Giving Counsel - Fall 2013

GIVING COUNSEL
FALL
2013
News from
The Dallas Foundation
ADVISORY COUNCIL SPOTLIGHT:
Tom Neuhoff, Bisignano & Harrison, LLP
Tom Neuhoff has a 360-degree perspective on philanthropy.
He’s an estate and gift planning attorney, a donor, and a former
nonprofit agency executive. Now a partner at Bisignano &
Harrison, LLP, he served as headmaster of the West Dallas
Community School for eight years. He continues his service to
the school as chairman of its board.
...............................................
Gary W. Garcia, CAP ®, Director of External
Relations, The Dallas Foundation
Dear Colleagues,
As a community foundation, we have two
main goals: to help donors realize their
charitable goals, and to enhance quality
of life in our community. Often, the
goals intersect. I want to tell you a little
more about how we reach the second
goal of enhancing life for Dallas
citizens. We hope the work of The
Dallas Foundation in this area proves
useful to you and your clients as you
develop charitable giving plans.
We use discretionary grants to
fund a broad range of nonprofits that
do good things in our community. About
seven years ago, our board began to
focus a portion of our discretionary
dollars on early childhood education.
The rationale behind this decision is
the belief that investing in very young
children yields the highest rate of
return for society. When children
receive what they need during the years
of greatest brain development – ages
0-3 – they have a much greater chance
of succeeding in school and in life.
Currently, The Dallas Foundation
focuses about one-third of our
discretionary grant dollars on improving
life for infants and young children. In
2006, The Dallas Foundation led the
effort to bring the Nurse-Family
Partnership (NFP) to Texas. This
program that partners nurses with
pregnant, first-time moms until their
(Continued on page 3)
“I
think I’m a better lawyer for having
been there,” Tom said, sitting in
the quiet conference room of his
firm’s Preston Center office. “My
charitable planning practice is better
for having been on the nonprofit side.”
Raised in Dallas, Tom graduated from
St. Mark’s School of Texas, then earned
a degree in economics from Stanford
University. He met his future wife, Flora,
while they were working summer jobs at
a resort along the Georgia coast. They
married between his first and second
years at SMU’s Dedman School of Law.
Even before he graduated, he found
himself gravitating toward estate and
gift tax planning. “It just resonated
with my personality more than any other
area,” he explained.
He said he enjoys working with
individuals, helping them think through
personal issues to put their affairs in
order. It’s a supportive, advisory role
rather than an adversarial one. When
controversies about estate planning do
arise within his clients’ families, “I like
being a mediator, a reconciler. I like to
help people step back from the edge
of the cliff and see the good in other
people.”
That same trait, combined with a
deep faith, helps explain how the estate
lawyer wound up leading a small
Christian school in a blighted section
of Dallas. Through their church, Tom
and his wife had learned about a racial
reconciliation conference hosted by a
West Dallas ministry, Voice of Hope.
The couple started volunteering with
the ministry, tutoring children, playing
basketball with the children, and
assisting with their Bible studies.
(Continued on page 2)
...............................................................
GIVE for GOOD this holiday season
Need a holiday gift for your clients or employees? We have the perfect solution.
T
he Dallas Foundation’s Giving for Good cards work like retail gift cards,
only the value is redeemed as a donation to the recipient’s favorite
charity. Choose from a selection of
holiday designs, or create a custom design
with your logo and message. For details
please contact Melinda Guravich at
[email protected] or
214-741-9898, or visit our website,
dallasfoundation.org.
2
S AV E T H E D AT E
EDUCATIONAL
SEMINARS
Kathryn W. Miree, President
Kathryn W. Miree & Associates, Inc.
The Dallas Foundation will
host back-to-back educational
events with nationally known
charitable planning expert
Kathryn W. Miree on January 30
and 31. Miree has worked
extensively with donors,
nonprofit executives, and paid
and unpaid trustees on issues
relating to pooled income
funds, gift annuities,
endowments, and other forms
of charitable giving.
The first event, on January
30, will offer practical advice
for nonprofit executives and
board members seeking to
build endowments. The January
31 event is our annual
Charitable Planning Seminar
for professional advisors.
Preregistration is required
for both events.
From Theory to Practice: How to
Build a Nonprofit Endowment
January 30, 2014
1 p.m. to 5 p.m.
Texas Scottish Rite
Hospital for Children
Maple Avenue at Oak Lawn
17th Annual Charitable
Planning Seminar
Ten Smart Charitable Planning
Ideas After the American
Taxpayer Relief Act of 2013
January 31, 2014
7:30 a.m. to 10:30 a.m.
Belo Mansion
2101 Ross Avenue
For information on these events,
please contact Gary Garcia at
[email protected].
