Creating a Legacy

THE SITUATION

Our clients, Mr. and Mrs. G, retired ten years ago. They sold their family home in Dallas, bought a small condo and spend most of their time travelling abroad. When they are in Dallas, they enjoy spending time in the Dallas Art District seeing performances and viewing art collections. Their three grown children have settled in other parts of the country with their own children.

Mr. and Mrs. G find that, without the family home, the family rarely gathers together as a group, which has resulted in a few family misunderstandings and a great deal of emotional distance between and among the generations. They also have no plan for their artwork after they have passed away, as their children do not have any interest in the art.

THE SOLUTION

The Philanthropy Services team of Tolleson Wealth Management meets with Mr. and Mrs. G to discuss using charitable giving as a way to bring family members together. Mr. and Mrs. G decide to create both a private foundation and a donor-advised fund so that they can use the tax and governance advantages of both. With the guidance of the Philanthropy Services team, they allocate $500,000 in cash, their oil and gas interests and a portion of their investment portfolio between the foundation and the donor-advised fund. Mr. and Mrs. G also revise their estate plan to direct that their artwork and a portion of their estates be added to the foundation and donor-advised fund at their deaths.

The Philanthropy Services team also works with Mr. and Mrs. to create a grant-making board and succession plan for the foundation and donor-advised fund. The board consists of Mr. and Mrs. G and their children, with provisions to allow the board and each child to recommend grants every year. Mr. and Mrs. G use the grant-making board as a reason for the family to meet as a group with their Tolleson Wealth Management team each year. Together, they work through their options for recommending grants, with each board member having an opportunity to advocate for their charities. Mr. and Mrs. G also use the meeting as a way to educate the next generation about financial concepts and the importance of giving back to their community.

When Mr. and Mrs. G pass away, the grant-making board will be able to work with the Philanthropy Services team and the donor-advised fund staff to recommend which pieces of art should be placed with museums and institutions and which pieces should be sold. By giving the artwork to their family’s charitable ventures at the time of their deaths, Mr. and Mrs. G will ensure that the artwork passes to others that will enjoy the artwork without the imposition of federal estate tax. They will also ensure that the artwork will be distributed and exhibited in a thoughtful way that aligns with both the charitable and family legacy.

For disclosures, please click here.

General Disclosure Language  This presentation has been complied by Tolleson Wealth Management (“TWM”).  Past performance is no guarantee of future results. No representation is being made that any account will or is likely to achieve profits or losses.  All investments involve risk, including the loss of principal. TWM’s advisory fees are described in Part 2a of our Form ADV. This material has been prepared and is distributed solely for informational purposes only and is not a solicitation or an offer to buy a security or instrument or to participate in any trading strategy. This report may not be reproduced, distributed or transmitted, in whole or part, by any means, without written permission from TWM. If you have any questions regarding this presentation, please contact your TWM representative. Tolleson Donor-Advised Fund: TPWM (“Tolleson Private Wealth Management”) offers a philanthropic option to its clients through the Tolleson Donor-Advised Fund. A donor-advised fund is a charitable giving vehicle that is created to manage charitable donations on behalf of families or individuals. This program is administered by National Philanthropic Trust (“NPT”).  Each donor-advised fund is subject to a charitable administration fee, which is paid to NPT to cover operating expenses, such as grantmaking, recordkeeping, annual audits, tax filing, quarterly statements, and other legal and fiscal responsibilities. NPT has engaged TPWM to provide investment advisory services and manage the underlying assets in the donor-advised fund. In addition to the investment advisory fee received from NPT, if TPWM recommends an investment in one or more of the Funds, TPWM will also receive a fee from the Fund.