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Give it Twice: A Strategic Approach to Estate Planning

Learn about the innovative "Give it Twice" strategy in estate planning, maximizing assets for both heirs and charitable causes. Discover the impact of changing IRA distribution rules, creating a lasting legacy through charitable trusts, and navigating real estate investments for long-term financial growth. Gain insights into the evolving landscape of planned giving amidst demographic shifts and favorable tax laws, ensuring a secure financial future for generations to come.

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Give it Twice: A Strategic Approach to Estate Planning

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  1. The Tip of the Iceberg! NWPGRT Annual Conference September, 2006

  2. Why So Much Attention On Planning Giving These Days? • The Nation is Age Rapidly • Favorable IRS Tax Code (Section 664) • Strength of Financial Markets During Last 20 Yrs • Four Affluent Generations Alive Simultaneously • Huge Transfer of Wealth Occurring • 40% of Americans Have A Retirement Plan

  3. “GIVE IT TWICE” A Unique Strategy in Estate Planning…

  4. Rationale for “Give it Twice” New Minimum Distribution Rules for IRAs Adopted Four Years Ago…

  5. Rationale for “Give it Twice” The Old Rule 90/90/90

  6. Rationale for “Give it Twice”

  7. Rationale for “Give it Twice” The New Rule 90/90/180!

  8. Rationale for “Give it Twice”

  9. Sample for “Give it Twice” PROPOSED ESTATE PLAN Stocks & Bonds Life Insurance Home Personal Effects Qualified Plan (IRA) REIT Shares 2nd Passing “Give it Twice” Trust (CRT) 8% income each year (Heirs) for 12 years 12 years pass A substantial gift to Charity!

  10. Why So Much Attention on Planning Giving These Days? • The Nation is Age Rapidly • Favorable IRS Tax Code (Section 664) • Strength of Financial Markets • Four Affluent Generations Alive Simultaneously • Huge Transfer of Wealth Occurring • 40% of Americans Have Retirement Plan • Real Estate Values Have Risen Tremendously

  11. A CASE ILLUSTRATION REAL ESTATE SALE WITH A CHARITABLE TWIST…

  12. CASE PROFILE… • Bob (age 59) and Alice (age 58) Auburn • He owns/manages a small residential construction company • She is an independent contractor currently consulting for ODOT

  13. CASE PROFILE - cont. • Nearing retirement - they want to travel more • Don’t want to dramatically affect children’s inheritance - close family

  14. CASE PROFILE - cont. • They have a $1,365,000 estate: • $200,000 life insurance on him • $125,000 life insurance on her • $328,000 his SEP-IRA • $210,000 her 401(k) & IRAs from past employers • $12,000 in ROTH IRAs • $170,000 home paid off • $320,000 rental properties (two homes)

  15. Rental properties A VISUAL LOOK AT THE AUBURN’S ESTATE... Life Insurance His SEP IRA Home ROTHS Her 401(k) & IRAs

  16. I. Analysis of Increased Income… Sale vs. CRT Value of Rentals $320,000 $320,000 Closing Costs ($ 22,400) ($ 22,400) Taxable Value $297,600 $297,600 Sale vs. Unitrust

  17. I. Analysis of Increased Income Continued… Sale vs. CRT Taxable Value $297,600 $297,600 Or. Cost Basis $ 88,000 N/A Cap. Gain Tax ($ 48,200) $ -0- Dep. Cost Basis $ 5,000 N/A Cap. Gain Tax ($ 26,500) $ -0- Sale vs. Unitrust

  18. I. Analysis of Increased Income Continued… Sale vs. CRT Legal/App. Fees $ ? ($ 2,500) Investable Funds $ 223,000 $ 297,600 Pre-Tax Income $13,400 $ 17,900 31.1-YR Exp. $795,000 $1,065,500 PV of Income $269,000 $ 365,500 Sale vs. Unitrust

  19. TRADITIONAL WEALTH ACCUMULATION… TODAY 31.1 years pass NICE & BIG PERSONAL ESTATE 2037 AD

  20. Adding the Charitable Dimension... TODAY CRT Rentals 2037 AD …………………………………………………………………………. NICE & BIG ESTATE Even LARGER Overall Estate! BIG CRT = X

  21. LET’S REVIEW AGAIN…Why So Much Attention…? • The Nation is Age Rapidly • Favorable IRS Tax Code (Section 664) • Strength of Financial Markets • Four Affluent Generations Alive Simultaneously • Huge Transfer of Wealth Occurring • 40% of Americans Have Retirement Plan • Real Estate Values Have Risen Tremendously

  22. What About the Future for More Traditional Fundraising Efforts? IT WILL BE INTERESTING! • 501(c)(3)s will double in 12-15 years • Foundation Giving Trends Downward • Donors Are Spreading Out Their Giving • Small Amounts of Cash To Give

  23. Personal Observation… PLANNED GIVING is a fertile and growing field of opportunity while TRADITIONAL FUNDRAISING may become increasingly competitive during the next 20-30 years.

  24. Thank You for Attending this Session Today!

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