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TRANSCRIPT
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales
Philanthropy and Charitable Giving
Why We Give and How We Give
The Guardian Life Insurance Company of America, New York, NY
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Disclaimer
The foregoing information regarding estate, charitable and/or business planning techniques is not intended to be tax, legal or investment advice and is provided for general educational purposes only. Neither The Guardian Life Insurance Company of America (Guardian), nor its subsidiaries, agents or employees provide tax or legal advice. You should consult with your tax and legal advisor regarding your individual situation.
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GEAR # 2008-9685 Approval: 01/05/2009 Expiration: 07/04/2010
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales What is Philanthropy?
“The idea behind meaningful philanthropyis a desire to change the world
for the better.” – Alan Alda
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales What is Charitable Giving?
“To me, money is a means to do good.”– Eli Broad
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Charitable Giving in America
• Over 70% of households make charitable gifts*
• An estimated $260.28 billion was given to charities in 2005 by Americans**
• Americans give, on average 2.2% of their after-tax income**
* The Center on Philanthropy at Indiana University, Panel Study, 2005 wave, revised January 2008**Giving USA 2006
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Why Do Americans Give?
• Have an impact in society and make a difference
• Pride in the community• Creating a legacy and perpetuating family
values• Sense of obligation and guilt• Good business
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Why Do Americans Give?
• Tax management and leverage• Recognition, standing and prestige• Giving back and redemption• Compelled by recent events• Religious identity
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Why Do Americans Give?
Philanthropy is different for each person.
The outcome of philanthropy can be as much for oneself as it is for others.
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales What Do Americans Give?
• Time and Talent• Treasures
– Money– Property
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Time and Talent: Volunteerism
• Most altruistic
• Often brings greatest personal satisfaction
• No financial incentive or reward
ESTATE PLANNING
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Treasures –Cash Contributions
• Cash contributions
• “Checkbook philanthropy”
• Tithing
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Income Tax Deduction
Cash Contributions
– Up to 50% of adjusted gross income in the year the gift was made
– Carryover of unused deduction
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales
Treasures – Contributions of Property
• Art work• Securities• Cars• Real estate• Personal property (e.g., furniture, clothing,
used electronics, etc.)
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Income Tax Deduction
Contributions of Property
– Up to 50% of adjusted gross income in the year the gift was made, with exceptions
– Amount of deduction depends upon the type of property donated
• Ordinary income type property• Capital gains type property
– “Related use” gift of property
– Carryover of unused deduction
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Treasures - Planned Giving
• Gifts to charity made at death (testamentary gifts)– Through wills and revocable living trusts– Through beneficiary designations– Through a “life estate” with remainder to charity
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Treasures - Planned Giving
• Particularly advantageous with “IRD” (“income in respect of a decedent”) assets– Qualified retirement plans– Individual Retirement Accounts (IRAs)– Annuities
ESTATE PLANNING
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Common SpecialtyPlanning Techniques
• Retirement Assets Donated to Charity• Donor Advised Fund• Charitable Gift Annuity• Pooled Income Fund• Life Insurance Charitable Giving
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Retirement Assets to Charity
• Retirement Plans– 401(k) Plans– Profit Sharing Plans– Pension Plans– Individual Retirement Accounts (IRAs)– Others
• Commonly used in testamentary planning– Many tax benefits
• Not as common for lifetime gift planning– New rules have helped
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Donor Advised Fund
• What is it? How does it work?• Contributions can be accumulated• Contributions are invested and grown• You, as donor, can “advise” the donor advised fund
on the investment strategy• You, as donor, can “advise” the donor advised fund
to make a distribution• Same tax deduction as a gift of cash• Donor advised fund does not have to distribute your
contribution each year
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Charitable Gift Annuity
Donor Charity
1. Donation to charity
2. Promise to pay annuity stream
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Charitable Gift Annuity
• What is it? How does it work?• Dual purpose
– Stream of income to donor for life– Remainder to charity
• Inexpensive to set up• Deal directly with charity of choice• Reliance on charity• Maintaining the family’s financial legacy
– Obtained through a Wealth Replacement Trust– Purchase life insurance in Wealth Replacement Trust using
income stream
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Pooled Income Fund
• What is it? How does it work?• Somewhat similar to charitable gift annuity
– Stream of income for life based upon investment performance– Asset to charity upon death
• Deal directly with charity of choice• Reliance on charity’s investment management skills• Maintaining the family’s financial legacy
– Obtained through a Wealth Replacement Trust– Purchase life insurance in Wealth Replacement Trust using income
stream
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Pooled Income Fund
DonorPooled
Income Fund Trust
1. Contribute to trust
2. Pay income stream based upon investment results
Charity
3. Remainder to charity
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Gift of Life Insurance
Four Methods:
• Charity as beneficiary of group term life insurance• Charity as beneficiary of personally owned life
insurance policy• Gift of an existing life insurance policy to charity• Gift of premiums to charity for charity owned life
insurance policy on donor
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales
Charitable Beneficiary of Group Term
Group Term Life Insurance
• Group term life insurance– Provided by employer– Income tax on benefit in excess of $50,000
• Charity named as beneficiary for full year– Avoid income tax– Create social legacy
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales
Charitable Beneficiary of Personally Owned Life Insurance
Personally Owned Life Insurance Policy
• Name as primary beneficiary• Name as contingent beneficiary• Beneficiary of some or all of death benefit
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Transfer Life Insurance Policy
Transfer of Policy
• Gift of existing life insurance policy to charity• On-going gift of premiums to charity
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales New Life Insurance
New Life Insurance
• Gift of money to charity for charity owned life insurance policy on donor
• Annual gift of money to charity for premiums• Insurable interest rules
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Wealth Replacement Trust
What Is It? How Does it Work?
• Irrevocable life insurance trust• “Replaces” wealth gifted to charity
– Premiums paid from income stream– Premiums paid from other assets or cash flow sources
(depending upon charitable giving technique)
• Allows for social legacy without reducing family family
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales
Other SpecialtyPlanning Techniques
• Charitable Remainder Trust• Charitable Lead Trust• Qualified Conservation Contribution• Private Foundations
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Choosing a Charity
• Charity Navigator (charitynavigator.org)• GuideStar (guidestar.com)• Community Giving Resource (smartlink.org)• American Institute of Philanthropy
(charitywatch.org)• Better Business Bureau Wise Giving Alliance
(give.org)• Schwab Charitable (schwabcharitable.org)• Publication No. 78 (irs.gov)
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales Conclusion
• Philanthropy and charitable giving are what you want it to be and what you make it to be
• Many ways to accomplish your goals• Create a community and social legacy• Create a family legacy
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales For Additional Information
Lynn Shaffer, EWI Executive DirectorCorporate Office515 South 700 East, Suite 2ASalt Lake City, UT 84102-2801Phone: 1.877.4EWI.NOW(1.877.439.4669)Fax 801.355.2852Email: [email protected]
ESTATE PLANNING
BUSINESS RESOURCE CENTER for Advanced Sales
For Additional Information
EWI of DenverWealth Strategies GroupGerry C. Frantz, CLUFinancial Representative6455 South Yosemite Street, Suite 300Greenwood Village, CO 80111Phone 303.714.5855Email: [email protected]