PLANNED GIVING

7 SIMPLE IDEAS TO ACHIEVE GIFTS FOR YOUR SCHOOL

7DONOR OBJECTIONS TO OVERCOME

ZITS NEEDS A TRUST FUND

BACKGROUND

• PLANNED GIVING –• ONE END—SIMPLE APPROACH– WILL GIFT– LIFE INSURANCE GIFT

• MIDDLE –401 (k), IRA GIFTS• MORE COMPLEX—IDEAS THAT APPEAR TO

THE DONOR AS COMPLEX—CHARITABLE TRUSTS,ETC

OBITUARIES

• READ YOUR OBITUARIES AND SEE HOW MANY “IN LIEU OF FLOWERS”. . . ARE TO THE HOSPICE OR MAYBE HOUSE OF WORSHIP.

• HEIRS ARE OFTEN NAMING THESE BECAUSE NO THOUGHT HAS BEEN GIVEN TO WHICH CHARITY

• BY EXTENSION, NEITHER DECEASED NOR HEIRS HAVE THOUGHT ABOUT THEIR ESTATE

EASY TO APPROACH

• WHO: TRUSTEES, MOST TRUSTED DONORS, GRANDPARENTS AND PARENTS

• WHEN: ANYTIME BUT EASIEST WHEN THERE IS HIGH STOCK MARKET, HIGH REAL ESTATE MARKEDT, HIGH TAX RATES

• REMEMBER: PLANNED GIFTS WILL GENERALLY NOT HELP YOU BUILD BUILDINGS OR FUND FINANCIAL AID IN THE NEXT 5 YEARS

EASY TO APPROACH

• DONOR’S FAMILY HAS WRITTEN A BIG CHECK FOR ESTATE TAXES TO THE GOVERNMENT

• DONOR & HIS/HER FAMILY HAVE A HISTORY OF PHILANTHROPY OFTEN EXCEEDING ONE GENERATION

• DONOR HAS PASSION FOR A CHARITY OR SERVED ON A BOARD AND HAS HEARD ABOUT PLANNED GIVING BEFORE YOUR APPROACH

DONOR OBJECTIONS

• AFRAID TO TALK ABOUT DEATH• SPOUSE AFRAID OF OUTLIVING INCOME• ONE CHILD IS SUCCESSFUL AND ONE IS NOT

SUCCESSFUL• WANT TO PROVIDE FOR (GRAND)CHILDREN

EDUCATION• VARIABILITY OF TAX CHANGES • TOO COMPLICATED• TOO EXPENSIVE TO ACCOMPLISH (FEE’S)

OVERCOME OBJECTIONS

• FEAR OF DISCUSSING DEATH• IN 2011, THE ESTATE AND GENERATION

SKIPPING EXEMPTIONS ARE LIKELY TO BE MORE FAVORABLE THAN IN 2012 OR FORSEEABLE FUTURE AT $5 MM FOR AN INDIVIDUAL AND $10MM FOR A COUPLE

• ACTUALLY, GIFTS CAN HELP BALANCE $ TO HEIRS

OVERCOME OBJECTIONS

• L—AT DEATH YOU ARE GOING TO LEAVE YOUR MONEY TO 2 OF 3 INSTITUTIONS• HEIRS, CHARITY, GOVERNMENT

• OUTLIVE INCOME—TRUSTS AND LIFE ESTATES CAN PROVIDE INCREASED INCOME FOR A SPOUSE

• BALANCE MONEY TO CHILDREN—TRUSTS AND WILLS CAN HAVE MAKE WHOLE AGREEMENTS

OVERCOME OBJECTIONS

• TOO COMPLICATED—TOO EXPENSIVE—2012 IS YOUR CHANCE TO SAVE MEANINGFUL MONEY IN YOUR ESTATE PLAN. YES, DEPENDING ON YOUR ASSETS IT CAN BE COMPLICATED. FAILURE TO ACT, MEANS YOU WILL WRITE A 7 FIGURE CHECK TO US GOV’T.

