1. Old North State Council, BSA PLANNED GIVING OVERVIEW Boy Scouts of America Council Fund Development Team Finance Impact Department – Council Operations Group

2. Planned Giving – What is it? Sign your kids up for sports – give up your Saturdays Sign your kids up for sports – give up your Saturdays Send your kids to college – give up your savings. Send your kids to college – give up your savings. Ask Ask your boss to play golf – give up winning Volunteer Volunteer to be a Scout leader – give up an hour a week.

3. Win Donor Win Charity Win Heirs Values

4. What Worries You? Estate Concerns Probate Costs Estate Tax Accidental Disinheritance Capital Gains Tax Unforeseen Expenses

5. Got wills? 60% of American adults have wills 60% of American adults have wills – This means 4 out of 10 dont – What about wills that arent up to date? – Only 8% of those with wills included a charity in it

6. With A Current Will … YOU specify distributions to anyone YOU specify distributions to anyone YOU nominate guardians and personal representatives YOU nominate guardians and personal representatives YOU can create trusts YOU can create trusts YOU can give to any charities you want YOU can give to any charities you want

7. Without A Current Will … May be COSTLY May be COSTLY STATE picks beneficiaries STATE picks beneficiaries COURT picks administrator/personal representative COURT picks administrator/personal representative COURT determines special needs COURT determines special needs NO distributions to charity NO distributions to charity NO tax savings strategies employed NO tax savings strategies employed

8. Estate Tax Simplified If you had a partnership with a neighbor – who did nothing to help you or add value – would you keep putting all your assets and best ideas into the partnership? If you had a partnership with a neighbor – who did nothing to help you or add value – would you keep putting all your assets and best ideas into the partnership? – NO!! Youd stay up all night trying to figure out how to keep more for yourself – Thats estate planning

9. Estate Distribution Only Three Places Family Charity Government

10. Phases of Life Estate Accumulation – 40 Years Estate Accumulation – 40 Years Estate Conservation – 10 Years Estate Conservation – 10 Years Estate Distribution – 2 Hours Estate Distribution – 2 Hours

11. We Three Kings (of Tax Savings Are…) 1.THE ANNUAL EXCLUSION $13,000 a year to anyone, per person, each year and no gift tax is owed. A spouse can give another $13,000/person/year E.g. Married couple can give $26,000/year to each child and grandchild, tax free.

12. We Three Kings (of Tax Savings Are…) 2.THE MARITAL EXCLUSION Unlimited tax free transfers between spouses $10 Billion? No Problem. NO TAX. (Exception for non-U.S. spouses)

13. We Three Kings (of Tax Savings Are…) 3.THE LIFETIME EXCLUSION (Non-Marital) $5 million during 2011-12 for an individual. Husband $5 million, Wife $5 million – if one only uses part of their exclusion, i.e. 75%, the other can also use the remaining 25% of late spouses exemption.

14. A MOVING TARGET... Year Exemption Top Rate 2008$2M 45% 2009$3.5M 45% 2010 Repealed Repealed * 2011-12 $5M 35% * Possible capital gains tax on appreciated assets or follow 2011 plan and the asset basis is stepped up to current value – option is up to estate. * Possible capital gains tax on appreciated assets or follow 2011 plan and the asset basis is stepped up to current value – option is up to estate. Year Exemption Top Rate 2008$2M 45% 2009$3.5M 45% 2010 Repealed Repealed * 2011-12 $5M 35% * Possible capital gains tax on appreciated assets or follow 2011 plan and the asset basis is stepped up to current value – option is up to estate. * Possible capital gains tax on appreciated assets or follow 2011 plan and the asset basis is stepped up to current value – option is up to estate.

