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
• ptions (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

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

Timelines

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

• Married 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