I described the technical differences between donor-advised funds (DAFs) and private foundations back in June of 2007. Frankly, at the time, I saw no compelling reason seriously to consider creating a DAF.

Following the FoundationWise^SM conference, however, I’m seeing more reasons than I did back then to consider this alternative. Read the rest of this entry »

I will confess: I’ve been dragging my feet. Not sure why. But I had to overcome the hurdle.

I have finally “turned on” the Strategic Inheritance Legacy Lounge forum and invite you to join what I hope will soon be a freewheeling and inspirational discussion of all things related to passing on a heritage from one generation to another.

Join us, won’t you?

Thanks!

A couple of weeks ago I received a phone call from a Generous Giving consultant. I was invited to join a group of 11 men who were going to visit the founder of a $2 billion company to talk about his and our philosophies and practices of giving . . . and of transferring our material wealth, our values, and our philanthropic perspectives to future generations.

As it turned out, we were to meet not only with the founder (a man in his late 60s), but with his sons, and one of his grandsons. The meeting occurred about a week and a half ago over the course of an afternoon and evening and the next morning.

As I’ve tried to work through the implications of what transpired, and as I’ve attempted to explain to others what occurred, I have realized I carried at least two lessons from the experience. This post is about the first–a lesson I’ve learned before, but never applied in quite this way to my charitable giving interests.

The lesson: That we benefit from participating in peer-level mastermind groups–groups of like-minded individuals who are willing to share their insights, experiences, knowledge, etc., in order to help each other attain a definite goal or purpose. In this case, then, to help each other improve our ability to make effective and generous charitable donations.

I was talking with my sister the other day and I mentioned how valuable this particular meeting had been for me “because I was meeting with fairly wealthy people who are already giving at a high level.”

“Why would that make a difference?” she asked.

“Because they are dealing with the kinds of issues Sarita and I are dealing with as we consider our giving,” I said.

“Like what?” she asked.

What follows is more or less what I discussed with her. Read the rest of this entry »

In my last post, I talked about giving your children the vast majority of their inheritance “early”–while they’re still in their 20s and early 30s, say–rather than later.

A few weeks ago, I was talking with a friend who has many years’ experience counseling and coaching wealthy individuals . . . as a wealthy person himself and a friend, not as a professional counselor. He made an interesting observation about a reason why you want to predefine for your heirs–and make sure they know–how much you intend to leave them: You want to remove every potential reason they may have (every potential conflict-of-interest) that may lead them to think that, by reducing cost of the care you receive toward the end of your life, they will benefit.

“I have seen it,” he said, “where the children say, ‘Y’know, if we put Mom in the _____ Village, we will be spending [i.e., they will be digging into Mom's nest-egg!] to the tune of an extra $50,000 a year compared to _____ Nursing Home. Why should we waste our money?’ “

Of course, they are not “wasting” money if the quality of service is significantly different (which it was in this particular case). And they weren’t about to “waste” or “spend” their money. It was Mom‘s money they were talking about. But they were already anticipating it as their own. And so they withheld from their mother what should have been rightfully hers . . . if only she and her husband had done advanced planning that predefined for the children exactly what they could expect and demonstrated that there was no reason for the kids to modify their care plans in hopes of gaining advantages for themselves.

I read an article this morning that reminded me: Most estate- and legacy-planning professionals ignore philanthropic considerations in their basic planning strategies.

Alexis Martin Neely, for example, notes, in an article printed in the latest Bottom Line Personal, that single adult parents (widowed or divorced, in particular) need to make allowances in their estate plans not only for their personal health care, but also “for the guardianship of any minor children and transfers [of] assets to heirs of your choice while minimizing taxes.”

It struck me: This is the standard mantra of traditional estate planning professionals. For them, estate planning is all about minimizing taxes and maximizing flow-through to the next generation. And it has absolutely nothing to do with larger life purposes, the legacies Read the rest of this entry »

I mentioned that profits have to do with increased wealth; and increased wealth is not the same as cash. If we fail to understand those differences, we can run into some serious trouble.

I thought I would illustrate what I am talking about. Read the rest of this entry »

What are profits?

I don’t think most of us really understand the concept very well. In fact, I’ll include myself in the number who struggle to understand what profits are.

To illustrate: When you hear that a company made, say, $8 billion last year, what image comes to your mind? –For me, I tend to think: “Oh, wow! They have $8 billion in cash in a bank somewhere–$8 billion that they did not have the year before.” “Profits” mean “cash.”

That’s what many people think. But that’s not right.

I’m sure there are more technically correct definitions of the word profits, but here’s a the best working definition I’ve been able to come up with: Profits are any increase in assets for which a business does not have increased liabilities (or debts) other than to the owners. Put another way, profits are an increase in wealth–and (most important to understand–and something I still tend to forget!) wealth comes in many forms other than money!

I say this because, for the longest time, I thought of profits in the same way I thought of a paycheck: profits are the same thing as a paycheck. You take them, bring them to the bank, and buy stuff with them.

But that’s not the case. Read the rest of this entry »

Mark Nestmann writes in the Sovereign Society‘s Offshore A-letter about how you can evaluate the financial health of the companies you rely upon for insurance.

Among his suggestions: Read the rest of this entry »