Planned Giving

1. To insert your company logo on this slide • From the Insert Menu • Select “Picture” • Locate your logo file • Click OK • To resize the logo • Click anywhere inside the logo. The boxes that appear outside the logo are known as “resize handles.” • Use these to resize the object. • If you hold down the shift key before using the resize handles, you will maintain the proportions of the object you wish to resize. Planned Giving Stephen W. Dale JD LL.M The Dale Law Firm, PC 1670 Riviera Ave, Suite 101 Walnut Creek, California 925-280-0172 www.achievingindependence.com www.nami.org www.specialneedsalliance.com

2. ABOUT THIS PRESENTATION • I do not intend to teach substantive law • My objective is to solicit your involvement on a Planned Giving Project. • One of the objectives of the Special Needs Alliance is create opportunities for members with leading disability organizations • If you cannot get in through the front door – take the back door.

3. ONE MORE THING • There is a version of this presentation on the SNA Website – • This version has been mostly stolen from so many sources – I don’t know who I need to make attributions to • The Fleming Rule of Attribution.

4. About this Presentation • This is a joint project between NAMI and the Special Needs Alliance • The Special Needs Alliance, or SNA , is a national network of lawyers dedicated to Disability and Public Benefits Law. • Families rely on SNA as the best way to connect with the nearest lawyer with proven expertise in maintaining public benefits for their loved ones – as well as for estate planning to protect their life savings.

5. Why Give to NAMI? • As America's largest organization of consumers and families, NAMI stands at the forefront of supporting those whose lives have been affected by serious mental illness, and is leading the way in transforming America's mental health care system.

6. Our Planned Giving Plan • Setting a goal • Identifying a purpose • Raising awareness • Integrated message in all contacts • Brochure • Board training and commitment • “Asking for the order”

7. What Are Planned Gifts? • Gift of assets, rather than income • Long range • Significant tax benefits • More thought and effort required • Significantly larger than annual gifts

8. Why Planned Gifts? • The fact is that in order for NAMI to do its advocacy – we need resources. • THIS MIGHT BE A PLACE FOR INSTANCE FOR THE ARC TO MAKE THE POINT THAT PROGRAMS THAT RELY TOTALLY ON STATE MONEYS ARE LIKELY TO COLLAPSE

9. First Level Planning 1. Bequests • Beneficiary • Designations

10. Second Level Planning • More advanced techniques: • Gifts of life insurance • Charitable Remainder Trusts (CRTs) • Charitable Gift Annuities • Charitable Residential Life Estates • IRAs to NIMCRUTS

11. Why do people give? What reasons you can think of?

12. Americans give ($212 Billion) out of a sense of wanting to make a difference… • Support worthwhile causes. (79%) • Financially successful have responsibility to share good fortune. (69%) • Help meet critical needs in their communities. (63%) • Help organizations that have benefited them. (50%) • Set example for children – avoid “Affluenza.” (46%) • Fill gaps left by government cutbacks. (29%) • Tax benefits (11%) • Earn respect and recognition from peers and community (4%) • Pressure from social acquaintances (2%) (US Trust Survey of Affluent Americans 1998)

13. Why Do People Give? Philanthropy fulfills a basic need to attach meaning to life – to know that our lives matter and that we made a difference in the world while we were here.

14. The Seven Types of Donors • Communitarian (26%) – Doing good makes sense. • Devout (21%) – Doing good is God’s will, sense of purpose and mission in life. • Investor (15%) – Doing good is good business. • Socialite (11%) – Doing good is fun! • Repayer (10%) – Doing good in return. • Altruist (9%) – Doing good feels right. • Dynast (8%) – Doing good is a family tradition. • (The Seven Faces of Philanthropy, Russ Prince and Karen File, 1994)

15. In Summary… People Give to Charity to: • Perpetuate ideological, philosophical & religious values • Leave a legacy • Provide for community, nation, world & society • Direct social capital; and • Reduce or eliminate taxes.

16. Controlling Your Wealth:Directing Social Capital SOCIAL CAPITAL: That part of your wealth over which you are simply a STEWARD; you have temporary control of it, but eventually the government will use it to provide benefits for the general welfare of society.

