Estate Planning Tips and Your Rotary Legacy

Estate Planning Tips and Your Rotary LegacyPresenter:

Michael Mattie, Rotary Club of Warrington, PA

Facilitators:

Nancy Hoffman, Sr. Supervisor Gift Administration

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AGENDA

• Overview of Estate Planning Basics

• Rotary Foundation tools that can complement your Estate Plan

• Your Rotary Legacy and naming opportunities

• Next Steps

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AS A REMINDER

The purpose of this webinar is to provide general gift, estate and financial planning information. It is not intended as legal, accounting or other professional advice. We encourage you to consult your tax, legal or financial advisor to assist you with your planning.

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KEEP IN MIND

Everyone Should Have:– Will– Durable Power of Attorney– Living Will

Beneficiary Designations Need to Be Kept Up to Date

– Life Insurance– 401k, IRA or other retirement account– Annuity

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HOW THE FEDERAL ESTATE TAX WORKSGross Estate/Valuation

Adjusted Gross Estate

Net Estate Tax Due

Estate Tax Base

LESS DEDUCTION FOR FUNERAL AND ADMINISTRATION EXPENSES, DEBTS, STATE DEATH TAXES, CERTAIN LOSSES

LESS MARITAL AND CHARITABLE DEDUCTIONS

ADJUSTABLE TAXABLE GIFTSTaxable Estate

TAX RATES ARE APPLIED TO CALCULATE A “TENTATIVE ESTATE TAX”

LESS: APPLICABLE CREDIT AMOUNT, UNUSED SPOUSAL APPLICABLE CREDIT, AND OTHER TAX CREDITS

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HOW A WILL WORKS

DESIRES FOR DISTRIBUTION OF PROPERTY

RESIDUAL ESTATE PROPERTYSPECIFIC BEQUESTS

Estate BeneficiariesIndividuals or Charities

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HOW A LIVING WILL WORKS

Patient Third Party Physician

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HOW A DURABLE POWER OF ATTORNEY WORKS

DURABLE POWER OF ATTORNEY

ACTIONS ON BEHALF OF PRINCIPAL

Attorney-In-Fact Agent Third Parties

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HOW THE FEDERAL GIFT TAX WORKS WITH AN ANNUAL EXCLUSION

Gift

GIFT-SPLITTING

Spouse 1

Spouse 2

$25,000

$25,000

LESS ANNUAL EXCLUSION $14,000

LESS ANNUAL EXCLUSION $14,000

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HOW THE MARITAL DEDUCTION WORKS

ESTATE ASSETS

PROPERTY PASSINGTO SPOUSE

AT SURVIVING SPOUSE’S DEATH

Deceased Spouse Spouse’s EstateSurviving SpouseEstate

UNLIMITED MARITAL DEDUCTIONNO MARITAL DEDUCTION (UNLESS THE SURVIVING SPOUSE HAD REMARRIED)

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HOW THE BYPASS TRUST WORKS

APPLICABLE EXCLUSION AMOUNT REMAINDER OF ESTATE

INCOME AND PRINCIPAL

NOT INCLUDED IN SURVIVING SPOUSE’S ESTATE

INCLUDED IN SURVIVING SPOUSE’S ESTATE

Surviving Spouse

Deceased Spouse

Children

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HOW THE IRREVOCABLE LIFE INSURANCE TRUST WORKS

TRANSFERS OR PURCHASES A LIFE INSURANCE POLICY

Beneficiaries

Beneficiary

TRUSTEE MAY MAKE LOANS OR BUY ESTATE ASSETS

CRUMMEY POWER

TRUST PAYMENTS

DEATH BENEFIT

TRUST PAYS PREMIUMS

TRANSFERS CASH ANNUALLY, UP TO THE GIFT TAX ANNUAL EXCLUSION AMOUNT

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HOW THE QTIP TRUST WORKS

PROPERTY

Beneficiaries Named by First Spouse

Surviving Spouse

Decedent/ Deceased Spouse

REMAINING PRINCIPAL AT SURVIVING SPOUSE’S DEATH

INCOME AND (POSSIBLY) PRINCIPAL FOR LIFE

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LET ROTARY HELP YOU ACHIEVE YOUR GOALS

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Will you?

Legacy giving ensures that the good you do in the world will live on.

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Retirement Fund Assets Make Tax-Wise Gifts

The value of an inherited IRA, 401k or other tax-deferred retirement accounts will be reduced by the income taxes your loved ones have to pay.

Consider using these funds first for legacy gifts and leave other less tax-burdened assets to your family.

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Increase Retirement Income and Leave a Legacy

Life Income Agreements offer:- tax benefits - lifetime payments - Major Donor and Arch C. Klumph Society

recognition- the ability to maximize appreciated assets

Charitable Remainder Trusts

Charitable Gift Annuities

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Giving Appreciated SecuritiesType of gift Cash Stock

Value of gift $10,000 $10,000

Cost basis n/a $4,000

Long-term capital gain if sold n/a $6,000

Long-term capital gains tax eliminated ($6,000 x 20% rate) n/a $1,200

Income tax savings ($10,000 x 39.6% rate) $3,960 $3,960

Total tax savings (cap gains tax eliminated + income tax savings) $3,960 $5,160

Net cost of gift (value of gift - total tax savings) $6,040 $4,840

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Support Your Favorite Charities with Rotary’s Donor Advised Fund

Contribution

Deduction

Rotary Invests Reports,

Administers

DAF Account

Your Favorite Charities

$ $ $ $

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Create Lasting Change with Rotary

“You are not going to solve the world’s

problems in one step. You have to

keep at it. The Endowment Fund

allows that to happen.”

- Perry Berkowitz, Rotary Club of Vestal, NY

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The Power of Endowment Giving

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Thank You!

If you have included a gift to Rotary in your plans, please let us know! We would like to express our gratitude and learn more about how you would like your gift to be used.

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NEXT STEPS

• Review your will, Power of Attorney and Advanced Directive/Living will

• Consider your Rotary legacy• Talk with a local Rotarian or Rotary

Gift Officer to discuss your goals• Request a Life Income Agreement

illustration• Visit www.rotary.org/plannedgiving

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DISCUSSION

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For more information

Contact Rotary’s Planned Giving Department

847-866-3100plannedgiving@rotary.org