1. Rebecca E. Dupras, Esq. Vice President of Development Silicon Valley Community Foundation Gifts that Give Back

2. Planned Giving: any gift given for any charitable purpose which is considered by the donor as part of an overall financial and/or estate plan What is Planned Giving?

3. What mankind fears is not so much extinction, but extinction with insignificance. Man wants to know that his life has somehow counted, if not for himself, then at least in the larger scheme of things. That it has left a trace, a trace that has meaning. -Ernest Becker What mankind fears is not so much extinction, but extinction with insignificance. Man wants to know that his life has somehow counted, if not for himself, then at least in the larger scheme of things. That it has left a trace, a trace that has meaning. -Ernest Becker But It Is Hard to Talk About…

4. What Motivates Donors? Creates a LegacyLowers cost of giftPossible tax advantagesPossible life incomeLarger Gift to Charity

5. Charitable Gift Annuities Charitable Remainder Trusts Gifts that Give Back (to the donor, that is)

7. How a Life Income Gift Works Remainder to Charity Gift Income tax deduction Capital gains tax advantages Income Donor Life Income Gift

11. Donor wants to make a large gift, but is afraid to outlive his assets Donor is leaving an estate gift but also wants an immediate tax deduction and income Donor wants an income stream from a trusted source Donor wants a simple way to give a small amount and still get income and a tax deduction

12. Charitable Gift Annuity Example * Assume basis of $50,000

13. Donor gets: Tax deduction of $24,664 $4,000 a year for life with $1,322 tax-free for 28.5 years Charity receives remainder Charitable Gift Annuity

15. Donor sets up the CRT naming charity as remainder beneficiary Donor can be income beneficiary or can name another person Donor must select payout of at least 5% at setup Donor can elect lifetime or term of years (20 year max) Donor transfers property to trust (cash, securities, etc.) Payout must begin right away Charitable Remainder Trusts

16. Annuity (CRAT) Unitrust (CRUT)

17. CRAT Fixed amount Cannot make additions Potential to exhaust Charitable Remainder Annuity Trusts

18. CRUT Payout can change Can make additions Less likely to exhaust Charitable Remainder UniTrusts

19. CashSecuritiesReal EstateOther illiquid assets CRTs can be funded with:

20. Four Tiers of Taxation Ordinary Income Capital Gains Tax Exempt Trust Principal Taxation of CRTs

21. Income tax deduction = present value of remainder interest 50% AGI Limitation for cash 30% AGI Limitation for long-term appreciated assets 5 Year Carryover

22. CRTs usually need to start paying out right away By combining a Net Income CRT with a CRUT, donor can get best of both worlds CRTs with Illiquid Assets

23. Before Sale: Trust treated as Net Income Trust After Sale: Trust flips to a CRUT Pays out the set payout rate Pays out only income up to payout rate CRTs funded with Illiquid Assets

24. We want to control my own assets and spend about 5% of my assets per year. I would also like to make a gift to charity from our estate.

25. Using a 5% Charitable Unitrust as an option: ASSUMPTIONS: Measuring lives age 72, 76. Original principal is $1,000,000. Cost basis is $500,000 Growth Assumption: Income 2%, Capital Appreciation 2.5% Gross Principal$1,000,000 Average Annual Payment$ 48,049 Charitable Deduction$ 472,450 Income Tax Savings$ 187,090 Cost of Gift$ 812,910 Total Before-Tax Benefit$ 816,835 Benefit to Charity$ 918,316 Total Benefit$1,501,210

26. We need $50,000 to live on every year and would like to make a gift to our favorite charities.

27. Using a 5% Charitable Annuity Trust as an option: Measuring lives age 72, 76. Original principal is $1,000,000. Cost basis is $500,000. Growth Assumptions: Income 2%, Capital Appreciation 2.5% Gross Principal$1,000,000 Annual Payment$ 50,000 Charitable Deduction$ 351,690 Income Tax Savings$ 139,269 Cost of Gift$ 860,731 Total Before-Tax Benefit$ 850,000 Benefit to Charity$ 876,291 Total Benefit$1,487,084

28. I have property I am not using and want to convert it to an income stream. After death I want to benefit charity.

29. Assumptions: Donor is in highest tax bracket Property has been fully depreciated Gross Principal$1,500,000 Average Annual Payout 73,521 Charitable Deduction 466,785 Income Tax Savings 184,847 Total Benefit to Charity 1,457,854 Total After-tax Benefit to Beneficiaries 1,521,679 FLIP UniTrust with a 5% Payout to Beneficiary

30. valuation of trust assets selling contributed assets establishing annual annuity or unitrust amounts receiving and disbursing revenues accounting under the four-tier system filing fiduciary tax and information returns maintaining the trust's tax-exempt status following private foundation rules holding and managing trust assets, and communicating and reporting to recipients There are several general rights and duties for which a trustee is responsible: Should the charity act as Trustee?

31. If charity wants to be trustee before illiquid asset is sold Charity has more control over the sale price Charity has burden of taking title and selling the property If charity does not act as trustee before illiquid asset is sold Charity runs risk that donor will sell for less than original value Charity would not have to take title and liquidate Should the Charity act as Trustee?

32. CGA v. CRT Remainder TrustsGift Annuities Donor retains control over how assets are invested Charity invests the assets Donor can set the payout rate as long as 5% or more Charity sets the payout rate Donor can select multiple income beneficiaries Donor is limited to two annuitants Trust assets could be exhaustedCharity must pay for life even if underlying assets are exhausted

33. Thank You Rebecca E. Dupras, Esq. Vice President of Development rdupras@siliconvalleycf.org | 650.450.5519