18. A Word About Taxes… Controlling Social Capital!

19. The “Coupons” • Annual Exclusion - $12,000/person/year • Applicable Exclusion Amount - Lifetime • Gift Tax Exclusion – Lifetime • State Inheritance Tax Exclusion -Lifetime

21. More tax issues… I.R.D. is B-A-D…

22. Income in Respect of a Decedent(IRD) Estate assets that generate income after your death, but on which income tax was not paid during lifetime: • Retirement plans • Annuities • IRAs • Installment/promissory notes • US Savings Bonds

23. The Problem with IRD… • The Value of IRD assets is subject to ESTATE TAX and the beneficiaries have to pay INCOME tax when they receive the assets. • The combined effect of these taxes means that heirs may receive less than 25% of the assets after all taxes are paid! • IRD affects even those without taxable estates! • Good assets for gifting!!!

24. IRD Taxes(Income Taxes on IRAs, Annuities, Etc.) Marginal tax rates on income thresholds for single filer

25. Planned Giving Strategies Our Two Key Strategies You Will Need to Know

26. Strategy #1--Bequests • Amend your Will or Living Trust to make a bequest to NAMI • Lowers the donor’s taxable estate – dollar for dollar deduction • Can give all, part, or just the taxable amount • Testamentary – effective at death.

27. Strategy #1—Bequests: Amend Will or Trust Designation Options: 1.Designate Percentage* of your Estate • I give to the NAMI, five percent (5%) of the residue of my estate. 2.Designate Dollar Amount • I give $10,000 to NAMI 3.Designate Real Property • I give to NAMI my entire interest in the real property located at 123 Able Street, San Francisco, California. The legal description of the property is …

28. Strategy #1—Bequests: Amend Will or Trust • Sample Language • Once you’ve determined that you would like to make a bequest to NAMI, the following sample charitable bequest language can be used in your will or revocable living trust: • An Unrestricted Bequest:"I give, devise and bequeath to NAMI (federal tax ID number 43-1201653), located at 2107 Wilson Boulevard, Suite 300, Arlington, Virginia 22201-3042, the sum of $_____ or ____% or real or personal property herein described, to be used for the general purpose of the organization, at the discretion of its Board of Directors."

29. Strategy #1—Bequests: Amend Will or Trust • Sample Language • Once you’ve determined that you would like to make a bequest to NAMI, the following sample charitable bequest language can be used in your will or revocable living trust: • A Restricted Bequest: (to support a particular program or area of interest to you)"I give, devise and bequeath to NAMI (federal tax ID number 43-1201653), located at 2107 Wilson Boulevard, Suite 300, Arlington, Virginia 22201-3042, the sum of $_____ or ____% or real or personal property herein described, to be used for the purpose of _____________."

30. Strategy #1—Bequests: Amend Will or Trust • Sample Language • Once you’ve determined that you would like to make a bequest to NAMI, the following sample charitable bequest language can be used in your will or revocable living trust: • A Residuary Bequest: (which leaves any remaining assets from your estate after all other obligations have been met)"I give, devise and bequeath to NAMI (federal tax ID number 43-1201653), located at 2107 Wilson Boulevard, Suite 300, Arlington, Virginia 22201-3042, all the rest, residue and remainder of my estate, both real and personal, of every kind of description, wherever situated and whether now owned or hereafter acquired, including any property with respect to which I may have power of appointment."

31. Strategy #1—Bequests: Amend Will or Trust • If you have remembered NAMI in a similar way, please notify NAMI's Office of Development.  • It will give us an opportunity to welcome you to the NAMI Iris Circle, a select group of NAMI supporters who are committed to ensuring NAMI's ability to serve generations to come.

32. Strategy #1—Bequests: Amend Will or Trust Designation Options: • Designate For Specific Purpose or for General Fund: • I give $25,000 to the National Alliance for the Mentally Ill in ****to create a perpetual endowment fund. This fund shall be called the Dale Family Endowment Fund for advocacy. The income of this fund shall be used to provide an *******. • I give $25,000 to the General Fund of the NAMI, to be used wherever the financial need is greatest.