He said that while he encourages all
his clients to be philanthropic, people
typically reach a certain threshold of
The Neuhoffs then became involved
net worth before they start thinking
with a fledging Christian school in the
about leaving a legacy of philanthropy.
neighborhood. West Dallas Community
When they bring up the issue, he offers
School (wdcschool.org) opened in 1995
options and opportunities on the “why,
and follows the same classics-oriented
how, and where” of giving and on the
education model as Providence Christian
blessing of giving while living in order
School of Texas. The West Dallas school,
to enjoy seeing their gifts at work. For
located just south of
example, gifting
the Trinity River along
retirement assets to
“ I like being a
Canada Drive, now
charities both during
mediator, a reconciler. one’s lifetime and at
enrolls 260 children in
pre-K through eighth
death makes excellent
I like to help people
grade. Tom joined its
sense, avoiding both
board in 1997.
deferred income taxes
step back from the
When founding
and the estate tax,
edge of the cliff and
headmistress Carole
he said.
Sonju stepped down in
Many clients
see the good in
2001, Tom became head
can provide for their
other people.”
of school. He spoke to
families as well as
his law partners, who
leave a charitable
invited him to stay “of
legacy. Donor advised
— Tom Neuhoff,
Bisignano &
counsel” while he ran
funds, such as
Harrison, LLP
the school. They even
those at The Dallas
covered his bar dues so
Foundation, are an
he could stay active in law.
easy, efficient alternative to establishing
“They paid the whole time, not
a private foundation, he said.
knowing whether I’d come back,” he
More challenging is sorting through
said. “They were very gracious.”
the personal issues – clients who may
After eight years, Neuhoff said, “I had
be estranged from their children,
led the school as far as my creative
children of clients who are estranged
abilities could take it.”
from each other, and the issues that
He called his law partners, who
naturally arise with blended families.
welcomed him back, and stepped down
That’s where his improved
as headmaster. Returning to the same
communication skills really help.
firm he’d left made his career transition
“That’s been a big lesson for me –
less jarring, he said, but it still took a
asking more fuzzy questions,” he said.
year to feel fully caught up in the legal
“Initially, I talk less about how to get
profession.
things done and ask more about why
“I had to dust off some cobwebs,” he
they want to do that. Selfishly, I also
laughed. “The worlds are so different.
look for patterns among clients who do
It’s very quiet here in my office. The
things well or not so well. I learn from
school is not like that.”
them, which hopefully helps me be not
His time at the school forced him to
only a better lawyer, but also a better
strengthen some skills, such as
father, husband, brother, and son.”
communication, which are critical to his
With six children between the ages
work. It also underscored the value of
of 7 and 20, and his ongoing
teamwork, which now translates into
commitment to the school he once led,
taking a collaborative approach to some
Tom doesn’t have much free time. But
legal issues. Tom is a Chartered Advisor
he wouldn’t have it any other way.
in Philanthropy ® , and he enjoys working
“I’m a blessed man with a wonderful
with professional advisors from other
family and a great place to work,”
fields to design gift and estate plans.
he said.
Advisory Council Spotlight
(Continued from front)
3
Charitable Planning to Complete
Before the End of 2013
By Ira Nevelow, CPA, AEP, JD . . . . . . . . . . . . . . . . . . . . . . . . .
C
ertain types of tax planning work best when interest rates are low. For
taxpayers who are charitably inclined, one of today’s most desirable charitable
giving alternatives is the charitable lead annuity trust (CLAT). By better
understanding the math of this planning technique, a professional advisor can
better identify clients who would most benefit by funding a CLAT and better explain
to those clients the benefits of a CLAT.
The CLAT first makes an annual payout to a charitable organization(s), either for
a term of years or over someone’s lifetime. The payout is based on a fixed percentage
of the initial fair market value of the trust. Any assets remaining in the trust after
the charitable annuity has been paid then go to non-charitable beneficiaries (a
non-grantor trust) or revert to the donor (a grantor trust). Depending on which
type of trust the taxpayer chooses, there can be various income and estate tax
benefits.
Three things most impact the tax savings from the portion of the CLAT gift claimed
as a charitable contribution: (a) the percentage payout to charity, (b) the term of the
annuity interest, and (c) the applicable Internal Revenue Code (IRC) Section 7520
rate, which is the lowest IRC 7520 rate of the month of the gift or of the two prior
months. There is no minimum or maximum percentage annual payout, so the taxpayer
has maximum flexibility with this variable, as they do with the term. The following
shows what the value of the charitable gift would be if $1 million were contributed
to a CLAT with differing terms and differing annual payout rates at the end of
the period:
Payout Rate
7520 Rate
Term
Charitable Gift
.............................................................
