For Donald Poole, Philanthropy Is Moral, Charitable and Strategic
By L. Stuart List

For Donald C. Poole, charity begins at the office. The senior attorney of McDonough Holland & Allen's Estate Planning/Probate Section, Poole says he first became interested in philanthropy when he was getting paid to do so, as the attorney for a charitable organization. "But the closer I got to what the group was doing - and the more I understood the intricacies of charitable giving - the more I became a true believer," he said.

"I became convinced, more than ever, that those of us who've been a little more fortunate than others have an obligation to give back. Not just because it's the 'right' thing to do, but because it shows that you recognize a fundamental truth: No successful person got there by himself or herself. So why don't we help others get here as well?"

For Poole, philanthropy is not just a personal commitment. It is often part of the carefully considered strategies he suggests when he advises those with estates of $2 million or more on how to maximize their assets and legacies while minimizing their tax liabilities. "When I meet new clients who tell me what their net worth is, I can't resist telling them, 'Well, I'm the guy who's going to reduce that - and it's going to make you very happy.' In my view, the estate tax is a voluntary tax - you can choose to pay it, but you can plan your way around it."

Poole said he particularly enjoys the philanthropic aspects of his practice. "I have a personal commitment to it, but that doesn't mean that I always approach estate planning from a philanthropic perspective. I always ask clients whether they have any philanthropic goals, but my job is to offer every client the best estate planning tools available."

One of the most often used tools for maximizing assets and legacies is the family limited partnership (FLP). Regarding the use of FLPs, Poole comments, "Since the mid-1980s and particularly after the Revenue Reconciliation Act of 1990 was enacted, our estate planning group has been able to take someone's million-dollar portfolio of stocks and bonds, put that person into a partnership, give away a 20 percent interest in the partnership, thus having a gift of $140,000 instead of $200,000. Alternatively, selling FLP interests may be the right answer."

"If the portfolio consists of real estate, not stocks and bonds, we can do even better. Pretty soon, that $500,000 tax liability on $1 million can go down as low as $125,000, with proper planning. Normally, you will not get a 75 percent reduction on the FLP itself. Results such as this typically arise by using the FLP in combination with other tools."

Many of the estate planning attorneys at McDonough, Holland & Allen -- one of the largest locally-owned law firms in Sacramento, currently celebrating its 50th year - are tax attorneys. "This makes us a better match for high-value estates or individuals," Poole said. Many people can benefit from estate planning. Poole pointed out that as the parents of Baby Boomers reach the end of their lives, "a huge transfer of wealth is about to take place in this country: trillions of dollars. This is a very good time to be in this practice area."

With respect to President Bush's proposal to cut taxes, Poole added a caveat. "The Bush tax bill doesn't make it clear whether we'll have some estate tax, limited estate tax or no estate tax," he said. "I can guarantee that we won't end up with the bill as currently written because it simply makes no sense. So what happens will depend, once again, on what those geniuses east of the Potomac can hammer out together."

Poole's practice concerns all aspects of estate planning; corporate, partnership and individual taxation; and for-profit and nonprofit corporate and business organizations. His practice includes probates, as well as contested matters, and all manner of general business advice.

He generously shares his knowledge. For the last several years, he has presented countless tax and estate planning seminars for individuals, companies and tax professionals. Underscoring his personal commitment to philanthropy, he has also immersed himself in volunteering his time and money to such community organizations as the Salvation Army (he chaired his local chapter), the Crocker Art Museum Foundation (he currently serves as vice president and president elect, and chairs the Planned Giving Committee) and the University of California's Sacramento Chancellor's Committee. He also serves as a board member and is Secretary of the Sacramento Regional Foundation, whose mission is both to promote philanthropy and to provide a vehicle for those who need or wish to create a foundation but don't want to be ensnared by the bureaucratic trappings of managing one.

Poole, 60, earned his bachelor's degree in history at UC Berkeley in 1964, and his law degree at Hastings College of the Law in 1967. The following year, he received his LL.M. (in Taxation) from New York University. He has been with McDonough since 1970. "I guess I've passed my probationary period," he jokes.

He said, only half-mockingly, that there are two basic rules of estate planning: "Number one, parents ought to be rich and children ought to be poor. That way, the kids will show up and treat you right for all of your life. Number two is that it's better to give your money and assets away to your kids or to charity than to the IRS."

"The art of what we do," he said, "is to determine when you apply which rule. If you're 40 years old, you probably have a lot of time to make decisions about your estate. But if you're 60, you need to get serious - and if you are 80, you should have gotten serious before now."

Poole would like to debunk a certain myth that his chosen practice area is "boring." "How can it be? As attorneys, we get to see families and businesses in times of crisis, exhibiting their best intentions and their worst tendencies. If they're rowing in opposite directions, we get to show them how to pull together on those oars. And when that happens, it's just wonderful — because you feel you've helped not just your client but all of the people and organizations in that client's orbit."

One of the introductory admonitions that Poole sometimes hears from a new client is, " 'Don't talk to me about life insurance. I don't believe in life insurance. You can plan my estate any way you want, but don't use life insurance!' They may say the same thing about trusts and charitable giving," Poole said with a chuckle. "Whenever someone says that, I ask, 'Listen, would you hire a carpenter who showed up to do some work for you and said he didn't believe in saws?' You want to have a full toolbox. Let your estate planning professional show you all of the tools, then decide. It very well may be that I wouldn't even recommend a life insurance trust or use of a charitable device to a client. But until you take a look at the project, you can't eliminate the possibility of any available tools."

Poole glances out the window of his ninth-floor conference room. The sun is low, and he's got to get downstairs to meet his wife, Janet, so they can make it to an early Sacramento Kings game. But the darkening sky stirs him to muse about potential clouds on the estate-planning horizon. "You know, in a number of states -- Alaska, Nevada, South Dakota, Delaware, Missouri - they allow the creation of trusts that can last from 250 to 500 years," he said. "I think this is just terrible public policy. It prevents wealth from being spread around, from being redistributed. Traditional U.S./British law has always held that trusts operate under the 'lives in being plus 21 years' principle, meaning that a trust lasts no longer than 21 years beyond the death of the last of your grandchildren or great-grandchildren who was alive at the time of your own passing." In California, you can have the longer of the traditional rule or 90 years.

"I think we need a new federal law against perpetuities like this," he said. "If we don't get one, people in states like California will send their money to states that can tie up the money for centuries. That can cause a terrible accumulation of hereditary power."

"It isn't healthy for anyone -- and it certainly isn't philanthropic."

The author, L. Stuart List, is a shareholder at McDonough Holland & Allen. He practices in the firm's estate planning and probate law section, focusing on planning and drafting for complex estates. Mr. List also is a certified public account and is certified by the State Bar of California Board of Legal Specialization as a Certified Specialist in Estate Planning, Trust and Probate Law.