1. PHILANTHROPIC PLANNING
Giving back and leaving a lasting legacy
Chad M. Irving, CFP, CIMA, Senior Portfolio Advisor
Merrill Lynch, Pierce, Fenner & Smith, Inc. | |
Jeremy Floberg, Director & Trust Specialist
Merrill Lynch Retirement & Personal Wealth Solutions
Shady Side Academy October 10, 2018

2. Philanthropic planning: A better way to give
What compels you to give, and how can charitable endeavors be incorporated into your wealth plan in a way that works for you, your heirs and the charitable organizations that you value?
With philanthropic planning, you can empower chosen charities to continue their good work while gaining a variety of personal benefits:
Maximize philanthropic impact and personal satisfaction
Integrate charitable strategies into your overall financial strategy
Create a legacy of charitable giving for you and your family
Accumulate tax-advantaged charitable assets for future giving
Integrate with wealth and estate planning solutions
Minimize both income and estate taxes
America is a giving nation
In 2016, Americans gave more than $390 billion to charity1.
80% came from individual giving and bequests1.
23.5% of high net worth individuals have, or plan to have, at least one giving vehicle2.
14.4% of high net worth households have a will with specific charitable provisions2.
5.9% of high net worth individuals plan to give by charitable bequest2.
1 Giving USA 2017.
U.S. Trust® Study of High Net Worth Philanthropy.

3. What compels you to give?
“I want to support organizations that help others.”
“Giving is my way to honor an institution that has had a major impact in my life.”
“It’s a great way to do good for others and help reduce
my taxes.”
“Giving is my way to pass on family values and traditions.”
“I believe we have a responsibility to give to the less fortunate.”
“Being active in
my community is important to me.”

4. Planned giving opportunities, from simple to complex
DIRECT GIVING
DONOR-ADVISED FUNDS
CHARITABLE GIFT ANNUITIES
CHARITABLE REMAINDER TRUSTS AND CHARITABLE LEAD TRUSTS
PRIVATE FOUNDATIONS
Philanthropic strategies
Simple
Complex
Many philanthropic strategies allow you to give generously — today and upon your death — while providing important personal benefits:
Charitable donations may provide income tax deductions for gifts made during your lifetime.
Donating appreciated securities may help you minimize capital gains taxes and reduce the risk of holding a concentrated stock position.
Philanthropic planning may reduce the size of your estate and resulting estate tax liability.
There are various strategies that might be appropriate, from the simple to the complex — all giving you various levels of control. Your U.S. Trust wealth strategist can explain your options and help you determine which are most suitable for you.
Donor-advised fund and private foundation management are provided by U.S. Trust.

5. Direct giving Advantages Simple and convenient
The most basic form of charitable giving, direct giving, allows you to provide immediate financial support to charities and receive a charitable tax deduction in the year the gift was made. You can develop a structured giving program that outlines what will be given and when.
Advantages
Simple and convenient
Provides immediate financial support to charities
Typically, you receive a tax deduction for that year
Challenges
Uncertainty of direct giving means charities can’t plan in advance
Donations of complex assets may not be possible

6. Donor-advised funds
With a donor-advised fund, you make charitable contributions to an account sponsored by a charitable organization and receive an immediate tax deduction. Over time, the fund will make grants to charities based on your recommendations.
Donor-advised funds allow you to:
Contribute appreciated assets
Recognize tax benefits now while granting over time
Invest assets to generate additional funds for future grants
Maintain anonymity if desired
Include your family in philanthropic giving
Donor-advised fund
Donor receives income tax deduction
Donor makes charitable recommendations
Fund makes grants to recommended charities that have been qualified and approved by the fund
Donor contributes to a fund sponsored by a charitable organization
Donor-advised fund and private foundation management are provided by U.S. Trust.

7. Charitable gift annuities
With a charitable gift annuity (CGA), you make an irrevocable gift to a charity that, in turn, pays a fixed income stream to you or other beneficiaries for your lifetimes. At the end of the annuity contract, remaining assets belong to the managing charity.
A CGA allows you to:
Diversify concentrated or appreciated assets without recognizing capital gains tax at the time of sale
Establish the annuity during your lifetime or through your will
Set the annuity term for your lifetime, for joint lifetimes or for the lifetime of a beneficiary you designate
Reduce your taxable estate while receiving income from the annuity over your lifetime
Eliminate taxes on the portion of each annuity payment that is treated as return of principal
Donor makes gift to charity
Charitable gift annuity (CGA)
Donor receives charitable tax deduction
Remaining assets at the end of the term belong to the charity
Donor or a designated beneficiary receives income for life