6%
5%
5%
5%
5%
2%
2%
2%
1%
6%
20
20
15
15
15
years
years
years
years
years
$981,084
$817,570
$642,465
$693,255
$485,610
The donor will not receive a charitable income tax deduction for a gift to a nongrantor CLAT. However, for gift tax purposes, the taxable gift is limited to the value of
the remainder interest. The lower the 7520 rate, the smaller the remainder interest.
To the extent the trust earns a rate of return in excess of the 7520 rate, the additional
return will accrue to the trust beneficiary without additional estate or gift tax being
paid. In the 6 percent example above, the taxable gift is $18,916. If the trust is able
to earn 6 percent over the life of the trust, the beneficiary would receive $1 million
upon termination of the trust. The trust will pay tax on its earnings and deduct its
annual payments to charity. The trust will also have the same asset protection
features of any other irrevocable trust.
A donor who wants a current income tax deduction would want to use a grantor
CLAT. The donor will pay tax on the trust’s income, which can be managed by
investing in tax-free investments or growth investments with deferred appreciation.
If the donor dies before the end of the term, a portion of the deduction is recaptured.
Of the three variables that most impact the tax savings from this planning, the
7520 rate is the only one advisors do not control. Given the likelihood that interest
rates may increase, thus reducing the tax benefits of this planning, now is the time
for clients interested in this strategy to act.
Ira Nevelow, CPA, AEP, JD, is the partner-in-charge of Estate, Gift & Trust Taxation
Services at Weaver, the largest independent accounting firm in the Southwest, with
offices throughout Texas. He can be reached at [email protected] or
972-448-6960.
Garcia’s Letter
(Continued from front)
child is 2 years old to promote a healthy
pregnancy, prevent child abuse, and
teach parents the skills needed to be
their child’s first teacher. The successful
Dallas County program helped convince
the state to approve funding for NFP in
more than 20 Texas counties.
In 2007, we cofounded the Zero-toFive Funders Collaborative, which works
to improve kindergarten readiness in
Dallas, specifically by working with
parents to increase the vocabulary of
their young children. We have focused
our efforts in the Bachman Lake
neighborhood, and a preliminary
evaluation by SMU experts shows that
participating children are better
prepared for school – and their parents
better understand how to help their
kids succeed.
If you or your clients want to know
more about our early childhood
initiatives or any other grant programs,
just call or email me. We want to be a
resource to you and your clients and a
leader in tackling our community’s
most important challenges.
All the best,
Gary
F O R M O R E I N F O R M AT I O N
For more information about
The Dallas Foundation,
please contact
Gary W. Garcia, CAP®
Director of External Relations
214.741.9898
or
[email protected]
or visit
dallasfoundation.org
The Dallas Foundation
Reagan Place at Old Parkland
3963 Maple Avenue, Suite 390
Dallas, TX 75219
Jesse T. Abercrombie
Edward Jones Investments
Gary Ahr, ChFC
AHR Financial Group
Todd R. Amacher
Robertson, Griege & Thoele
Larry K. Anders
Summit Alliance Companies
Barbara McComas Anderson
Attorney at Law
Sharon J. Baca, CFP
Spectrum Financial Group
Donald W. Bailey, CFP, CIMA
UBS Financial Services, Inc.
Jayson Bales, CFS
Spectrum Financial Group
Charles M. Best, II
Alliance Financial Group, Inc.
Santo Bisignano, Jr.
Bisignano & Harrison
Jan Hart Black
Black, Muncy, Davis
Kalita Beck Blessing
Quest Capital Management, Inc.
Truman G. Blocker, IV
Spectrum Strategies
Colleen M. Bowler
Strategic Wealth Partners
James Braden
Brownlie & Braden
Jon M. Bradley
Weaver
Thomas D. Brittain
Glast Phillips & Murray, PC
Rebekah Steely Brooker
Passman & Jones
Patrick S. Carrigan
UBS Financial Services, Inc.
John M. Collins
Haynes and Boone
Edward A. Copley, Jr.
Akin, Gump, Strauss, Hauer & Feld
Deborah A. Cox
JP Morgan Private Bank
Ronald R. Cresswell
Johnson, Jordan, Cresswell & Monk
Dodee Crockett
Merrill Lynch
W. Bennett Cullum
Bell, Nunnally & Martin
Kamal N. Daya, CFP
The Nautilus Group
Brian L. Dethrow
Jackson Walker
Cory M. Dowell
Bernstein Global Wealth Management
Neely D. Duncan, CPA, CFE, FCPA
Lane Gorman Trubitt, PLLC
Mary H. Durie, CFP
Quest Capital Management, Inc.
