financial planning association – dallas chapter november 12, 2013 dr. jeffrey w. steed, mba senior...
TRANSCRIPT
elping ClientsIn Retirement Years
Financial Planning Association – Dallas ChapterNovember 12, 2013
Dr. Jeffrey W. Steed, MBASenior Director of Gift
PlanningThe University of Texas at
Arlington HCase Studies Involving Gift
Planning
Retirement Years...
Traveling Carefree
Transitioning
Retirement Years...
Without Time Constraints
Retirement Years...
Being Prepared
Retirement Years...
Staying Independent
Retirement Years...
Enjoying Life
Retirement Years...
Financially Managing
Retirement Years...
How can advisors help clients in their
retirement years using gift planning tools?
Retirement Years...
Helping Clients in Retirement Years
Agenda
1. Impacting Through A Legacy Gift
2. Funding Retirement Living
3. Maximizing Annual IRA Distributions
4. Diversifying a Retirement Portfolio
5. Increasing Retirement Income Securely
6. Reducing/Avoiding Gift Tax
FUNDING RETIREMENT LIVING
Step #1
Mr. and Mrs. Page establish an endowment through their Last Will and Testament or Revocable Trust.
They do not feel that they can prudently give away major gifts
during retirement due to a minimal estate size.
Step #2
At their passing, charity receives
income payments every year for
student scholarships.
RESULT: Their impact on the lives of charity continues
perpetually.
Impacting Through A Legacy Gift
The Page Endowed Scholarsh
ip
The Page Endowed Scholarsh
ip
Helping Clients in Retirement Years
FUNDING RETIREMENT LIVING
Step #1
Mr. and Mrs. Johnson establish a Charitable Remainder Trust
(CRT) and give their farm to the CRT.
Establish the Johnson
Charitable Remainder
Trust
Establish the Johnson
Charitable Remainder
Trust
Step #2
After the CRT sells the farm, income is distributed periodically to Mr. and Mrs. Johnson to fund
retirement living.
After Mr. And Mrs. Johnson pass away, charity receives the
CRT remainder.
Funding Retirement Living
Step #3
Helping Clients in Retirement Years
FUNDING RETIREMENT LIVING
Step #1
Mrs. Lyle (“non-itemizer tax filer“) contacts her IRA
custodian for a qualified charitable distribution.
IRA Custodi
an
IRA Custodi
an
Step #2
IRA custodian mails a check
directly to charity.
RESULT: Mrs. Lyle benefits charity with pre-tax dollars and does not pay tax on the amount.
NOTES:- Donor must be
70.5+- Benefit ends
12/31/13- Maximum:
$100,000- Qualifies for MRD
Maximizing Annual IRA Distributions
Helping Clients in Retirement Years
FUNDING RETIREMENT LIVING
Step #1
Mr. May establishes a Charitable Remainder Trust (CRT) and gives a concentrated, appreciated stock
position (or other asset) to the CRT without capital gain taxes initially.
Establishes the May
Charitable Remainder
Trust
Establishes the May
Charitable Remainder
Trust
Step #2
The CRT sells the stock, diversifies the CRT portfolio and
income is distributed periodically to Mr. May.
After Mr. May passes away, charity receives
the CRT remainder.
Diversifying a Retirement Portfolio
Step #3
Helping Clients in Retirement Years
FUNDING RETIREMENT LIVING
CHARITABLE GIFT ANNUITY (CGA):
Mrs. Wright (age 70) establishes a
$100,000 CGA at 5.10% ($5100
annually)
CHARITABLE GIFT ANNUITY (CGA):
Mrs. Wright (age 70) establishes a
$100,000 CGA at 5.10% ($5100
annually)
The CGA allows for Mrs. Wright to have an initial partial income tax
deduction and provides $5100 annually in income to her.
After Mrs. Wright passes away, charity
receives the CGA remainder.
Increasing Retirement Income Securely
STATUS QUO: Mrs. Wright
purchases a five-year $100,000 CD at 1.50% ($1500
annually).
STATUS QUO: Mrs. Wright
purchases a five-year $100,000 CD at 1.50% ($1500
annually).
OR
Helping Clients in Retirement Years
Desire to pass company to children (C-Corp) with minimal tax No pre-sale agreements exist FLP owns 99% LP interest, while donor keeps 1% GP interest until
death (stepped-up at death to children) Discounted valuation of LP interest by qualified appraisal No active participation by the FLP or GP in the C-corporation and
no debt Various types of Lead Trusts – this is a non-grantor lead trust
(Family Lead Trust). Donor has other assets for retirement Appreciation of assets in Trust not taxable
Charitable Lead Annuity TrustFacts/Assumptions
Reducing/Avoiding Gift Tax
(Or 10% of $2,200,000)
#2
#1
#3
#4
#5
At Samantha’s death, the remaining 1% GP interest
is distributed to family (stepped-up costs basis)
#6
Potential Gift Planning Solutions:
1. An individual does not feel that he/she can give much to charity while living due to a minimal estate size, but he/she is charitable. »Bequest gift?
2. An individual is wanting to sell her/his farm in order to move to a retirement center. »Charitable Remainder Trust?
3. An individual complains about being forced to take a taxable IRA distribution. »IRA Charitable Rollover?
4. A client mentions that most of their portfolio is tied up in one stock – possibly employer stock. »Charitable Remainder Trust?
5. A client is concerned about CD rates. »Charitable Gift Annuity?
6. A client desires to distribute closely held stock to children with reduced/eliminated gift tax. »Charitable Lead Trust?
Helping Clients in Retirement Years
Questions?
Helping Clients in Retirement Years
Dr. Jeffrey W. Steed, MBASenior Director of Gift
PlanningThe University of Texas at
Arlington(817) [email protected]
Case Studies Involving Gift Planning