• TRUSTS CAN PROVIDE FOR CHILDREN’S EDUCATION, REMOVE ASSETS FROM WILL, AND PROVIDE FOR YOUR LOVED CHARITY

“SIMPLE END”

• WHEN MOST PEOPLE THINK OF A PLANNED GIFT—THEY THINK OF A WILL GIFT

• SOME PEOPLE THINK OF A PLANNED GIFT AS A LIFE INSURANCE POLICY

• TAXES (ROMNEY) ARE NOT SIMPLE. • MUST TRY TO KEEP THE DONOR FOCUSED

AND LET HIS ADVISOR DO THE DETAILS• TRUSTEES MUST DO PLANNED GIFT FIRST

SIMPLE SAMPLE 1-WILL

• SIMPLE, COSTS NOTHING IN LIFE• CAN BE ANY $ AMOUNT• WILL OR TESTIMENTARY GIFT— “I HEREBY BEQUEATH . . .”• CAN BE DONE WITH A CODICIL (AMENDMENT) TO THE

WILL

• PROBLEM -- WITHOUT THE SCHOOL’S KNOWLEDGE IT CAN BE CHANGED

• SOLUTION – A TESTIMENTARY AGREEMENT THAT ACTS LIKE A CONTRACT

I intend to legally bind myself in accordance with the laws of the State of Georgia and I hereby irrevocably agree to bequeath to CHARITY a testamentary gift of ___ thousand dollars ($______), in cash, readily marketable securities or some combination thereof, under my Last Will and Testament. If the Last Will and Testament in force at my death does not contain such a testamentary gift, it is my intention that this Letter of Testamentary Gift be binding upon and constitute a claim against my estate to be paid in full by my Executor and to be binding on my heirs, successor, assigns and beneficiaries.

My Executor shall first use any property, the receipt of which by the Executor would constitute income in respect of a decedent for federal income tax purposes, in satisfying this gift. I direct that no death taxes of any description due because of my death (or any interest or penalties thereon) shall be payable from this gift.

SIMPLE SAMPLE 2-LIFE INSURANCE

• ADVANTAGE OF SIMPLE—COSTS LITTLE OR NOTHING IN LIFE

• LIFE INSURANCE POLICY--WITH THE SCHOOL AS OWNER

• PREMIUMS PAID OVER 10 TO 15 YEARS• SCHOOL PAYS THE PREMIUMS AND DONOR

REIMBURSES THE SCHOOL FOR THE PREMIUMS• DONATIONS FROM DONOR TO SCHOOL FOR

PREMIUMS ARE TAX DEDUCTIBLE

SIMPLE SAMPLE 3

• “FRATERNITY BROTHER FORGOTTEN LIFE INSURANCE”

• DONOR IS AGE 50. . . SUCCESSFUL BUSINESS• BUSINESS WORTH $2-5 MILLION• DONOR HAS LIFE INSURANCE FOR CHILDREN

AND TO KEEP BUSINESS CONTINUING IN EVENT OF DEATH

• DONOR AT 25 PURCHASED $25,000 LIFE INSURANCE POLICY THAT IS FORGOTTEN

SIMPLE SAMPLE 3

• DONOR DONATES HIS LIFE INSURANCE• POLICY IS CLOSE TO BEING PAID UP• DONOR GETS A DEDUCTION OF CASH VALUE—

COULD BE $15,000 OR MORE• SCHOOL MAY NOT HAVE TO PAY ANY FUTURE

PREMIUMS OR IF THEY DO THEY WILL BE MINIMAL

CASE STUDY

• INSURE MAJOR DONOR• EXAMPLE—MAJOR DONOR IS GRANDPARENT• GRANDPARENT IS 70 AND GIVES SCHOOL

$500,000 GIFT PAID OVER 5 YEARS• SCHOOL PURCHASES A $300,000 POLICY TO

INSURE COMPLETION OF GIFT• ONCE GIFT IS COMPLETE, ASK DONOR TO PAY

PREMIUMS AND SCHOOL GETS ANOTHER $300,000

SORT OF SIMPLE 4

• DONATE IRA AT DEATH-CHARITY IS EITHER BENEFICIARY OR CONTIGENT BENEFICIARY

• IRA’S AT DEATH ARE TAXABLE (IN MOST CASES) • TAXES INCLUDE BOTH ESTATE TAXES AND

INCOME TAXES• SURVIVING SPOUSE AND EVEN CHILDREN

WILL HAVE TO PAY ESTATE TAX AND INCOME TAX

SORT OF SIMPLE 4

• IRA CAN BE LEFT TO CHARITY AT DONOR’S DEATH WITH NEITHER INCOME TAX OR ESTATE TAX

• HERE IS WHERE IT GETS COMPLICATED– BOTH SURVIVING SPOUSE AND CHILDREN CAN “INHERIT”