William S. Dykeman
JP Morgan Private Bank
John A. Eads
Smith Jackson Boyer & Bovard
Christopher D. Fay
Smith, Frank & Partners
Robert E. Feiger
Friedman & Feiger
Barbara B. Ferguson
Thompson & Knight
Brant C. Ferguson
UBS Financial Services, Inc.
James B. Fincher
Burch Fincher & Company, CPAs, PC
Barry N. Finkelstein
Barry N. Finkelstein, CPA
Derek L. Fletcher
US Trust, Bank of America Private
Wealth Management
David Folz
Texas Capital Bank
William J. Goodwin
US Trust, Bank of America Private
Wealth Management
Joe M. Graham
Graham Investments
Donald J. Hahn, Jr.
Investments
Greg Hall, CPA, CFP
Tolleson Wealth Management
Jeffrey S. Hamilton
Mincey – Carter, P.C.
John W. Harris
Snell, Wylie & Tibbals
Bob D. Harrison
Bisignano & Harrison
Jack W. Hawkins
Gardere Wynne Sewell
Todd S. Healy
HealyPartners
James O. Hutcheson
Regeneration Partners
Douglas G. John
UBS Financial Services, Inc.
William D. Jordan
Johnson Jordan Nipper & Monk
Stanford M. Kaufman
Stanford M. Kaufman & Associates
Tom D. Kingsley
Capitas Financial
Robert Kipp
BKD
Robert H. Kroney
Kroney Morse Lan, PC
Robert Lane
Lane Gorman Trubitt
Sheryl B. Latham
Hallett & Perrin, P.C.
George T. Lee, Jr.
Attorney at Law
Eleshea D. Lively
Kroney Morse Lan, PC
Fred Lohmeyer
Taylor Lohmeyer P.C.
Jason Loveless
Ash Technical Services
Lynne J. Luby
Luby & Associates
Eric D. Marchand
Meadows, Collier, Reed, Cousins,
Crouch & Ungerman, L.L.P.
Tommy McBride
Merrill Lynch
Carmen McCracken McMillan
Fortune Wealth Management
Curtis W. Meadows, Jr.
Thompson & Knight
Danika H. Mendrygal
Haynes and Boone
J. Mitchell Miller
Haynes and Boone
James Mincey, Jr.
Mincey – Carter, PC
John Mockovciak, III
Robert W. Baird & Co.
William R. Moss, CPA
IAS
Kathy Muldoon
Carter Financial Management
Jeffrey A. Murlette, CPA
Weaver
Alex E. Nakos
Malouf Lynch Jackson & Swinson
Tom Neuhoff, Jr.
Bisignano & Harrison, L.L.P.
Ira L. Nevelow, CPA, JD
Weaver
Jane Nober
Consultant
Keith V. Novick
Gardere Wynne Sewell
E. E. “Boots” Nowlin
Deutsche Bank Alex. Brown
R. David Parrish
Credit Suisse
Robert C. Prather, Sr.
Snell, Wylie & Tibbals
J. Clint Pugh
Saville Dodgen & Company
Andy Raub
Raub Capital Management
Dale R. Reed, III
Merrill Lynch Private Client Group
Rust E. Reid
Thompson & Knight
John L. Roach
John L. Roach, Inc.
James Y. Robb, III
Perot Services
Randall L. Root
Westwood Holdings Group
David M. Rosenberg
Thompson & Knight
David T. Ross, J.D., L.L.M.
Tolleson Wealth Management
John K. Round
Strasburger & Price
Roger A. Shake
Legacy Consulting Group
Terry Simmons
Thompson & Knight
Steven L. Skov
Law Offices of Steven L. Skov
Edward V. Smith, III
Smith & Stephens
R. Scot Smith
Morgan Stanley Smith Barney
John D. Solana
Solana & Associates, PC
Elizabeth E. Solender
Solender/Hall, Inc.
Richard J. Szelc
Neuberger Berman
C. Albert Tatum, III
Investments
Kenneth B. Travis
TravisWolff
James K. Webb
Webb Financial
Paul H. Welch
Fiduciary Financial Services of
the Southwest, Inc.
Robert E. Wilbur
Robert E. Wilbur, Attorney at Law, PC
Clark Willingham
Barnes & Harrington, PC
Sondra Wilson, C.P.A.
Fiduciary Financial Services of
the Southwest, Inc.
Lawrence M. Wolfish, Esq.
Wolfish & Newman, PC
Scott A. Wood
True North Advisors
David R. Work
Merrill Lynch
ADVISORY COUNCIL
Stuart Bumpas, Locke Lord, Chairman, Advisory Council
U.S. Community Foundations
with National Standards for
Confirmed in Compliance
REAGAN PLACE AT OLD PARKLAND
3963 MAPLE AVENUE, SUITE 390
DALLAS, TX 75219
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DALLAS, TX
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