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October 2014 Newsletter

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Planned Giving Mentor

Professional Partnerships: Hospice Philanthropy Group L.L.C.

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Quotes for today: I honestly think it is better to be a failure at something you love than to be a success at something you hate. ---George Burns

Quickie quiz:.....How much do you need today to fund a retiement payment stream of $100,000 annually so that it will last 30 years? Answer below

Senior Spirit.....Click the Senior Spirit link (below left) for a copy of the latest articles from Certified Senior Advisors

Past issues of the Newsletter are available in the Newsletter Archives To subscribe to this newsletter E-mail and put Subscribe in the subject line


Leaders who truly embrace planned giving weave it into the fabric of their organization's everyday development activities. Constant attention inspires results.

If you do not sew, you won't reap. (Edddie Thompson)




Ethical issues Part 2 - Intra Family Issues

One of the increasingly most common ethical issues for seniors or at least one of the “sticky” issues in planned gift strategies for seniors is the second marriage or blended family issue. It is common for high net worth seniors or at least those who think they have significant asset issues to have some form of pre-nuptial agreement. This agreement may be formal or informal and it may or may not impact their giving or ability to make an estate pledge.

Example 1 - I once worked with a couple where the female had significantly more assets than the male. She had estate tax issues under both the old and now the new regulations. The female had a deceased child and was not close with the surviving spouse or her niece. The male had two children, one with special late in life needs, on what I call “economic outpatient care.”

They did not have a formal agreement but related the informal agreement they had established. The each surviving spouse was to inherit a set figure from the deceased spouses estate. The amount was six figures from the female estate and five figures from the male estate. Each considered this token support for their late in life remarriage. Fortunately, in this situation there was open and honest communication to all involved, including the charitable beneficiaries. Along the way the couple established several one and two life gift annuity agreements for various charitable interests, one agreement was for $1,000,000. They are both still living active lives in their senior retirement years.

Example 2 - This was a 92 year old widow who was well known about town as a philanthropist. She had no children and was planning to marry a 71 year old. He never married and was the sole care giver for his recently deceased mother.

The widow had multiple charitable gift annuity agreements with several national and local charities and a multi million dollar stock portfolio. She also had a well funded donor advised fund and a will and trust agreements which left significant assets to 15 different charities.

Two of her long time trusted advisors took issue with her mental capacity to understand the financial implications of the marriage. They did not prevail and the new husband promptly changed attorneys and financial advisors.

She died several days before her 100 birthday leaving only minor charitable support. Because of her long life many of the gift annuities had little or no charitable support.

The tangled web of many gift situations is the expectations of the children from both marriages. The children in a blended marriage may effect the inclination of both spouses to make commitments from their estate assets. The major concern of children “Is mom or dad giving away our inheritance to the new spouse or to charity?" This means the children we may never see the fruits of their parents life’s work or the fruits will be reduced as the new spouse or charity, is included in the estate plan.

These so called “Entitlement children” may exert subtle but continuing influence over their parent putting up a barriers to significant spouse support or charitable estate giving. Perhaps they will even try forcing late in life changes to their parent’s estate plans.

In the PG discussion with probable donors it is important to get a sense of the nature of the relationship with their children. This relationship may cut both ways for a potential gift, it may promote or quench a gift. Parents must first decide the common questions of “if, when and how much” their children deserve to receive and implement the appropriate tools to finalize the estate plan.

As the primary charitable contact with donors the PG officer must always be mindful of undue influence and how they deal with confidential information about donor’s estate plans. This is especially true if you are working with late in life seniors who may be in a weaken condition. Be especially mindful if you uncover a person (staff or care giver) who is using confidential information for their personal gain.

Moving Forward Charitable strategy suggestion: One strategy I have used successfully with blended marriages is the Lifetime Partnership Annuity. This annuity is a Flexible Deferred Gift Annuity where one spouse is significantly older than the other spouse. The spouse wishes to provide continuing income to the surviving spouse but have the assets go to their charitable interests. The FDCGA is established in the name of and will make payment to the younger spouse. The donor will receive an immediate charitable deduction and the knowledge that the annuity payments will begin when the older spouse dies. Allowing the annuitant the flexibility of turning on the payments either upon death or perhaps sooner should illness or need dictate is a powerful planning strategy.

Next issue: Ethics involved in the appropriateness of the gift for the donor.

(adapted from presentation by Brian Black, J.D., “Gift Planning for Seniors” to Susquehanna Planned Giving Council, Harrisburg Pennsylvania)


Big Gifts Small Effort-New Book from a Familiar Author to help you achieve more by doing less.

There is a new book available now with tips on you can bring in Big Gifts with Less Effort. Written by Wayne Olson, a nationally-known speaker and writer on Donor Relations and Planned Giving, "Big Gifts Small Effort" is a practical approach to Planned Giving and offers ways any nonprofit fundraiser can benefit from this type of giving. Olson says when he made the career switch from being a trial attorney to nonprofit fundraiser there were not many practical guides to fundraising. He wrote this book for people like him, who want to know how to fundraise better, especially when it comes to the big gifts in planned giving.

The book is easy-to-read, written in conversational style. It includes topics such as what gifts should you accept and a few you should never accept (but many charities do without knowing the risks). More than anything, though, Olson wrote the book so no one would be left out of planned giving. Planned giving is the way the big nonprofits became big and it is the lifeblood of successful nonprofits.