33. Strategy #1—Bequests: Amend Will or Trust *Designation Caution: • Preference is for Specific Dollar Amounts • Precludes accountings and delays • Percentage gifts can be cumbersome and contentious • ALWAYS HAVE DONORS WORK WITH A QUALIFIED ESTATE PLANNING ATTORNEY AND THE EXECUTIVE DIRECTOR!!!

34. Strategy #2—Change Beneficiary Designations • IRAs, retirement plans, 401k, 403b, etc. • Easy to do—just a form • Lowers taxable estate and • Avoids IRD (Income Taxes)! • Usually name spouse as primary beneficiary, NAMI as the contingent • Can specify percentages • Use our exact name

35. Strategy #2—Change Beneficiary Designations • Insurance Contracts • Also easy to do—just a form • Taxes on the gain on the annuity are avoided

36. What About The Kids???

37. What About The Kids??? • How much is enough? • Conveying your values: • How you want to be remembered • What was important in your life • Set an example • Provide direction • Involve kids through Philanthropic options: Provide philanthropic wealth with financial wealth.

38. Charitable Gift Annuity • A charitable annuity is an investment vehicle. A gift annuity makes it possible to transfer cash, real estate, or securities to the charitable organization. • In exchange, the donor or another designee will receive fixed payments for life from the charitable organization. • The charitable organization receives the remaining principle upon the passing of the beneficiary.

39. Pooled Income Fund • A Pooled Income Fund is a type of charitable remainder trust that operates somewhat like a mutual fund, wherein gifts to the fund from many donors are invested in a common fund.

40. Pooled Income Fund • Donors receive income earned by the fund in proportion to the number of shares in the fund.

41. Pooled Income Fund • The charitable organization may use the remaining principal only after the donor’s death and the death of any donor-designated beneficiaries.

42. Charitable Remainder Trust • A Charitable Remainder Trust (CRT) is an irrevocable trust that is designed to convert an investor's highly appreciated assets into a lifetime income stream without generating estate and immediate capital gains taxes. When the trust ends, the remaining assets pass to the qualified charity or charities of your choice.

43. Charitable Remainder Trust • Here’s how it works:  (1) You irrevocably transfer cash, securities, or other property you own into a CRT; (2) As a result of this transfer, you lower the taxable value of your estate and provide significant estate tax savings to your heirs; (3) You select the type of CRT based on your individual needs.

44. What is a Gift Annuity? • A gift annuity is a legal arrangement between a donor and a qualified charitable organization where the donor exchanges cash or other assets in exchange for the organization’s promise to pay the donor or some other designated annuitant(s) a fixed amount of income each year for the life of the annuitant(s).

45. What is a Gift Annuity? • The donor is entitled to a charitable income tax deduction for the “gift value” at the time of contribution • The charitable deduction is dependent on the annuitant(s) age, the amount being paid by the charitable organization and interest rate assumptions.

46. What is a Gift Annuity? • EXAMPLE - Mr. Bruce Hilt, age 65, transfers $100,000 cash to NAMI in exchange for a gift annuity. • The organization is offering 7.3% to age 65 donors. Mr. Hilt will receive $7,300 per year for the remainder of his life. • Mr. Hilt will be entitled to an income tax deduction of $50,382.20 in the year of his gift.

47. The IRA - NIMCRUT • EXAMPLE - Bill Howard and his wife, Doris Howard, established an unfunded joint NIMCRUT, which was named as the beneficiary of Bill’s $250,000 IRA. IRA

48. The IRA - NIMCRUT • They also established a joint wealth replacement life insurance trust for the benefit of their children, which owns a second to die $250,000 universal life insurance policy, that insures both Bill and Doris Howard’s lives. ILIT

49. The IRA - NIMCRUT • If Bill dies first, the $250,000 IRA is paid to the NIMCRUT to provide Doris Howard with the same income the IRA would have paid her. IRA

50. The IRA - NIMCRUT • Upon Doris Howard’s subsequent death, NAMI would receive the balance of the IRA proceeds tax free. IRA