8. Charitable remainder trusts
With a charitable remainder trust (CRT), you and your beneficiaries can receive a steady income stream for a selected period of time while making a contribution to the charities of your choice, including private foundations.
A CRT allows you to:
Diversify highly appreciated or low-income- producing assets without recognizing capital gains tax at the time of sale
Establish the trust during your lifetime or through your will
Claim an immediate charitable tax deduction on your income tax return
Benefit from an estate and gift tax charitable deduction for the amount passing to charity
Grantor transfers assets
CHARITABLE REMAINDER TRUST (CRT)
Grantor receives income and gift tax deduction
Charity receives remaining assets at the end of the income term
Grantor or a designated beneficiary receives distributions during the income term

9. Charitable remainder trusts
Charitable Remainder Trusts (CRTs) can provide income to you or your beneficiaries, for a fixed term or to last for a beneficiary’s lifetime, and are advantageous for assets with a low tax basis. The trust can sell appreciated assets without triggering capital gains taxes, enabling it to reinvest the proceeds to generate income. Assets remaining in the trust when it terminates are distributed to your chosen charities.
GRANTOR
$1M gift
CHARITABLE REMAINDER TRUST
GRANTOR or BENEFICIARIES
$50K/year for 12 years totaling $600K
CHARITY
$1.2M remainder
Assumptions:
Client is age 72, a nonsmoker in good health and has a life expectancy of 12 years
IRS discount rate of 3.4%
6% appreciation on assets over 12 years
For illustrative purposes only; does not reflect an actual investment.

10. Charitable lead trusts
Charitable lead trusts (CLTs) are often used to transfer assets to younger generations while, at the same time, generating an income stream for designated charities.
A CLT allows you to:
Apply all or part of your unified credit to the gift, although it will not qualify as an annual exclusion gift
Remove income and future appreciation from your estate
Designate charities to receive a fixed or variable income for a specified time period without permanently relinquishing control of your assets
Possibly discount the value of a gift for transfer-tax purposes, enabling you to transfer more value to heirs with reduced transfer-tax implications*
Grantor transfers assets
CHARITABLE LEAD TRUST (CLT)
Grantor receives income and gift tax deduction*
Beneficiaries receive remainder of assets at the end of the income term, often with no or reduced gift or estate taxes**
Charity receives distributions during the income term
The grantor only receives an income tax deduction if the CLT is set up as a grantor trust for income tax purposes.
**Consider the applicability of generation-skipping transfer taxes.

11. Charitable Lead trusts
Charitable Lead Trusts (CLTs) enable you to provide for charitable causes and transfer property to heirs at a reduced valuation for gift tax purposes. The value of the charitable gifts made by the trust reduces the gift tax value of the transferred property.
GRANTOR
CHARITY
$1.5M remaining after 15 years available to heirs
BENEFICIARIES
$1M gift
CHARITABLE LEAD TRUST
$40K/year for 15 years totaling $600K
CLT enables Grantor to transfer $1.5M in assets to heirs at a gift tax value of $536K
Assumptions:
Trust has 15 year term
IRS discount rate of 3.4%
6% annual rate of return on assets1
1 A higher or lower actual return (than 6%) would change the final value of the trust property but would not affect the gift tax consequences.
For illustrative purposes only; does not reflect an actual investment.

12. Private foundations
For greater flexibility and control, you can establish a nonprofit legal entity specifically dedicated to your giving program. With a private foundation, you have full decision-making authority over granting and investment management.
A private foundation allows you to:
Engage your family members and other donors as board members, trustees and staff and provide a reasonable income for services
Invest assets to generate additional funds for future grants
Establish a giving program for future generations
With a private foundation, you must:
Distribute at least 5% of assets each year
File tax returns and pay excise tax (up to 2% of net investment income)
Donor establishes and contributes to a 501(c)(3) charitable organization
PRIVATE FOUNDATION
Donor receives income tax deduction
Foundation may employ family members and donors as board members, trustees and staff
Private foundation makes grants to designated charities
Donor-advised fund and private foundation management are provided by U.S. Trust.

