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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
