Friends of the Army Fall 2012

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Personal Planning Before Year’s End

the purpose of this brochure is to provide accurate information of a general character only. For

specific recommendations, each person should consult his or her own qualified professional adviser.

ESTATE AND F INANC IAL PLANNING IDEAS®

Friends OF THE ARMYFriends OF THE ARMY

How The Salvation Army Has Helped

Arletta on her Salvation Army tricycle

Every day The Salvation Armytouches the lives of thousands ofindividuals, from the very youngto the elderly. In most cases, wecan see the immediate, positiveimpact we have in their lives.But rarely do we get to see thelong-lasting effects of ourencounters with them. However, in the case of

Arletta, we do know, becauseshe was kind enough to shareher thanks, and her thankfulnesshas expressed itself in the formof donations to The SalvationArmy for more than 20 years!Let’s allow Arletta to tell her

story in her own words, from a letter she sent this past year:Dear Salvation Army:

I want to say thank you for the two Christmas gifts and treatsmy family received from youwhen I was 5 and 6 years old.

You gave me my first and onlytricycle. I came from a large,poor family. Our house burntdown and we moved to a newhome in 1945. I was two anda half years old then. If not foryou, my little brother and

I would not have had a happyChristmas.

P.S. When I got married andhad the extra money, I begangiving back to you.

Most grateful for all you do,

Arletta R.

We’re grateful for so much ofwhat Arletta’s story expresses.We’re grateful that The SalvationArmy was there to help her family in their need back in the1940s. We’re grateful for thejoy that tricycle provided toArletta. We’re grateful that shetook the time to share her storywith us. We’re grateful forArletta’s generous support ofour mission and work for morethan 20 years. And we’re grate-ful to all those, like Arletta,whose support makes it possibleto continue helping those inneed day after day. Thank you,Arletta! You affirm that whatwe do makes a difference;because of you we’re encour-aged to press forward in thisimportant and life-changingwork. Thanks for making ourday, our week…our year!

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Please call our office for the appropriatewording whenever you are preparing a giftthrough your will, living trust, IRA or otherbeneficiary designation.

Major Paul Smith

Divisional Commander

Major Renea SmithDirector of Women’s Ministries/Divisional Secretaryfor Program/Officer LeadershipDevelopment Secretary

Planned Giving DepartmentWestern Divisional HeadquartersServing Nebraska, Iowa and South Dakota10755 Burt Street • Omaha, NE 68114

(402) 898-5925 (800) 274-0628www.SalArmyGiving.org

John Langdon, J.D.

Planned GivingAssociate

(402) [email protected]

Linda Holmes GarbinaDirector of Planned Giving


Greg KrumbachPlanned GivingAssociate


Diane K. Moore

Planned GivingAssociate


Might This Be You?1. You have stock that has gone up in value,

want to avoid capital gain taxes, and are seekingto make a tax-wise gift to charity. If you haveheld the stock for more than one year you cancontribute the stock directly to The SalvationArmy and avoid capital gains tax plus qualifyfor a charitable income tax deduction for thefull current stock value.

2. Like situation number one above, you alsohave stock that has gone way up in value – butyou want to keep holding that company. Youcan make the same charitable gift using yourstock and get the same benefits. However, youthen buy the same number of shares on thestock market. This gives you a new, increasedcost basis so you will also save capital gainstaxes in the future.

3. You have reached the age where you arerequired to take a “minimum required distribu-tion” from your IRA or other retirement plansbefore the end of each year. You must payincome tax at the highest rate on these with-drawals. If you itemize, a year-end gift to TheSalvation Army can shelter your income fromthe income tax liability on your withdrawal.

4. You would like to find out more abouttax-wise year-end strategies.

If you fit any of these scenarios or you wouldjust like more information on these topics,please contact us as indicated below. We canprovide more information including instructionsregarding stock gift transfers.

Inside T

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■Gifts T

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Thank You

(Detach, fold and tape before mailing.)

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❑ I would like to receive a copy of your complimentary publication,Personal Planning Before Year’s End.

❑ Please provide me with your complimentaryguide on state inheritance and estate taxes,Stop Your Estate from Shrinking.

❑ I’m interested in planning: ❑ a gift of stock

❑ a charitable gift annuity ❑ a direct IRA gift.

❑ I am considering a provision in my willor other plans for the future assistance ofThe Salvation Army.

❑ I have already made provision in myestate plans for the Army, as follows:

For more information on any of the topics discussed in

the newsletter, simply fill out and mail this reply card.

