The Gifts of Jim and Mary Mitchell:  A Charitable Fairy Tale

Once  upon  a time… there was  a  young married  couple  named  Jim  and Mary
Mitchell.  After Jim graduated from college, he started working for a very large
company.  As  the  years  passed,  the  very  large  company  offered  Jim the
opportunity to  buy  stock in the  company  at  a  very  good  price.  He  and Mary
made the decision that the very large company was a good investment. So, Jim
bought  stock in the  very large company every time it was  offered to  him at a
very  good  price.  As  time  went  by,  three  little  Mitchells  came  to  live  in  the
Mitchell’s  home.  Jim  and  Mary  were  very  busy  making  sure  the  three  little
Mitchells were fed, clothed and learned everything they needed to know to go
into the world on their own.
One  day the three little Mitchells  started  families  of their  own,  and  Jim  and
Mary found themselves on their own.
The years passed and before they knew it the very large company reminded Jim
and Mary it was Jim’s 65th year and the very large company suggested he take
the time to enjoy the good things in life.  So Jim and Mary Mitchell decided to
count all of the things of value they had collected over the years to see just how
many of the good things in life they could enjoy.
As Jim and Mary looked at the list they were surprised to see that many of the
things they had collected would still be needed. But, there, at the end of the list
was  the  stock  of  the  very  large  company.  It  had  grown  and  grown  over  the
years, and was now worth $1,000,000. This  seemed too  good to  be true  since
Jim and Mary had only paid the very large company $100,000 for the stock. So
Jim and Mary made an appointment with their financial advisor to see how they
might make the stock in the very large company produce as many of the good
things in life as possible.
The  day  of the  appointment  came  and  Jim  and Mary  were  very  excited.  The
financial  advisor looked  at the  stock  from the  very large  company  and  asked
Jim  and  Mary  how  much  they  had  paid  for  it.  "One  hundred  thousand"  Jim
replied proudly.  A concerned look came over the face of the financial advisor’s
face. "What’s the matter?" asked Jim. "Depending upon what you decide to do,
you may  not  have  a million  dollars to  enjoy the  good things in life"  said the
financial advisor.
"Why not?" asked Jim. The advisor replied "Because you will have to pay the
King  for  your  $900,000 in  good  fortune."  "How much will we  have to  pay?"
asked Mary. "I will prepare a  report  for you" said the advisor. "I will tell you
three things:  how much  you must  pay the King,  how much  you will  have  for
yourselves to enjoy the  good things in life and  how much will  be left  for the
three little Mitchells.  In addition, I will prepare my report two ways. First, what
will happen if you keep the stock in the very large company forever. Secondly,
what will  happen if  you  sell the  stock  and  reinvest it to  produce more  of the
good things in life." And so she did.
And so it was… The advisor’s news was not good news.
If the Mitchells kept the stock of the very large company, they would not need
to  pay  the  King  for  their  good  fortune.  However,  they  would  not  be  able  to
enjoy many of the good things in life  for the stock in the very large company
only  paid  $13,000  per  year  after  taxes.  While  the  income  from  the  stock
eventually grew to $44,194, that was 22 years away.
If they sold the stock now, they would have to pay the King $315,000 for their
$900,000 in good fortune. In addition, because of this, the $1,000,000 would be
reduced  to  $685,000  and  would  only  produce  $35,620  after taxes  each  year.
And what  of the three little Mitchells?  To leave the  greatest amount  possible,
$1,621,592, Jim and Mary would have to keep the stock and enjoy the  fewest
number  of the  good things in life.  "Surely there  must  be  another  way?"  said
Jim.  "If you could  have  but  one wish  for yourselves and  your   children, what
would  that  be?"  asked  the  advisor.  The  Mitchells  thought  and  thought.
"Anything?" asked Jim and Mary in unison.
"Anything!" said the advisor.
After much thought, the Mitchells gave the advisor their answer. "If we could
have one wish for ourselves it would be that we could enjoy more of the good
things in life than either of these two options allow. At the same time, we wish
our  children  would  have  as  much  as  if  we  kept  the  stock  in  the  very  large
"You  don’t  want  much,  do  you?"  replied the  advisor.  "In  order to  grant  you
your wish I will need to call in the Court Fairy."  And so she did.
The Fairy  came… "What  do  you  desire?"  asked the Fairy.  "We want
more of the good things in life then either of these two options have to  offer,
and we want our children to have as much as they would have if we kept the
stock in the very large company" said the Mitchells.
"You don’t want much do you?" said the Fairy. "OK, there is a third option.
I will grant you your wish, but only upon the  following conditions. First, you
must promise to give away the stock of the very large company to all the people
of the land.  Second, you must never ask for it back."
"This  seems  like  a  very  large  price  to  pay"  said  Jim.  What  will  we  get  in
exchange  for  such  sacrifice  and  what must  we  do?".  The Fairy  answered
"For such a gift you will be bestowed with many treasures. This is my reply."
"First, you will promise to give the stock of the very large company to all the
people of the land.
It will be placed in the trust for them immediately. We will keep the trust assets
in the Palace and they will be protected by the Palace Guard."
"Second, because you have made such a promise, instead of charging you taxes,
the  King  will  give  you  a  handsome tax  deduction  of  $246,720,  and  you  will
save much in taxes."
"Third,  since the trust is  for  all the  people in the land, the  King  has made it
exempt from all taxes.
We  will  sell the  stock in the  very large  company  while it is in the trust  and
invest it wisely to pay for all the good things in life you desire. We assure you,
we will invest the trust assets to create the income you desire, but we will not
subject you or all the people in the land to undue risk."
"Fourth, we will pay you eight percent ($52,000 after taxes in the first year) of
all that is in the trust each year, starting immediately. Over your lifetimes, this
will be approximately $446,712 more than selling the stock in the very large
company and $666,252 more than keeping the stock in the very large company.
This will give you more of the good things in life and allow you to replace the
stock  you  are  giving  all  the  people  in  the  land,  for  the  three  little Mitchells
when you are gone."
"Fifth,  you  must  give  the  three  little Mitchells  $249,458  over  the  next  eight
years.  The  King  will  allow  you  to  do  this  without  any  taxes.  This  will  still
provide  you with  $197,253 more in income than  selling the  stock in the  very
large company and $416,793 more the keeping the stock."
"Sixth, your children must give this money to the Knight of the Round Table so
he may purchase life insurance on you and Mary to benefit your children when
you and Mary are gone. If you do this, when you and Mary die, the Knight of
the Round Table will give the three little Mitchells an amount equal to the value
of the stock in the very large company, as if you had kept it."
"Seventh, when you and Mary die you will not owe the King any more in taxes
on the  stock  you  placed in trust  or the money the Knight  of the Round Table
gives to  your  children.  At that time,  we  will  release the  assets  you  placed in
trust to all the people in the land.  Your advisor has prepared a report that shows
the results of your charitable hearts.  If you do these things, your wishes will be
And so it came to pass…the Mitchells did these things the Fairy requested.
The Mitchells left the very large company  behind. They enjoyed all the  good
things in life which  $980,893 could  buy. And when they  died, the three little
Mitchells received $1,641,219 from the Knight of the Round Table.  And all the
people rejoiced, for after the trust created all this good fortune for Jim and Mary
and the three little Mitchells, it was still valued at $1,000,000 and many good
things were done across the land.  To this day the people talk of the magic of the
charitable  remainder  trust  and  the  kindness  and  wisdom  of  Jim  and  Mary