Wealth Management – Leanne Kaufman
By Leanne Kaufman
“Do whatever you think is right with it.” That was the instruction David “Sandy” Gottesman left for his wife, Dr. Ruth Gottesman, along with a stock portfolio worth billions.
You may have read about this story in the news. Initially overwhelmed by her late husband’s bequest, Dr. Gottesman did nothing at all for two years, but at the urging of her children she finally made a decision. In 2024, she gifted $1 billion to the Albert Einstein College of Medicine in the Bronx, an institution she’s been involved with since 1968, first as faculty, then on the board of trustees, and currently as chair. The Gottesman’s gift will cover tuition for all students in perpetuity.
There is a lot that’s “right” about this story of giving. Indeed, it’s an example of philanthropy doing exactly what it should: contributing to an institution important to the benefactors and the greater community. The United States needs doctors, and free medical school tuition offers significant opportunity while reducing the debt burden on students in the Bronx. It’s a beautiful legacy. Still, it left me thinking about the value of having a strategic giving plan.
A case for planned giving
Planned giving is exactly what it sounds like: making a plan now for a monetary gift in the future — often, but not always, after death.
Philanthropic giving, in all its forms, aligns with Canadian values, but it seems safe to say that only a small percentage of Canadians have a strategic giving plan. Perhaps that is starting to shift; a study commissioned by the Will Power campaign found the number of Canadians naming a charity in their Will increased from five to eight percent between 2019 and 2022, a jump of 1. 2 million people.
There is no question that planned giving has benefits for the recipient charities, including of course stability of revenue, and the ability to plan programming around that revenue. But there are also many advantages to donors, and their families.
Simplifying the donor’s estate – and leave no doubt
Few will inherit the billions Dr. Gottesman did, but trying to identify the final wishes of a loved one can be distressing no matter the size of a bequest. Dr. Gottesman spent two years on this very question. If she had also passed, the decision would have fallen to their children.
When instructions for philanthropic giving are included in a wealth distribution plan, it relieves the inheritors of a significant burden. They don’t have to question what the deceased would have wanted or worry that they got it wrong. They’re free to simply remember their loved one.
It’s worth noting that this is an issue on the rise. Over the coming years there will be one of the largest wealth transfers in history, involving trillions of dollars in assets across Canada, the United States, and the United Kingdom. In Canada, women outlive men by an average of four years, so it’s likely they’ll bear more than their share of the burden. Managing family wealth is an enormous responsibility made even more challenging without clear directions.
A careful, documented plan can also prevent unnecessary discord. According to recent research, only around 30 percent of wealth transfers are successful, in that once the heirs receive their inheritances, the family maintains harmony along with control over their assets . For these reasons and more, benefactors should consider preparing their succession plans now.
Making the most of family wealth
Planned philanthropic giving is also a pragmatic decision. With strategic preparation, people can identify the best outcomes for their families and the causes they support.
Sometimes, concerns about charitable giving arise from misconceptions. Some worry that their contributions are too modest or that they can’t afford to donate and take care of their family. Understandably, people don’t want to spend their children’s inheritance.
Including philanthropic planning strategically as part of a donor’s overall financial and estate plan creates opportunities for tax efficiencies, sometimes specifically timed to be most advantageous, that may otherwise be missed.
Creating a legacy
Of all the reasons for philanthropic giving, creating a legacy may be the most personal. Leaving a gift to an organization or cause makes a statement about the benefactor’s values and it’s a way to provide concrete, actionable support to ensure the work carries on.
You might not be able to take it with you, as they say, but proactive planning will help ensure a donor’s charitable intentions will be carried through. Indeed, it’s the only way to do so.
No better gift
When Dr. Gottesman took the podium at the Albert Einstein College of Medicine in late February to reveal the bequest, the announcement caused an eruption of excitement and joy. “You can’t ask for a better gift than this,” one teary-eyed student said. “What this gift means to medical students and the future population that this is going to serve is outstanding.” It’s easy to imagine the pride Sandy Gottesman might have felt to witness the bequest.
Sandy Gottesman’s instructions to his wife were to do with the money what she felt was right, so that’s what she did. Her gift is so important, so appropriate, so profound, that’s it’s almost impossible to imagine anything better. Still, she wonders about it. “I hope he’s smiling and not frowning,” she told the New York Times, adding, “I think he would be happy — I hope so.”
And that, as we know, is the power of planned giving. It clarifies, empowers, and removes those nagging doubts that pester us all — even those fortunate enough to enjoy the kind of trust that Sandy and Ruth so obviously shared.
Leanne Kaufman is the President and CEO of the Royal Trust Corporation of Canada and The Royal Trust Company. She is responsible for the strategy and overall management of RBC Royal Trust, which provides wealth protection and transfer solutions across generations to high net wealth Canadian families. A lawyer by profession, Leanne is the author of the fourth edition of The Executor’s Handbook, a contributor to various publications on the topic of estates and trusts and the host of RBC Wealth Management’s Matters Beyond Wealth podcast. For more information, visit: https://rbc.com/royaltrust.
RBC Royal Trust refers to Royal Trust Corporation of Canada and The Royal Trust Company. This document has been prepared for use by Royal Bank of Canada, Royal Mutual Funds Inc., RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc., RBC Dominion Securities Inc.*, Royal Trust Corporation of Canada and The Royal Trust Company. Royal Mutual Funds Inc., RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc., RBC Dominion Securities Inc., Royal Trust Corporation of Canada, The Royal Trust Company (collectively, the “Companies”) and Royal Bank of Canada are separate corporate entities that are affiliated. RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc., RBC Dominion Securities Inc., Royal Trust Corporation of Canada and The Royal Trust Company are member companies of RBC Wealth Management, a business segment of Royal Bank of Canada. * Member–Canadian Investor Protection Fund. The Companies and the Royal Bank of Canada do not endorse or recommend any information, content or services offered in any third party publication or on any third party website. This publication is not intended to provide specific financial, investment, tax, legal, accounting or other advice for you, and should not be relied upon in that regard. Readers should consult their own professional advisor when planning to implement a strategy to ensure that individual circumstances have been considered properly and it is based on the latest available information. ® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Trust are registered trademarks of Royal Bank of Canada. Used under licence. © Royal Trust Corporation of Canada and The Royal Trust Company 2024. All rights reserved. Printed in Canada.
Related Posts