13. Choosing the strategy that’s right for you
Donor-advised funds
Private foundations
Deductibility of contributions
For cash, up to 50% of AGI
For property, up to 30% of AGI
For cash, up to 30% of AGI
For property, up to 20% of AGI
Grantmaking
Donor may make recommendations, which must be approved by the fund
Donor has full control over and responsibility for grantmaking
Required annual distribution
None
5% of charitable assets, based on asset value
Excise taxes on net investment income
Up to 2% of income
Privacy/IRS filing requirements
Can give anonymously; no IRS filing required
Cannot give anonymously; IRS Form 990-PF must be filed
Investments
Donor chooses from available investment options
Donor can choose direct investment management
Setup and ongoing costs
None other than any investment or management fees charged by the sponsoring organization or its affiliates
Legal and filing fees, and annual tax preparation costs
Fiduciary and legal requirements
Limited for donor
Extensive for donor and foundation staff

14. Choosing the planned giving strategy that’s right for you
Charitable gift annuity
Charitable remainder trust
Charitable lead trust
Deductibility of contributions
Income tax deduction on the estimated amount of the original gift that the charity will receive after annuity payments
Partial income tax deduction on contributions; gift taxes may apply
Generally no deductions on current income taxes; gift taxes may apply
Beneficiary during life of trust
Specified annuitant receives current income but will be required to pay taxes on a portion of it
Specified beneficiary receives current income but will be required to pay taxes on it
Charity receives current income
Beneficiary at trust termination or donor’s death
Charitable organization that received initial donation and has paid income to the annuitant; no federal estate taxes
Charitable organization; no federal estate taxes
Specified beneficiary (for example, children or grandchildren); no federal estate taxes*
Level of complexity
Low
High
Donor control
None
Medium
Timing for charity to receive donation
At the end of the annuitant’s lifetime
At end of specified payment term (for example, at death of payment recipient(s)) or at end of life, joint lives or specified term of years not to exceed 20)
During specified payment term at least annually until death of measuring life or lives, or end of specified term of years
Annual fees
Donor does not pay an annual fee; the nonprofit absorbs any administrative and investment fees
There may be trustee, investment management, administration and tax preparation fees
* Consider the applicability of generation-skipping transfer taxes.

15. Fulfilling your philanthropic vision
Supporting the causes you care about is an important part of enjoying your wealth. We are committed to making your philanthropic endeavors more fulfilling and effective.
At U.S. Trust, you work with a team of skilled professionals to develop a sound philanthropic plan that reflects your goals and complements your overall wealth strategy. Our goal is to help you realize your vision of a better world by delivering innovative charitable solutions and advice, giving you access to our resources and intellectual capital through a trusted advisor.
How we help you pursue your philanthropic goals
Disciplined, holistic discovery process
Helps you and your family turn your values into actionable charitable giving plans
Innovative, effective charitable giving solutions
Help you and your family, including future generations, achieve greater unity and continuity by sharing your philanthropic commitment
Rigorous investment management process
Helps you and your family meet unique grantmaking and investment objectives through carefully selected and combined investment managers
Experienced, dedicated team of philanthropic advisors
Brings to bear our true passion for helping you fulfill your vision and minimize your day-to-day administrative concerns
Culture of innovation
Enables you to manage the grantmaking, governance and investment aspects of charitable giving with greater efficiency, productivity and accountability

16. Important Information
This presentation is designed to introduce you to the products and services available through U.S. Trust, Bank of America Private Wealth Management, is provided for informational purposes only, and is not issued in connection with any proposed offering of securities. This presentation is not used with regard to any specific investment objectives, financial situation or particular needs of any specific recipient and does not contain investment recommendations. Bank of America and its affiliates do not accept any liability for any direct, indirect or consequential damages or losses arising from any use of this presentation or its contents. The information in this presentation was obtained from sources believed to be accurate, but we do not guarantee that it is accurate or complete. The opinions expressed herein are made as of the date of this material and are subject to change without notice. There is no guarantee the views and opinions expressed in this presentation will come to pass. Other affiliates may have opinions that are different from and/or inconsistent with the opinions expressed herein. All charts are based on historical data for the time periods indicated and are intended for illustrative purposes only.
IMPORTANT: The material presented is designed to provide general information about ideas and strategies. It is for discussion purposes since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy.
Neither U.S. Trust nor any of its affiliates or advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisor before making any financial decisions.
Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.
Institutional Investments & Philanthropic Solutions (Philanthropic Solutions) is part of U.S. Trust, Bank of America Private Wealth Management (U.S. Trust). U.S. Trust operates through Bank of America, N.A. and other subsidiaries of Bank of America Corporation (BofA Corp.). Bank of America, N.A., Member FDIC. Trust and fiduciary services and other banking products are provided by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A. Brokerage services may be performed by wholly owned brokerage affiliates of BofA Corp., including Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S).
Certain U.S. Trust associates are registered representatives with MLPF&S and may assist you with investment products and services provided through MLPF&S and other nonbank investment affiliates. MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of BofA Corp.
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