15. Ways to give that benefit you, your family and Your Council/BSA… With planned gifts, you create win-win-win solutions for you, your heirs and your council. With planned gifts, you create win-win-win solutions for you, your heirs and your council. – You can make a gift that costs nothing during your lifetime. – You can give stock and realize larger tax savings. – You can get a regular paycheck for life in return for your gift. – You can donate your house, continue to live there, and get a tax break all at the same time. – You can use annuity or trust distributions to purchase wealth-replacement insurance for your children/heirs.

16. Bequests 1. Specific Bequest 2. Contingent 3. Percentage

17. Add/Change a Bequest? Codicil – a n addition to an existing will – Only needs to be one paragraph/page

18. Designating Your Council/BSA as beneficiary of your Retirement Plan: 401(k) or IRA Bypass probate Bypass probate $0.00 cost to you, today $0.00 cost to you, today Qualifies you for membership in Heritage Society Qualifies you for membership in Heritage Society Provide for the future of local Scouting Provide for the future of local Scouting

19. Stock Gifts Still an excellent way to make gifts Still an excellent way to make gifts Giving appreciated stocks to charity (instead of selling) avoids CG taxes Giving appreciated stocks to charity (instead of selling) avoids CG taxes Stock owned for more than 12 months – fair market value deduction Stock owned for more than 12 months – fair market value deduction

20. Stock Gifts Example: Donor considers a gift of $100,000. Should he make his gift with: a) stock (with a $10,000 basis); b) the sales proceeds from the stock; c) or a personal check?

21. GIFTS OF STOCKS 1. PERSONAL CHECK Tax Owed By Donor0 (but after-tax dollars!) Tax Owed By Donor0 (but after-tax dollars!) Tax Deduction/Gift$100,000 Tax Deduction/Gift$100,000 Capital Gains Tax Avoided0 Capital Gains Tax Avoided0 2. STOCK SOLD, PROCEEDS DONATED Tax Owed By Donor$13,500 Tax Owed By Donor$13,500 Tax Deduction/Gift$86,500 Tax Deduction/Gift$86,500 Capital Gains Tax Avoided0 Capital Gains Tax Avoided0 3. STOCK GIVEN TO COUNCIL Tax Owed by Donor0 Tax Owed by Donor0 Tax Deduction/Gift$100,000 Tax Deduction/Gift$100,000 Capital Gains Tax0 Capital Gains Tax0

22. Real Estate Gifts Also an excellent way to make gifts Also an excellent way to make gifts Same tax benefits to donor as for stock gifts Same tax benefits to donor as for stock gifts Gifts of mortgaged property not good for anyone (unless very small) Gifts of mortgaged property not good for anyone (unless very small)

23. IRAs – What to Do? IRAs are Retirement Plans – IRAs are Retirement Plans – not Inheritance Plans Can be hit with Income Taxes and Estate Taxes Can be hit with Income Taxes and Estate Taxes Often the worst thing you can leave your heirs Often the worst thing you can leave your heirs

24. Who Gets Which Asset? Jane has a large, taxable estate. It includes a block of stocks worth $500,000 and an IRA worth $500,000. She wants one to go to her children, the other one to your council. Who should get the stocks? Who should get the stocks? Who should get the IRA? Who should get the IRA?

25. IRA To Children -- Bad IRA to kids could be double taxed IRA to kids could be double taxed IRA to council saves taxes (council is tax exempt) IRA to council saves taxes (council is tax exempt) Stocks $500,000 IRA $500,000 Children $500,000 JVC/BSA $500,000

26. Income Challenge Not sure you want to give it away now Not sure you want to give it away now Dividends often 2% or less Dividends often 2% or less Youd like some extra income Youd like some extra income What Can You Do?

