Tuesday, January 06, 1998
Unexpected Charity
by [email protected]
([email protected])
A couple in their eighties visited my law office two years ago to discuss their estate plan. They didn't have one. They had $680,000 in Coke stock and a vacation house worth $500,000, and a few thousand in the bank.
"Did you retire from Coke?," I asked.
"No, I was a dentist," he replied. Then he told me about his bird-hunting friend who told him thirty years ago to invest $3,000 in Coca Cola. He did. It was his only investment. It had grown to over $600,000. His dividend at the time was less than 2%. They sold stock for major purchases and living expenses, paying (at the time) 33% in capital gains taxes (Federal and Virginia rates).
It didn't take long for me to focus on his need for a major charitable gift, with income reserved for life. He said, "I'm not selling my Coke stock," and she said, "We aren't giving it to charity." He crossed his arms and she stood to go, but they agreed to come back in a week to review the numbers with me.
At our next meeting, I had run projections on a charitable trust to hold $250,000 worth of the Coke stock. He studied the figures a while, and said, "I'd be a Fool [his term] not to do this." He avoided capital gains on the sale, erased his federal income tax liability for the next six years, boosted his income substantially, reduced his risk from a one-stock plan, cut inheritance taxes, and became a major benefactor of a church-based health mission.
I saw the couple again today. Two years later, their portfolio has made up much of the value they gave away. The couple is now happy with their decision -- at first reluctant -- to give up a major part of their nest egg. They feel really good about what they did, and I'm pleased with my role in making it happen.
Sometimes, we find charity in unexpected corners. Have your parents and grandparents talk to their church or university planned giving directors for more information about gifts like this one, that keep on giving.
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