
Disclaimer: This hypothetical example, based on a real scenario with altered identifying information, is for educational use only. The situations, tax rates, and returns mentioned are not reflective of actual clients or investments. There is no guarantee the depicted rates can or will be achieved. Results will vary. Consult legal and tax advisors for suitability. RCF reviewed all due diligence documents, including governing documents, audited financials, and tax returns.
