2. Why expend resources on charitable
estate planning & planned giving?
• Estimates show that 91% of Americans’ wealth is held
in non-cash assets.
• Giving USA 2012 report:
– Total US giving: $316.23 billion (up 3.5%)
– Total giving by individuals: $228.93 billion (up 3.9%)
– Total bequest giving: $23.41 billion (down 7%)
• ECFA (Evangelical Council for Financial Accountability):
– Cash donations 2012: $11 billion (up 6.4%)
– Noncash donations 2012: $3.4 billion (up 4.8%)
3. Paradoxes of Estate Planning and
Planned Giving for the Nonprofit
• Estate planning/planned giving can
accomplish much for the individual, but
getting a donor to do estate planning/planned
giving is like getting them to go to the dentist
• Estate planning/planned giving can help your
organization, but you’re one step removed
from being able to make it happen
• Education is the key to solving the paradox
4. 3 Levels of Donor
Engagement and Education
• Down Home Estate Planning
– Low cost, low expertise, low maintenance
• Bread and Butter Estate Planning
– Lawyer consultation recommended
• Lifetime Gift Planning
– Heavy lawyer lifting, high donor commitment
5. Down Home Estate Planning
• Why?
– It’s easy
– Doesn’t require a lawyer
• Challenges?
– Results can be messy
– Revocable giving
• Benefits?
– Low cost
– Low complication
– Low thought process
– Little third party involvement
6. Down Home Estate Planning
Method: Beneficiary designations
– Focused on probate avoidance after death
– Transfer/pay on death designations
• Bank accounts
• Investment accounts
– Life insurance beneficiary designations
– Commercial annuity beneficiary designations
– Retirement account beneficiary designations
– Beneficiary deed designations
7. Bread & Butter Estate Planning
• Why?
– Basic and straightforward
– Known quantity
• Challenges?
– Revocable giving
– Lawyer consultation recommended
• Benefits?
– Reasonable cost
– Reasonably easy to find a lawyer who can help
– Real documents and plans – tangible results
8. Bread & Butter Estate Planning
Method #1: Last Will and Testament
A wills and bequests program encourages
donors to name your organization in their will
– Encourage creation of wills & charitable giving
– Build a lawyer referral list
– Develop bequest language to be used
– Thank everyone who completes a will
– Continue to build relationship to avoid revocation
9. Bread & Butter Estate Planning
Method #2: Revocable Trusts
– One notch more complicated, one notch more
expensive, but maybe one notch more committed
– Choice of trust vs. will is client specific
– Trusts are a commitment to a structure, leading
clients to feel more committed when they have a
trust
– Same lawyer referral list and bequest language
– Thank everyone who completes a trust
– Continue to build relationship to avoid revocation
10. Lifetime Gift Planning
• Why?
– Charitable tax deduction
– Bypass/deferral of capital gains tax
– Reduction of estate for estate tax and Medicaid purposes
• Challenges?
– Complex – requires professionals
– Requires higher donor commitment
• Benefits?
– Irrevocable giving
– Involves higher donor commitment
– Lifetime income, lifetime giving, lifetime fulfillment
11. Lifetime Gift Planning
Charitable Tax Deduction
– Contributions to public charities are deductible up to 50%
of the donor’s AGI (adjusted gross income).
– Charitable deduction that exceeds 50% of the donor’s AGI
can be carried forward up to 5 years
Bypass/deferral of Capital Gains Tax
– Giving tools often operate to bypass or defer capital gains
tax on appreciated assets donated
Reduction of estate for tax & Medicaid purposes
– Irrevocable giving done right shifts assets from being
considered taxable under state and federal estate tax laws
or considered accessible under state Medicaid laws
12. Lifetime Gift Planning
Charitable IRA Rollover/Qualified Charitable Distribution
– Required minimum distributions (RMD) begin at 70-1/2
– Through 2013, traditional IRA RMD up to $100,000 could
be distributed to charity – not yet extended into 2014
– Extender bill to cover 2014-2015 currently in Congress
– Gift avoids income tax normally associated with RMD
– No additional charitable deduction but no tax on RMD
– No DAFs, CRTs, CGAs or private foundations
13. Lifetime Gift Planning
Charitable Trusts
– Charitable remainder trust
• Lifetime income to donor, spouse, even children
• Immediate partial charitable deduction
• Bypass/deferral of capital gain on appreciated assets
• Charity receives principal of trust upon death/termination
– Charitable lead trust
• Income producing asset spins off income to charity
• Possible: immediate charitable deduction for income to charity
• Return of assets to donor or transfer of asset to donor’s children
upon termination of trust
• Assists in the transfer of assets to children at a reduced tax value
14. Lifetime Gift Planning
Donor Advised Funds
– Flexible alternative to private foundations
– No income to donor – simply a giving fund with
deferred giving & investment/growth options
– Flexibility in assets can be donated to a DAF
– Flexibility in giving so long as 501(c)(3)
– Immediate charitable deduction but no requirement
to immediately distribute to charity
– Bypass of capital gains upon sale of donated assets
15. Lifetime Gift Planning
Charitable gift annuities
– Lifetime income
– Immediate charitable deduction
– Capital gains payment over life of gift annuity
– Gift to charity upon death of donor
Life estate reserved (real estate)
– No lifetime income, but donor keeps their property
– Transfer of partial interest in real estate results in
charitable deduction
16. Keep It Simple
• Focus on your mission and your donors
• Build long-term relationships
• Create a plan, a message, and a cycle
• Develop your internal processes
• Develop your referral network
• Thank your donors at every opportunity
17. Resources
• AG Financial Solutions
– http://www.agfinancial.org -- (417) 520-3216
• Community Foundation of the Ozarks
– http://www.cfozarks.org
• National Christian Foundation
– http://www.nationalchristian.com
• Crescendo Interactive
– http://www.crescendointeractive.com
• Planned Giving Design Center
– http://www.pgdc.com
• Partnership for Philanthropic Planning
– http://www.pppnet.org