For readers of this newsletter, Olson has offered a special discount to make it even easier to purchase the book. Order through www.biggiftssmalleffort and pay the full price of $24 but mention in the comments section that you want the newsletter discount and the publisher will rebate $4 to you through PayPal. The book will be shipped to you right away for $20 – postage included. This discount is valid through for two weeks from date of publication.


Technical Tips: Driving web site traffic.....Carolyn DeFrancesco, J.D., Director of Planned Giving, Elon University as part of her Email signature has the following phrase, "Discover the Benefits of Giving Wisely" followed by the website link which takes interested prospects to their externally hosted website of the same title.


Quickie Quiz Answer.....LUMP-SUM NEEDED - A present value (PV) amount of $1.96 million in a pre-tax retirement account is required today to fund a future payment stream of 30 years of $100,000 annually (with a 2.5% increase for maintenance of purchasing power) assuming that a 6% rate of return (ROR) can be maintained into the future. If the ROR falls to 5%, the PV amount rises 13% to $2.21 million. If the ROR rises to 7%, the PV amount falls 11% to $1.75 million. These calculations do not account for the payment of federal income taxes which would be due as a result of withdrawals from any pre-tax retirement funds (source: BTN Research).


Laminated Gift Annuity Rate Charts.....The American Council on Gift Annuities announced new
gift annuity rates effective in 2012 which are also effective for 2014. The ACGA will meet again in April, 2015.

If you would like a laminated rate chart for the most recent rates simply request one using the following E-mail request and put Laminated Chart in the subject line.


IRA Rollover Samples..... Once again the IRA rollover option for 2014 is in a state of suspended animation. For some samples of past promotions follow this E-mail link and request IRA Rollover in subject line.


IRS Tax Tables for 2015.....(courtesy of Crescendo Interactive) In Rev. Proc. 2014-61, the IRS released 44 inflation-adjusted amounts for 2015. The increased amounts affect tax tables, exemptions, exclusions and benefit phase outs.

1. Standard Deduction – The standard deduction for 2015 will be $6,300 for a single person and $12,600 for a married couple.

2. Personal Exemption – The exemption increases from $3,950 this year to $4,000 in 2015. The exemption phases out for single persons between $258,250 and $380,750. The married couple phaseout is from $309,900 to $432,400.

3. Top 39.6% Tax Rate – For single persons the top rate affects those with income over $413,200. Married couples face the top rate with income over $457,600.

4. Itemized Phase Out – The reduced itemized deductions limit is applicable for single persons with income over $258,250. For married couples, the itemized phaseout starts at $309,900.

5. Alternative Minimum Tax (AMT) Exemption – For single persons the AMT exemption will be $53,600. The married couple exemption is $83,400.

6. Earned Income Tax Credit – The maximum earned income tax credit will increase from $6,143 to $6,242 for a couple filing jointly with three children.

7. Basic Exclusion Amount – Estates may have a value of $5,430,000 and avoid taxation.

8. Annual Gift Exclusions – The present interest annual exclusion amount remains at $14,000.

9. Gifts to a Non-Citizen Spouse – The 2015 gift limit for a non-citizen spouse increases from $145,000 to $147,000.

10. Flexible Spending Account (FSA) – The $2,500 FSA limit is increased to $2,550.

11. Token Gifts – Donors who give $52.50 or more may receive a token gift with logo or other identification by the charitable organization with a value up to $10.50. Larger gift donors may receive a token value up to 2% of the gift with a limit of $105.


News and Notes....SKEWED DISTRIBUTION - The wealthiest 5% of American households owned 63% of all assets in the country as of 2013, up from 54% in 1989 (source: Federal Reserve Survey of Consumer Finances).

JUST A SINGLE PERCENT - The bottom 50% of American households owned just 1% of all assets in the country as of 2013, down from 3% in 1989 (source: Federal Reserve Survey of Consumer Finances).

ONLY SOCIAL SECURITY - More than 1 in 3 American seniors (35%) aged 65 and up have no other source of retirement income other than Social Security. The maximum benefit paid by Social Security to a worker retiring at “full retirement age” in 2014 is $2,642 per month or $31,704 per year (source: US Census Bureau).

END OF LIFE - 28% of Medicare expenditures are generated by Americans in the final 6 months of their lives. 80% of deaths in the United States are Medicare beneficiaries (source: Medicare).

HEALTH INSURANCE - When Medicare began in 1965 (50 years ago next year) it provided health care coverage to 19 million elderly Americans. Today Medicare covers 52 million American seniors (source: Medicare).

MURPHY’S LAW – Only 39% of Americans have a 3-month “rainy day fund” set aside in the event of a financial emergency (source: Federal Reserve).

LONGER LIFE - The life expectancy at birth of an average American was 61.7 years in 1935, the year that Social Security was created. Life expectancy at birth is 78.8 years today (source: Center for Disease Control).

WHO GIVES WHAT - The 3 most generous states (measured by charitable gifts as a percentage of adjusted gross income) are Utah, Mississippi and Alabama. The 3 least generous states are New Hampshire, Maine and Vermont (source: The Chronicle of Philanthropy).


Kudos Corner - Celebrating gifts of all types and sizes

In this section I periodically highlight some recent gift expectancies and gift program elements I think will be helpful and informative, not all gifts are included.

Check back next issue for a sampling of gifts generated by clients



James E. Connell and Associates is a national consulting service devoted to increasing resources for charities using the power of charitable estate and gift planning techniques.

Pinehurst office: PO Box 3335, Pinehurst, NC 28374
Phone: 910-295-6800

Northeast office: 20982 Bayside Avenue, Rock Hall, MD 21661

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