Charitable Giving Maximizing the impact of your contributions Insurance products are issued by Minnesota Life Insurance Company in all states except New York. In New York, products are issued by Securian Life Insurance Company, a New York authorized insurer. Both companies are headquartered in Saint Paul, MN. Product availability and features may vary by state. Each insurer is solely responsible for the financial obligations under the policies or contracts it issues.

Agenda Deciding how to give Tax treatment of charitable gifts Life insurance: an important asset for charities Trusts and advanced giving strategies Strategies for increasing involvement

8 The Center on Philanthropy at Indiana University, “ Bank of America 2012 Study of High Net Worth Philanthropy.”

Subhead Deciding how to give

Benefits of lifetime gifts Typically qualify for an immediate income tax deduction Give the donor the satisfaction of supporting the charity while alive

Deciding how to give Benefits of testamentary bequests Unlimited estate tax deduction Donor has access to property or assets during their lifetime Potential income tax deduction, depending on type of donation

Subhead Tax treatment of charitable gifts

Income tax deduction Deductions for gifts to qualifying charities Rules do not allow deductions for –Services –Gifts to specific individuals –Charitable loans –Quid pro quo Deduction limited to 50% of donor’s Adjusted Gross Income –Value in excess is deducted over subsequent years

GiftAdjusted Gross Income (AGI) deduction limit Value of asset Cash50%Fair market value Long-term securities and real estate holdings 30% 50% election 4 available Fair market value Short-term securities and real estate holdings 50%Cost basis Ordinary income property 50%Cost basis Personal propertyRelated – 30% Unrelated – 50% 5 Fair market value Realized gain Tax treatment of charitable gifts 4 Donors of these gifts may take an election permitting the donor to deduct all “30%” gifts at cost basis, and then take the reduced gifts as a charitable deduction subject to the “50%” limitation. 5 When tangible property is donated to a charity, it is treated differently when it is unrelated. For example, artworks donated to an art institute are “related.” If the art was donated to a food bank, it would be “unrelated.”

Tax treatment of charitable gifts Gift tax charitable deduction –Unlimited gift tax charitable deduction for lifetime gifts –May not impost conditions, restrictions or contingencies Estate tax charitable deduction –Estate may take charitable deduction for testamentary transfer –Limited to the total amount included in the decedent’s estate

Subhead Life insurance: An important asset for charities

Benefits Large gift with small premium No trusts or trust admin Minimizes the risk that gift will be contested Considerations Cost of life insurance Donor may change mind Insured may not qualify for insurance Life insurance: An important asset for charities Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. Policyholders could lose money in this product.

Subhead Trusts and advanced giving strategies

Charitable remainder trusts (CRT) The donor avoids capital gains taxes The donor receives an immediate charitable income tax deduction The donor potentially receives an estate tax deduction. Trust assets qualify for an offsetting estate tax deduction. Trustees can invest the trust asset in a tax-free environment.

Trusts and advanced giving strategies Charitable lead trusts Pooled income fund Charitable gift annuity

Strategies for increasing involvement Donor advised funds Private foundations Supporting organizations

Comparing donor-advised funds, private foundations and supporting organizations FeaturesDonor-advised fundsPrivate foundationsSupporting organizations StructureWritten agreement between charity and donor Corporation or trust Cost to establish$0-500, depending on charity Significant legal and accounting fees Cost to runFlat feeAnnual administrative and operating expenses Minimum donationApproximately $10,000, depending on charity Approximately $1-2 million Donor’s deduction limitsCash: 50% Appreciated assets: 30% Cash: 30% Appreciated assets: 20% Cash: 50% Appreciated assets: 30% Five-year carryover?Yes When to useDonor would like some control over how the charitable donation is spent Wealthy donors not concerned about overhead costs who wish to create a permanent endowment aligned with their own charitable goals Wealthy donors who are willing to give up some degree of control to avoid the restrictions imposed on a private foundation

Subhead Partnering with you to give back to your community

Subhead This information is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances. Securian Financial Group, Inc. Insurance products offered by Minnesota Life Insurance Company, 400 Robert Street North, St. Paul, MN ©2014 Securian Financial Group, Inc. All rights reserved. A