Jan 02 2024 / Round the Table Magazine
Maximizing the gift
After Joel Bray, CFP, CLU, lost his 49-year-old mother to ovarian cancer when he was just 16, he took away two lessons:
“One, it was a very early reality check that our time here is limited, and every day is a gift,” said the three-year MDRT member from Calgary, Alberta, Canada. “And two, it’s up to us to expand our comfort zone to grow who we are and leave the biggest footprint.”
Bray’s perception of how to put that wisdom into practice really clicked 17 years later in 2018 when his dad, who took a reduced pension and stopped working to stay at home and raise his two sons after he lost his wife, died at 65 of numerous cancers. Because of the speed of the illness and a lack of planning, half of his father’s retirement savings went to taxes instead of to the hospital he identified to receive a donation just a day before he died. That’s when Bray realized he needed to educate himself, other advisors, his clients and even charities about estate planning, tax minimization and the unutilized potential of what he calls “intentional philanthropy.”
So, Bray dove in, becoming a member of the Canadian Association of Gift Planners and earning the Canadian designation MFA-P, or master financial advisor of philanthropy, two years later. Bray’s goal is to speak with every client about “never use money” — the surplus retirement assets that are highly eligible for charitable contribution but subject to considerable taxation without a plan. He explained that clients have their pick to send money to family, charity or the government, and no one picks the government. Plus, when a contact refers a prospect, Bray donates to the referrer’s designated charity on their behalf and donates to the new client’s charity of choice on their behalf as well.
The result is Bray discovers charities he didn’t know about, and he deepens his client relationships by learning what is important to them and, crucially, why. He also establishes contacts with charities. These groups often send a thank-you email to Bray, and he responds by expressing interest in helping their board of directors or donors.
In fact, just before his interview for this article, Bray had two meetings where he appeared before 120 charities and was told later that his presentation was the best of its sort they’d ever seen. Why? Because his dad’s story gives Bray personal experience with an organization that didn’t receive the gift it should have, and he showed the charities that he is there not to compete for money but to collaborate and help more people become philanthropists while reducing their taxes.
Benefits in action
There are so many examples of Bray demonstrating how to do so, and why it matters. To name just a few:
- A client referred to Bray faced a large tax bill for moving from her current advisor to Bray’s practice. After discovering that the client’s late father’s motto was “education, education, education,” Bray set up a donor-advised fund that offset the tax on the portfolio transfer and established annual scholarships at three different universities in the client’s parents’ names.
- A couple who had rewritten their wills to give 80% of their assets to charity hadn’t updated all the necessary documents, and their existing advisors and lawyers weren’t communicating how to do that. Bray ensured that the couple’s selected charities would be known upon their death and helped them learn how they could help now rather than waiting until they die.
- A retiring advisor who, like many advisors, wasn’t aware of the opportunities that come from client philanthropy, brought Bray into a client meeting. Bray helped identify that a widow had millions that the advisor hadn’t known about. By uncovering these assets, including a $2 million stock gain, Bray created a discussion about estate planning and philanthropy-based financial planning scenarios. “There’s the 10% we know, the 10% we don’t know and the 80% we didn’t know that we don’t know,” Bray said. “I can relate that back to advisors who don’t know about the possibilities for intentional philanthropy.”
- A husband and wife had an $8 million gain from a sale of their company but faced $2 million in taxes. Bray explained that using life insurance to pay the tax bill would leave the couple with $7.6 million instead of $6 million. Even better: By donating company shares to a charity that they’d then buy back, the estate would be worth $7.3 million while also creating $3.8 million for charity, or more than $11 million total. “Charities and advisors need to work together because so many people don’t know this stuff,” Bray said. Charities could add an “Ask an advisor” column to their newsletters and websites to connect donors with questions to informed resources. Similarly, charities that can promote advisors’ articles or social media posts or include advisors in donor events can lead to additional knowledge and opportunities for these donors, Bray explained.
- Many charities shy away from life insurance, thinking it has no value until a person dies. Bray explains to charities that a life insurance policy can magnify a gift significantly by using pennies to produce dollars, and charities can access that money within the policy while the donor is still alive. “If we get enough of those going, it takes the day-to-day stress of fundraising off the charities’ shoulders,” Bray said.
- After spending 12 years as a board member volunteer for a local charity that provides opportunities for kids to attend sporting events, museums and more, Bray got involved with a gift planning advisory committee to create more planned giving strategies. That will result in bigger gifts delivered in a more reliable manner than cash, check or credit card.
In fact, there is so much work that Bray is on the verge of hiring another advisor to help with the charitable component. His practice already has one associate advisor and a full-time assistant who help 140 families, split between holistic planning for those in their late 30s to early 50s and an estate and tax planning for people in their 60s and beyond.
He’s careful, though, to note that his goal is simply to direct money to charities, and any new clients or business that result is a byproduct and not the motivation. (If you’re wondering how Bray gets paid for any of this, it comes from introductions to new clients, new investments and insurance opportunities.)
“My dad’s death lit the fire in me to talk about this,” Bray said. “As much as I want both of my parents to be here, it’s because of them and what we experienced that I’m now on this path. I can’t wait to look back after another year, another 10 years, at all these gifts and education we’ve facilitated.”
Interested in learning more about how life insurance can be given as a charitable gift? Read mdrt.org/charity-through-life-insurance to find out about the MDRT Foundation’s Gift of Life Insurance Program, in which policyholders can name the Foundation as a beneficiary and the money will be spread across charities around the world.