As an estate planner I talk about death and dying on a daily basis. It is often remarkable to me how unique it is to meet someone and after 5 minutes of schmoozing we get into a conversation about some of the most personal aspects of their lives. We speak about their families, their values, their financial affairs. Ultimately the conversation always boils down to death and how the clients want their estate distributed on their death. I always frame the conversation around goals – what are your goals? What do you wish to achieve through your estate plan? Often time, the conversation turns to how they want to leave their assets; any gifts they have made to a child during their lifetime that needs to be equalized; and how to structure their assets in a way that is both tax efficient and practical.
It is surprising to me that clients often come to an initial meeting with me (the estate planner) without having a clear set of goals in mind. With that said, it is equally surprising when clients come to our meeting with a very clear set of goals, and in particular a set of goals that go beyond how to distribute their assets on their death. Conversations with clients that want to take active steps to ensure that they pass their values and legacies on to the beneficiaries and work with their advisors to do just that are one of the most fulfilling aspects of the job. It is within those conversations that discussions surrounding philanthropic giving and how to ensure that the values behind it pass from generation to generation.
Michael and Janette Diamond were actively engaged with the Jewish Foundation years before I met them. In fact, from the moment I started working with them, it was clear that philanthropy was core to their value system and was going to be a fundamental part to their estate plan. Michael and Janette knew that a fundamental part of their succession plan was to ensure that their legacy of giving and supporting the Jewish community both here and in Israel continued for generations to come. They also believe that true philanthropy is a learned behaviour that needs to be taught generation by generation and that the true benefit of philanthropic giving is only realized when you put your money and/or your time into charitable causes.
With this in mind, Michael and Janette met with Janice Benatar of the Jewish Foundation to explore opening a donor advised fund for their family and ultimately decided that such a fund was the perfect vehicle through which to ensure that their children (and their grandchildren) had the necessary tools through which to pass their philanthropic legacy. As Michael said, “a donor advised fund is a perfect vehicle to teach children and grandchildren the benefits of philanthropy, while increasing the likelihood that future generations of one’s family will have the same life enhancing experiences that you have had in your own lifetime.”
Michael and Janette ultimately opened their own donor advised fund in 2019. After ensuring that they contributed to the fund in the most tax efficient way, and with all of the tax planning surrounding their philanthropic giving behind them, the focus of their efforts shifted to ensuring that the fund accomplished two goals: (1) that on their death the fund continued to support the Jewish community in ways similar to the level of support that they had provided to the community during their respective lifetimes; and (2) that the fund provide their children with a framework through which to support philanthropy and the underlying values behind charitable giving. With these goals in mind Michael and Janette spent significant time and energy ensuring that the agreement creating the fund mirrored their objectives.
Over the following months Michael and Janette had many conversations with their advisors and the Jewish Foundation that focused on what the mechanics of the fund would look like on their death to ensure that their children were provided with the proper tools to want to continue to be philanthropic in their own lives. Ultimately Michael and Janette came up with a structure that worked for their family in achieving these goals. In doing so they crafted an agreement that see their sons step in as successor advisors on the fund when both Michael and Janette are unable to do so and provides some structure to how and when donations are to be made. Specifically, Michael and Janette have ensured that the Jewish community will continue to receive the support it requires, by: (i) providing that on the death of the survivor of them a portion of the fund be converted into a “UJA Legacy Fund” that provides annual distributions to United Jewish Appeal of Greater Toronto; and (ii) creating a structure that sees their sons actively engaged in the management of the remainder of the fund for at least 20 years after the death of the survivor of them.
The structure specifically provides that the fund remains the responsibility of both of their children for at least 5 years after the death of the survivor of them (to give them a chance to learn to give together), with the option to split the fund thereafter such that each of their children is responsible for the management of “their share” of the fund. 20 years after the death of the survivor of Michael and Janette the fund, or funds, can be wound up with all of the funds remaining being distributed to registered charities. Additional components of the fund include a direction that a certain percentage of annual distributions be directed towards supporting the Jewish community and the ability to make donations to charities outside the Jewish community, subject to a prohibition against donating to causes which negatively impact Israel or the Jewish people.
Michael and Janette are the perfect example of how important it is to ensure that philanthropic conversations go beyond the tax savings, or the dollars being donated. True philanthropy is about both time and money and having a genuine desire to support causes and communities that require our assistance. We need to set the next generations up for success. Michael and Janette are doing so by beginning the process of giving together as a family, but also by having a plan in place for the future. Creating structures, like the one that Michael and Janette have put in place, not only increases the chances that the next generation will continue to support the Jewish Foundation but also serves to set the next generation up for success and is key to the survival of the Jewish community through the Jewish Foundation.
About the Author
Marni Pernica works closely with her clients to provide them with practical, thoughtful advice regarding their estate plan. Understanding both the financial and personal elements of a family is essential to ensuring that a client’s estate plan reflects their unique circumstances.
Clients appreciate Marni’s strong relationship-building skills and reputation as a thought-leader, and trust her because they are comfortable confiding in her and confident in her ability to advise them effectively. As a member of the firm’s Tax Group, Estates & Trusts Group and Estates & Succession Planning Group, Marni’s practice focuses on estate, income tax and succession planning, including cross-border planning, planning to reduce estate administration tax (formerly known as probate fees), the preparation of wills, powers of attorney and trusts, and assisting with estate administration. Additionally, Marni advises clients on how to reduce personal and corporate tax, including the effective use of a family trust.
Marni offers thoughtful and effective planning for clients ranging from young families who are just starting out to multi-generational families who are looking for effective ways to transition assets to the next generation. Marni enjoys navigating the complexities that arise in complicated and layered family structures, such as the dynamics that are present in blended families. Marni also has significant experience with cross-border planning for clients who have U.S. or other foreign connections. Marni frequently writes and speaks on topics involving tax, estate planning and business succession planning for audiences such as insurance and financial advisers, accountants, professionals, and fellow lawyers.