27. Solution BSA Gift Annuity BSA Gift Annuity Guaranteed payments for life Guaranteed payments for life Rates based on age – will not change Rates based on age – will not change Income tax deduction, no estate tax Income tax deduction, no estate tax Most payments part tax-free Most payments part tax-free No commissions (unlike commercial annuities) No commissions (unlike commercial annuities)

28. BSA Gift Annuity John Jones 70 Property $25,000 ($10,000 Basis) Bypass $15,000 gain Tax deduction = $7,788.35 Property $25,000 5.8% Annuity One Life Payout $1,450 Tax-free part = $444 Effective rate 8.2% Scouting $25,000 After one life, goes to council

29. Gift Annuity Rates (2010) AGE PAYOUT RATE 605.2% 605.2% 705.8% 705.8% 807.2% 807.2% 85 8.1% 85 8.1% (Check with your advisor for current rates)

30. Challenge Have property you no longer need Have property you no longer need Want some income and a tax deduction now. Want some income and a tax deduction now. Do I have to make an outright gift?

31. Phil & Betty Property worth $300,000 Property worth $300,000 Only paid $40,000 for it Only paid $40,000 for it Currently receive no income from it Currently receive no income from it Want supplemental retirement income Want supplemental retirement income

32. Charitable Unitrust Phil – Age 70 Betty - Age 70 5.00% Unitrust Property $300,000 Principal $300,000 Scouting $300,000 TwoLives Bypass $260,000 gain Deduction: $126,700 Income $15,000/yr. (compared to $0 before) Gift to the BSA after their lives

33. CHARITABLE UNITRUSTS Great way to turn non-income producing assets into income producers Great way to turn non-income producing assets into income producers Asset removed from estate (no estate tax, probate costs) Asset removed from estate (no estate tax, probate costs) Can add to it at any time, in any amounts Can add to it at any time, in any amounts Good for land, cash, stocks, etc. Good for land, cash, stocks, etc.

34. A Shift in Estate Planning Philosophy Conventional Estate Planning – Keep as much as you can – Pass to heirs as much as possible Estate Planning for the Modern Philanthropist Estate Planning for the Modern Philanthropist Keep as much as you need Keep as much as you need Pass to heirs what you deem appropriate Pass to heirs what you deem appropriate Control distribution of what you cant keep Control distribution of what you cant keep

35. The Modern Philanthropist Philosophy I want my children to have enough to do anything, but not enough to do nothing.I want my children to have enough to do anything, but not enough to do nothing. Warren Buffett

36. Affluenza Project Jessie ONeill, founder of the Affluenza Project and heir of a wealthy family, lists the following outcomes when valuables are passed on without values: Inability to delay gratification; Inability to tolerate frustration; Low future motivation; Low self-esteem; Low self-worth; Lack of self confidence; Inability to delay gratification; Inability to tolerate frustration; Low future motivation; Low self-esteem; Low self-worth; Lack of self confidence; Lack of personal identity; Social & emotional isolation; Feelings of failure, depressions, anxiety; Unrealistic expectations and lack of accountability; False sense of entitlement; Inability to form intimate relationships. Lack of personal identity; Social & emotional isolation; Feelings of failure, depressions, anxiety; Unrealistic expectations and lack of accountability; False sense of entitlement; Inability to form intimate relationships.

37. The parent who leaves his son enormous wealth generally deadens the talents and energies of the son, and tempts him to lead a less useful and less worthy life than he otherwise would. The parent who leaves his son enormous wealth generally deadens the talents and energies of the son, and tempts him to lead a less useful and less worthy life than he otherwise would. - Andrew Carnegie

38. Moving Toward A Values-Based Planning Process

39. Values-Based Estate Planning? Estate planning is not just the documentation used to transfer material wealth Estate planning is not just the documentation used to transfer material wealth It is the process of passing on the family s true wealth – its traditions, morals, and virtues It is the process of passing on the family s true wealth – its traditions, morals, and virtues The process of identifying shared family values as a family The process of identifying shared family values as a family

40. Why is Values Based Planning Important? 65% of all family fortunes are lost by the end of the 2 nd generation 90% of all family fortunes are lost by the end of the 3 rd generation 65% of all family fortunes are lost by the end of the 2 nd generation 90% of all family fortunes are lost by the end of the 3 rd generation

41. MORE INFORMATION?