1. Giving In The Current Environment Dr. Eddie Thompson CEO and Founder eddie@ceplan.com www.ceplan.com

2. We will explore the type of gifts donors are making in this difficult economy Agenda: 1.A few fundamental concepts 2.Four types of gifts 3.Six examples 4.Trends, tools and conclusions

3. Three types of gifts Three types of donors Two sources of assets Three questions Four giving techniques A Few Fundamental Concepts:

4. Capital Three Types of Gifts Annual Planned

5. Three Types of Donors About 70% Give Out Of Habit About 23% Give Based On Emotion About 7% Are Strategic Donors

6. Where are we Looking for Gifts? Annual Planned Discretionary Income Net Worth

7. …that must be answered for and by Strategic Donors!! Three Questions…

8. Do I have enough to live on for the rest of my life? How would most donors answer today? # 1—My Needs

9. How much should I leave my heirs? Not only how much, but WHEN should they get it! # 2—Heirs’ Needs

11. # 3—Social Capital When your executor writes a large check from your estate would you rather it go to the IRS or to my favorite charities? Which would your donors pick?

12. Total Wealth FinancialIndependence Inheritance for Heirs CharitableGifts Self Directed TaxGovernmentDirected

13. Many of their donors no longer have the disposable income that they once had and/or are concerned that they may no longer have the resources that they need to maintain their lifestyle. Now to the issues at hand:

14. "If a number of my donors don't feel like they can write me check, but they still want to give, what other ways to give are available to them?" There are many answers to that question, but here are a few that fit in the current economic environment: An Important Question:

15. Gifts of net worth Testamentary gifts Gifts that provide income Gifts that also fulfill estate planning objectives 4 Types of gifts donor are making:

16. Less cash, but still same charitable intent. Investment assets, real estate, etc. may allow the donor to do more now than they realize is possible 1. Gifts from Net Worth

17. While many donors are worried about making a current major gift because they are uncertain about their own future, the idea of making a testamentary gift may make perfect sense. Such a gift comes from "what's left" and does not impact the donors current use of the assets. 2. Testamentary Gifts

18. Bequests Testamentary Trusts PODs IRDs Insurance Types of Testamentary Gifts

19. What are they? Are they taxable in an estate? Doctors / Professionals / Others and IRDs A plan that works almost every time! IRDs IRAs, 401ks, 403bs, etc

20. Estate 3,800,000 ($2,000,000 in IRAs) * Actual future value of estate and gift may be higher or lower at time of death. ** Income Tax calculated at a 28% rate *** Future Values discounted at 3.5% for inflation to arrive at present values Remaining Assets $1,615,000 Current Planning* Heirs $ 2,890,000 Charities $ 0 Taxes $ 910,000 Heirs $3,340,000 Taxes $185,000 ET Taxes $185,000 IRDs to Testamentary Charitable Remainder Trust TCRUT $2,000,000 (7% ROI) Recommended Plan Heirs $ 3,340,000 Charities $ 2,896,000 Taxes $ 185,000 Charity $2,896,000 5% payout For 20 years After Tax Total** $1,725,000 Present Value of Recommended Plan*** Heirs $ 3,340,000 Charities $ 2,855,000 Taxes $ 185,000

21. Charitable Gift Annuities may be just what they are looking for while also allowing them to fulfill their charitable intent CD rates are very low Concern about ROI on traditional investments 3. Gifts that provide income for the donor

24. Betty’s story 83 woman with farm land

25. She has a good income He wants to make sure she has enough to retire on Each year he funds a deferred CGA with $50,000 These CGAs would begin paying out when she is 60. 62 year old client with a 36 year old wife

26. Retired doc Two houses

27. While the current economic environment has caused many problems, it has also created some unique opportunities.. 4. Gifts that also fulfill estate objectives

