Passing Along the Act of Generosity
The following story reinforces three secrets of philanthropy for many Americans: frugality, consistency and generosity. It also demonstrates how the Hill family used trusts to fulfill family goals and strengthen communities.
The Hill family emigrated from Germany in 1884. A family of four upon arrival, they quickly grew to a family of 12! As attending college wasn’t as common at that time as it is today, Otto, the youngest of 10 children, was the only one to graduate from college. After receiving his Ph.D. in agricultural chemistry, he returned to and worked for WSC (now WSU) where he met his wife, Opal. They married in 1936. After 11 more years in Pullman, they moved to Seattle, where their two boys were born.
While Otto never earned more than $10,000 a year, (perhaps around $70,000 today), the lessons on frugality he learned from his immigrant parents allowed the family to have their own home and live comfortably. Aided by his interest in the stock market, slowly but surely he learned to invest, and over the years their nest egg grew.
The elder son, Ken, became a teacher, and in 1965 the younger son, Richard, enlisted in the Army. Like so many young men of that era, Richard returned home with emotional and psychological scars from which he never fully recovered. He would need financial help throughout his life. To ensure the family would be cared for, Otto and his wife established three trusts: a family trust, a living trust and a special needs trust. The first two were to provide for Otto’s wife when he passed, and the third ensured that Richard’s difficult life was made easier and his needs were met.
If governmental assistance such as VA support is involved, a special needs trust can be administered to ensure that the governmental assistance continues. Charitable trusts can be very flexible in their construction to meet specific needs as well as cover multiple beneficiaries. They bypass an upfront capital gains tax if funded with long-term appreciated assets such as stocks.
After Richard’s death in 2019, the proceeds of the special needs trust—grown to $750,000 over the years—went to charities benefiting Otto and Opal’s alma maters as well as several social service groups, including Northwest Harvest. Otto, at one time, was named an alumnus of the year at WSU.
Setting up charitable trusts to ensure your family needs are met, then providing the residue to charities after the trust parameters have been met, may help families like Otto’s see significant tax savings while meeting personal and philanthropic goals.
If, as you begin to think about estate planning, you want to learn more about the basics of different types of charitable trusts, please contact Anne S. Knapp at 206.390.6094 or anneK@northwestharvest.org.