Gift Planning From 0 to 70 ! What We Will Cover Life events to - PowerPoint PPT Presentation

Gift Planning – From 0 to 70 ½!

What We Will Cover • Life events to consider • Donor risk tolerance • Gift types • Case studies • And…

Life Events Reunion Marriage/Divorce Retirement Travel Kids/Grandkids Illness Liquidity Death Downsizing Tax Event

What is Risk Tolerance? • Referring primarily to donor’s risk tolerance • Age plays a role • Personality plays a role • Some gifts are better suited to certain risk tolerances • Also have to be mindful of the organization’s level of risk tolerance

Donor Tolerance Weighing the Risks Any Age : Bequest (Low risk) Ages 50 to 65 : Flexible deferred gift annuity or flip charitable remainder unitrust (Medium risk for gift annuity/High risk for trust) Ages 65 to 75 : Flexible deferred gift annuity or charitable remainder trust (Medium risk for gift annuity/High risk for trust) Ages 75+ : Immediate gift annuity (Medium risk) Note: Despite age, however, any donor could have unique risk tolerance and financial objectives

Bequest • Present discussion about future gift • Broadest audience of all planned giving options (Any age) • Can take form of gift in will or gift in trust

Bequest Case Study #1 • Married Couple • No children together • Wife is alumnae of Tufts (Age 72) • Husband has two children from prior marriage (Age 80) • Life event: Age • Risk Tolerance: Low • Additional Information: Annual Fund donor and Reunion Committee Volunteer

Retirement Plan Beneficiary Designation • Subset of the audience for will/trust Cost-free (As compared to will or trust) • • Age: 40 to 80 • Change of beneficiary form • Options – IRA (Traditional and Roth) – 401(k) – 401(a) – 403(b)

Retirement Plan Case Study #1 • Senior academic administrator (Age 59) • Mid-career transition from IT to academia • Proactively reached out to Tufts • Second marriage • Children from first marriage • Still working for 5-7 more years • Life event: Family change (Daughters are self-sufficient) • Risk Tolerance: Low

Flexible Deferred Gift Annuities • Contract between donor and institution • Typically requires gift of $10K or more • Fixed income for life • Can provide income to 2 beneficiaries • Target Age: 50s to 75 • Risk Tolerance: Medium • NOTE: Organizational policies do vary

FDGA Case Study #1 • Single woman (Age 65) • No children • Risk Tolerance: Medium • Life event = Retirement

FDGA Case Study #2 • Single man (Age 71) • Never married • Risk Tolerance: Medium • Life Event – N/A • Established annuities in late 1980s/early 1990s • Severed annuity to provide current gift (Insight into current income level)

Charitable Remainder Unitrust • Grounded in trust law • Typically requires gift of $100K or more • Variable income for life • Can provide income to multiple beneficiaries • Target Age: 65 to 75 • Risk Tolerance: High

Flip Charitable Remainder Unitrust • AKA “Retirement CRUT” • Specific type of CRUT used primarily for: – Delaying income to a later date (E.g.- Retirement) – Accepting complex assets (E.g. – Real estate or closely-held stock) • Target Age: 50 to 70 • Risk Tolerance: High

Timelines CRT Creation: Peak Age is 70-74 CGA Creation: Peak Age is 75-79 Realized Bequest: Peak Age is 88 Franey, J. W. & James, R. N., III (2013) Trending Forward: Emerging Demographics Driving Planned Giving. National Conference on Philanthropic Planning, Minneapolis, MN, October 15- 17, 2013

Charitable Remainder Unitrust Case Study #1 • Married couple • Husband is alumnus of Medical School (Age 74 at age of trust creation) • Two children • Life Event: Pending retirement – Also motivated by tax deduction • Risk Tolerance: High

Charitable Remainder Unitrust Case Study #2 • Married couple • Husband is alumnus of Tufts (Age 63) • Career in media • Life Event: Change of employment status (18-month period of radio silence) • Risk Tolerance: High

Immediate Gift Annuities • Contract between donor and institution • Typically requires gift of $10K or more • Fixed income for life • Can provide income to 2 beneficiaries • Target Age: 75+ • Risk Tolerance: Medium

Charitable Gift Annuity Case Study #1 • Married Couple • No children together • Wife is alumna of Tufts (Age 62) • Life Event: Wife’s pending retirement • Risk Tolerance: Medium • Additional Information: Annual Fund donor, Reunion Committee Volunteer, and alumni chapter leader. Alumna’s late father was also alumnus of Tufts. Her father established a gift annuity for his and his wife’s benefit.

Multiple Gift Annuities M arried Couple • • No children together • Wife is alumna of Tufts (Age 81) • Life Event: N/A (Intrinsic motivating factor present) – Desire to honor memory of father and grandfather • Risk Tolerance: Medium • 12 gift annuities with Tufts…and counting!

Individual Retirement Account (IRA) • Multiple pathways on the road to success • Outright gift: IRA Rollover • Planned Gift: Beneficiary Designation • Gold Standard: Blended gift – Lifetime IRA Rollovers – Beneficiary Designation

Gold Standard Case Study #1 • Married couple • Husband is alumnus of School of Arts and Sciences (Age 78) • Two children • One is Tufts alumna • Life Event: Pending retirement • Risk Tolerance: High • Outcome: Bequest, IRA Rollover, and potential beneficiary designation

Gold Standard Case Study #2 • Married couple • Wife is alumna of School of Arts and Sciences (Age 72) • No children • Life Event: Reunion • Risk Tolerance: High • Outcome: Bequest and outright gift via IRA Rollover

Why are life events important? “…because timing is everything!”

Take Home Messages • Risk tolerance • Life events • The relationships we build allow us to learn our donor’s unique risk tolerance • Right place at the right time

Questions? Samuel Sanker samuel.sanker@tufts.edu