28. Flashback to Chemistry Class 28

29. An Estate Planner’s Version 29

30. Trend 100% 20% Outright 40% Annual 40% Lump Heirs

31. Trends In Charitable Estate Planning 40% Lump 100% 20% Outright 40% Annual Heirs TCRUT TCLA/UT Charity

32. The Mechanics of a Trust

33. Donors wants to give at his death $1,000,000 to each of his four children He does not want to leave them money outright He has directions in his Will to establish four CGAs at $1,000,000 each for his four children Gifting To Children CGAs

34. Retirement Accounts Heirs $6,450,000 After Planning: Heirs $6,450,000 Charity $2,400,000 Taxes $450,000* Before Planning: Heirs $7,200,000 Charity $0 Taxes $2,100,000 (potential immediate income and estate taxes) Credit Shelter Trust $3,500,000 Charity $2,400,000 Death of the first spouse Death of the surviving spouse Passes to Heirs free of tax Other Assets$2,375,000 Life Insurance$4,525,000 Retirement Accts.$2,400,000__ Total Estate $9,300,000 * Entirely Tennessee Inheritance Tax Health, Education. Maintenance, Support Estate Plan Taxes $450,000 $9,300,000 Surviving Spouse Outright $5,800,000

35. One such opportunity is the ability of wealthier individuals to pass assets to their heirs while they are living at a lower cost because of the current depressed values. Many wealthier donors are looking for ways to leverage the current low values, and arrangements like a Charitable Lead Trust may be just what they are looking for. The Lead Trust creates a charitable deduction the donor can use to move an even greater value of assets to his or her heirs free of tax. When combined with the current low interest rates that allow for larger deductions and historically high tax exemptions, this may be the best time in history to utilize such arrangements. Such arrangements also provide for immediate annual gifts to charity that help fulfill the donor's desire to give Lead Trusts

36. Trends In Estate Planning 100% 20% Outright 40% Annual 40% Lump Heirs

37. Wife $30,000,000 Death of 2nd Spouse Husband’s Heirs $2,460,000 Example of TCLT if Husband Dies First Tax $140,000 Husband $2,600,000 ILIT $10,000,000 Tom’s DSUEA - $2,400,000 Wife’s Heirs $15,290,000 Tax $4,710,000 State Tax - $1,600,000 Fed Tax - $3,110,000 TCLTs $20,000,000 Charity $15,000,000 5 yrs. 10 yrs. 15 yrs. 20 yrs. 6% payout 6% return Wife’s Heirs $20,000,000 Death of 1st Spouse ILIT $10,000,000 Wife’s Heirs $30,000,000

38. Trends In Charitable Estate Planning 40% Lump 100% 20% Outright 40% Annual Heirs TCRUT TCLA/UT Charity

39. Putting it all together

40. $18,000,000 * Actual future value of estate and gift may be higher or lower at time of death. Heirs $24,145,000 $1,500,000 Credit Shelter Trust (No State Gap Trust) $16,050,000 Surviving Spouse Current Plan Heirs $12,975,000 Charities $ 525,000 Taxes $ 7,400,000 Taxes $4,100,000 QPRT $2,800,000 ILIT 100,000 Charity $75,000 Heirs $775,000 Charity $450,000 GST Trust To Heirs $3,000,000 Foundation $5,800,000 Family Trusts $35,000,000 Lead Trust $9,600,000 20 years 5% to Charity Remainder to Heirs $17,470,000 Recommended Plan Heirs $24,145,000 Charities $10,125,000 Taxes $ 4,100,000 Present Value of Plan Heirs $11,175,000 Charities $ 5,625,000 Taxes $ 4,100,000

42. Put their needs first Help them achieve their objectives and goals Show a better use of social capital Give them time to think about it Trust them! Introducing new concepts to donors:

43. Charitable Estate Planning 1.Goal is to create the best plan for the donor 2.Educates donors about how a gift fits into their objectives 3.Based on values of donor 4.Typically results in larger gifts

44. Do you think donors give so they can get a charitable deduction? Do you think donors would rather give to local charities than to the IRS Do you think tax considerations impact the technique a donor may use to achieve their charitable intent? Do taxes considerations impact giving?

45. Questions? Dr. Eddie Thompson CEO and Founder eddie@ceplan.com www.ceplan.com