IRA AND PAY INCOME TAXES OVER A LONG PERIOD OF TIME AS THEY RECEIVE ANNUITY

– MUCH SIMPLER TO LEAVE TO CHARITY AT SPOUSE’S DEATH• RULES FOR SURVIVING DESCENDENT ANNUITY ARE

ENORMOUSLY COMPLEX AND MUST BE DONE VERY VERY CAREFULLY

COMPLEX 5CHARITABLE REMAINDER TRUST

• WHO BENEFITS?– DONORS WITH APPRECIATED STOCK and/or– DONORS WITH APPRECIATED STOCK AND MINIMAL

DIVIDENDS (APPLE)– INCREASED INCOME TO DONOR AND/OR SPOUSE– DONOR WITH NEED FOR IMMEDIATE LARGE TAX DEDUCTION

• HOW IT WORKS– DONOR DONATES $500,000 TO CRAT– DONOR AND WIFE RECEIVE 5% A YEAR FOR LIFE--$25,000– CHARITY RECIEVES WHATEVER IS LEFT– DONOR RECEIVED A DEDUCTION OF $250,000

COMPLEX 5

• WHAT ARE BENEFITS/OVERCOME OBJECTIONS– DONOR (SPOUSE) GETS EXTRA INCOME FOR LIFE--ACTUALLY

$25,000 A YEAR MORE THAN THEY GOT WITH APPLE STOCK– DONOR RECIEVES INCOME TAX DEDUCTION AND ESTATE TAX

EXEMPTION– DONOR AVOIDS CAPITAL GAINS ON SALE OF APPLE STOCK– CHARITY RECIEVES WHATEVER IS LEFT AT BOTH DEATHS– IN SOME CASES, DONOR CAN REPLACE DONATION WITH

LIFE INSURANCE POLICY

COMPLEX 6&7CHARITABLE LEAD TRUSTS

• WHO BENEFITS–DONOR WHO NEEDS ESTATE PLANNING –GIFT

AND ESTATE TAX–DONOR WANTS TO MAKE GIFTS TO HEIRS

(CHILDREN)–DONOR WHO HAS AN INTEREST IN THE CHARITY– CHARITY COMES FIRST IN PAYMENTS– REMAINDER TO CHILDREN– REMAINDER CAN BE LEFT TO DONOR

VARIATION OF CHARITABLE LEAD TRUST (GRANTOR TRUST)

• WHO BENEFITS– DONOR WHO HAS SOLD BUSINESS & NEEDS LARGE

TAX DEDUCTION– DONOR CAN SET UP A TRUST FOR $1,000,000– GIVE AWAY $450,000 AWAY OVER 10 YEARS– DONOR GETS $650,000 TAX DEDUCTION– DONOR LEAVES $600,000 TO HEIRS OR GETS

$600,000 BACK AFTER 10 YEARS – DONOR HAS TAKEN ADVANTAGE OF FAVORABLE IRS

INTEREST RATE ASSUMPTION

PROMOTING THESE OPPORTUNTIES

• ALL TRUSTEES REQUIRED TO DO PLAN GIFT• SEMINARS ONCE OR TWICE A YEAR TO

PARENTS• SPECIFIC SEMINARS TO MEMBERS OF THE

DEVELOPMENT COMMITTEE

PROMOTING THESE OPPORTUNITIES

• ALERT THE DEVELOPMENT COMMITTEE TO THOSE WHO– SOLD THEIR BUSINESS– HAVE A HIGH NET WORTH– HAVE A HIGH CONCENTRATION IN 1 STOCK– ARE DISCUSSING THEIR ESTATE PLANS

PROMOTING THESE OPPORTUNITIES

• GRANDPARENTS—ALWAYS ASK PARENTS FIRST• GRANDPARENTS WHO RESPOND TO

HEADMATER’S EMAIL• GRANDPARENTS WHO MAKE GIFTS

CASE STUDIES 2 AND 3