▼Detach here

Tax Savings May Be Higher for 2012 GiftsPlan for the Upcoming Tax ChangesSunsets are supposed to

be things of beauty, but notwhen it comes to tax legislation.On January 1, 2013, thefederal estate tax exemptionis scheduled to drop to only$1 million (from the current$5.12 million) and all the“Bush tax cuts”are due to expireas well, leavingmany taxpayerswith higher taxrates and fewertax breaks.

This issue of Friends ofthe Army examines whatCongress may do about thesetax “sunsets,” and offerssome planning strategiesto consider, including howto best support The SalvationArmy. We are pleased to

offer our comprehen-sive new publication,Personal PlanningBefore Year’s End.Just send back theattached card foryour free copy.

How Can You Plan for Estate Taxes?What does the current tax

law uncertainty mean for yourestate plan? As a startingpoint, take some time to totalup your present net worth.

■ If your taxable estateexceeds $1 million, ask youradvisers if you should make2012 gifts to your beneficiariesto take advantage of thecurrent $5.12 million gift taxexemption.

■ Married couples may needspecial trusts to ensure themaximum estate tax shelterfor each spouse.

■ “Formula clauses” in willsand trusts that are tied to

changing exemption amountsmay also need to be revisited.

It’s vital that you monitorongoing tax legislation inCongress and revise your estateplan accordingly. If changes in your plans are needed, wehope you will consider addingor increasing a bequest to The Salvation Army (100%deductible for federal and state estate tax purposes).

Note: Many friends of theArmy may be affected by stateinheritance or estate taxes, andwe strongly suggest you sendfor Stop Your Estate fromShrinking, our publication on preserving your assets.

People don’t give to TheSalvation Army just to save taxes. But tax savings clearlyenable friends to do more withtheir generosity. While it’s seldomprudent to predict the courseof future federal tax legislation,some tax advisers are tellingclients that the tax rewards forcharitable giving may never bebetter than they are right now, in2012, and that those incentivescould decline considerably undervarious legislative proposals.Some changes recently underconsideration would:

■ Limit tax savings fromcharitable deductions fordonors in high tax brackets;

■ Permit deductions onlyabove a certain floor (similarto medical expense deductions);

■ Replace the deductions witha less generous tax credit;

■ Calculate donors’ tax savingsunder a lower “flat tax” rate.

The year 2012 could be agood time to follow throughwith planned gifts you mayhave been considering, such ascharitable gift annuities, possiblyusing stocks that have grownin value (that you have ownedmore than one year). Benefits ofgift annuities include:

■ Lifetime payments to oneor two people of your choice;

■ Payout rates of up to 9%based on age;

■ 70% to 85% tax-free payouts during recipients’ life expectancies;

■ Large charitable deductions;

■ Capital gains tax savingsfor gifts of securities.

Please contact our office for a personal illustration of all your potential benefits.

What if absolutely nothingchanges with regard to charitablegiving incentives? As a generalstrategy, it’s better to achievetax savings as early as possible.And if Congress later reducestax rewards for charitablegiving, both you and theArmy will benefit from yourgood timing. Please call ourexperienced gift planning stafffor ideas on making the mostof your generosity.

IRA Charitable Gift Strategies

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Since 2006, many SalvationArmy donors age 70½ and olderhave taken advantage of theirunique ability to make lifetimecharitable gifts directly fromtheir IRAs. Unfortunately, theIRA gift law expired in 2011,and Congress may not getaround to renewing it until late2012. But there’s a way formany donors to ensure tax savings, no matter whatCongress does.

Direct IRA gifts to the Armyare attractive because they cansatisfy part or all of an IRAowner’s annual required minimum distribution – reducingtaxable income without theneed to itemize deductions.

IRA gifts also may ease certaintax penalties and restrictions.

For qualified donors who doitemize their deductions, a goodstrategy would be to instructyour IRA custodian to make adirect 2012 gift to the Armyfrom your account, up to yourrequired minimum distribution.If Congress should fail to renewthe IRA provision, you wouldreport the minimum distributionbut could still take a charitablecontribution deduction thatavoids tax.

Our staff is closely monitor-ing IRA tax legislation, and we encourage you to contact our office before making anyIRA gift.

Some people’s legacies are engraved on monuments, but yours can be written on lives.

Gifts That Carry a Bonus

Tax-savvy donors know that they can magnify their charitablesupport for The Salvation Army by contributing stock that has gone up in value, thanks to a double tax benefit: Donors avoidall capital gains taxes on the “paper profit” on their investments,and they can deduct the full fair market value of their securities,not just what they paid originally. (Donors must have owned theirsecurities more than one year.) Yes, many people still have stocksthat have gone up in value. These tax savings also apply to othertypes of appreciated assets, such as mutual funds and closely heldstock. Our staff would be pleased to walk you through the simplesteps to making a gift of securities.

Documents

Friends of the Army Fall 2012