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Gift Planning Opportunities

Gift Planning Opportunities. KSU Foundation Gift Planning Department Lori Rogge, CAP Darci Cain, CTFA. Consider Gift Planning:. Investments Strategies Charitable Giving. Early Retirement. Charlie and Elaine Caus Charlie – 60 – Mgr Hardware Store

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Gift Planning Opportunities

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  1. Gift Planning Opportunities KSU Foundation Gift Planning Department Lori Rogge, CAP Darci Cain, CTFA

  2. Consider Gift Planning: • Investments • Strategies • Charitable Giving

  3. Early Retirement Charlie and Elaine Caus Charlie – 60 – Mgr Hardware Store Elaine – 60 – HR Director of Packing Plant 401(k)’s $1,000,000 Stock 500,000 Rentals 325,000 Home 200,000 Savings 50,000 UL Charlie 250,000 UL Elaine 250,000 No Children Charlie’s Nieces (Tara – 10; Sidney -15)

  4. What strategies would you suggest for Charlie and Elaine to increase their income? • Utilize 401(k) and SS now • Selling stock-reinvest at higher dividends • Gifting stock to CRUT or CGA • Partial Retirement • Sell property-reinvest • Utilize net unrealized appreciation w/co stk in 401(k) • Rental income • Cash value on UL policies possible 1035 exchange

  5. What unanswered questions would you ask of Charlie and Elaine? • Philanthropic intent • Estate Issues—contingent beneficiaries • LTC • Education coverage for girls • Health insurance coverage • Intent of rental properties, marketable • Value of home • Cost of travel • What does retirement mean (never working again)? • Rental income • Debt on rentals • Gifting to girls • CV of LI—premiums on policy

  6. How would you help Charlie and Elaine keep their taxes as low as possible? • CRUT • CGA • Outright gifts • Stock basis—how to handle gifted vs. purchased • 1035 Exchange • Diversify portfolio with tax exempt securities • Life insurance • Highly appreciated stock • Minimum funded LI w/o MEC

  7. Consider Outright Gift: • Reduce tax (plus cash from gift/sale) • Bypass gain on gift • Deduction offsets tax liability

  8. How would you suggest Charlie and Elaine preserve their assets in the event of their incapacitation or death? • Wills • Trust • DPOA • Living Wills • LTC • Beneficiary designation • Distribution of property • Life Insurance • 401(k) beneficiary—charity or nieces

  9. Consider Beneficiary Designations: • Maintain control during life • Charitable intentions • Desire estate tax deduction • Does not want $ given to IRS

  10. What options would you offer to Charlie and Elaine regarding their philanthropic intentions? • Life Estate • Bargain Sale • Donor Advised Funds • CGA • CRUT • CLUT • IRA Rollover if available • Term insurance • Second to die policy • Need to determine how much income they have from rental—is gifting possible?

  11. Consider a Life Estate: • Current tax deduction • Preserves lifetime use • Transfer to charity without probate • Reduces estate tax • Possible conversion to trust for income later

  12. How would you suggest providing for Tara and Sidney’s college education? • Mutual funds • 529 Plan • Life Insurance • Stock • Roth IRA • Sell rental properties • Annual gifts • EE Bonds • UGMA/UTMA • College Education Unitrust/Annuity Trust (kiddie tax) • Work study • Scholarships and financial aid

  13. BREAK TIME

  14. Land Strategies and Investment Opportunities Bob and Sue Land Bob – 68 – Farmer Sue – 72 – Teacher 2K Acres Land $2,000,000 Home + 20 acres 350,000 SEP 300,000 Savings 50,000 Grain 300,000 Machinery 500,000 50 hd of Cattle 50,000 UL Policy - Bob 250,000 UL Policy – Sue 250,000 Sue – son Steve (father deceased) 2 grandchildren Bob & Sue - Cara

  15. Credit card- what is interest rate, is this a recent purchase, making min. payments or long term balance, reason for debt? Use money in savings to pay debt Possible to use SEP proceeds- but will be taxable Are there any tax benefits for the mortgage? Depends on itemized deductions Could use savings, cattle, land or machinery to pay off debts. Land purchase- debt on purchase Improvements made on the property? What recommendations do you have for handling their debt?

  16. How could Bob and Sue receive income during retirement? • KPERS-income, lump sum or combo • SEP • Sale of land, cattle, machinery, grain (consider storage fee) • Investments from the sale of land, cattle, etc. • Need for deductions if selling assets • CRUT, CGA • Social Security • Land Lease- Cash rent- Share Crop (wind farm; recreational assumptions) • SPIA • Borrow on LI

  17. Bypass capital gain Increase income Receive a current charitable income tax deduction May deduct 30% (appreciated property gift) to 50% (cash gift) of your AGI in the year of the gift, carried forward for five years if needed Reduce federal estate taxes Diversify assets Utilize professional asset management Consider a Charitable Trust:

  18. What considerations should Bob & Sue explore as they liquidate their land, cattle and machinery? • Recapture, depreciation • Capital gains • Value of machinery at auction • Price of cattle • Charitable options • CRUT, outright gifts-ILIT wealth replacement • How much land do they want to keep? • Will they keep the house or move? • 1031 exchange • Conservation easement • Cash rent/Share crop • Debt consideration • Family use of land (emotional issue) • How much income will they produce from sale of land, cattle and machinery? • Consider tax implications of selling

  19. What types of estate issues do you foresee for Bob and Sue? How could they be rectified? • What plans are in place? • Titles of assets-corporations; farm • What amount left to heirs & grandchildren • Will there be different amounts to kids • Education of grandchildren • Cara vs. Steve • Estate taxes- Annual reviews • Gifting to children or charity • Move the LI to ILIT • Bequest, outright, CRUT, wealth replacement • Beneficiary designation of SEP (IRD) • Lead Trust (CLUT) • Life Estate • Roth rollover • Estate rates • Exemptions • Recapture

  20. Consider a Charitable Lead Trust: • Receive charitable deduction • Donor not taxed on trust income (non-grantor) • Reduced gift/estate taxes • Assets returned to family

  21. What income vehicles would you recommend as they enter retirement? • KPERS • Annuities, Mutual Funds, REITs • SEP • Lease/sell land- mineral rights, water, gas, oil • CRUT, CGA • Discuss timing of asset liquidation • Social Security • Cash value of LI • 1031 Exchange • Income now? • Title of land • Stay on farm? • What do the children want?

  22. Consider a Charitable Gift Annuity: • Provides supplemental payments for life • Partially tax-free payments • Portion of capital gains tax pro-rated • Receive a current charitable income tax deduction

  23. What key information do you need to help Bob and Sue make the best financial decisions? • Financial background-current income-future income needs (travel) • Land • Title of property • Trustee • Current plans-will/trust/POA • Risk tolerance-investment philosophy • Tax status • Family information-relationships between children- grandchildren • Charitable intent- by both • Retirement living • LTC • Beneficiary • Health status • Location of land • Social Security • Private school

  24. THANK YOU!

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