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Estate Planning Council of Tompkins County Thursday, October 13, 2011 Tompkins County Transfer of Wealth Opportunities for your Clients Turning a One-time Opportunity into Long-term Good for Tompkins County. George Ferrari Executive Director 309 N. Aurora Street 272-9333 - PowerPoint PPT Presentation
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Estate Planning Council of Tompkins CountyThursday, October 13, 2011
Tompkins County Transfer of Wealth Opportunities for your Clients
Turning a One-time Opportunity into Long-term Good for Tompkins County
Surprising wealth transfer in next 50 years
$53 trillion in United States
$2.07 trillion in New York State
$38.63 billion total in Tompkins County
Wealth Transfer
A possible timing scenario for the U.S., New York and Tompkins County
2011-2015
2016-2020
2021-2025
2026-2030
2031-2035
2036-2040
2041-2045
2046-2050
2051-2055
02468
10121416
U. S.New YorkTompkins County
Current Household Net Worth Tompkins County, New York as of 2010
$190,200 per household
$7.4 billion total Population:
101,564
Estimate2,900 High Net Worth
HouseholdsAssets of >$500,000
Opportunity to retain some portion of Tompkins County’s generational transfer of wealth for future generations through planned giving into charitable
endowments
5%
A possibility for the next 10 to 50 years
LOOKING AHEAD
• For generations, people lived entire livesclose to their birthplace
• Tompkins County wealth generally passed from generation to generation, but primarily stayed in Tompkins County
Yesterday
COMMUNITY WEALTH
• Many of the next generation no longerlive in our county
• Once the wealth leaves our community,it will never return
Today
COMMUNITY WEALTH
Tompkins County has a robust community endowment and a secure future; or,
LOOKING AHEAD
Two possible scenarios
Much of Tompkins County wealth has been transferred to communities in California, Arizona, Florida and beyond.
Three beneficiaries
Taxes CommunityHeirs
PASSING WEALTH FROM ONE GENERATION TO THE NEXT
6+ TIMES
One gift, many generations
YEAR 15
$100,000 in cumulative grants and services
$158,000 balance
YEAR 25
$200,000 in cumulative grants and services
$213,000 balance
assumes 5% annual payout and 8.5% rate of return
INITIAL GIFT INVESTED 1 TIME 2 TIMES
YEAR 50
$625,000 in cumulative grants and services
$455,000 balance
YEAR 1
Establish an endowment
$100,000 gift
LOOKING AHEAD
Impact if only 5% of Tompkins County wealth was given as charitable gifts designated for community endowments
$1.93 billion in 50 years
$126.51 million in 10 years
Many gifts, many generations
If people make a charitable gift of 5% of their estate to community endowments
YEAR 10
$126.5 million charitable gifts
Range from $6.33 to $33.5 million in total grants
$145.5 million community endowments
YEAR 50
$1.93 billion charitable gifts
Range from $96.58 million to $3.5 billion in total grants
$3.94 billion community endowments
LOOKING AHEAD
HISTORY & BACKGROUND
o Millionaires in the Millennium (1999)o Boston Collegeo $41 Trillion TOW opportunityo 1998-2052 period
o Transfer of Wealth in Nebraska (2002)o RUPRI Center for Rural Entrepreneurshipo Completed over 38 studies in 1,100 communities
TOW Studies in the United States
U.S. Household Net Worth1945-1990
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
$0
$2,500
$5,000
$7,500
$10,000
$12,500
$15,000
$17,500
$20,000
$22,500
$25,000
$27,500
$30,000
$32,500
$35,000
$37,500
$40,000
Source: Board of Governors of the Federal Reserve Syste, Statistical Releases, Flow of Funds - Z.1
in b
illio
ns o
f rea
l 201
0 do
llars
Events of the Last Decade
Dot Com & 9-11 CrisisThe Post 9-11 RecessionHousing BubbleFinancial CrisisThe Great Recession of 2008
U.S. Household Net Worth1990-2010 Q2
Q1
Q2
Q3
Q4
Q1
Q2
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009 2009 2009 2010 2010
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
$75,000
$80,000
Source: Board of Governors of the Federal Reserve System, Statistical Releases, Flow of Funds - Z.1
in b
illio
ns o
f rea
l 201
0 do
llars Bubble 1
Dot Com & 9-11 Recession
Bubble 2
Great Reces-sion
Historic Trend Line
Participating community foundations:
• Central New York Community Foundation• Community Foundation of Herkimer & Oneida Counties• Community Foundation of the Hudson Valley• Community Foundation of Tompkins County
Methodology
Scenario Forecast NOT a Prediction ForecastBase year 2010, for 50 year period 2010-60Real NOT Constant Dollars
Estimating Net WorthStep I
Survey of Consumer Finance, The Federal Reserve Board TriennialCurrent Release: 2007
Flow of Funds, The Federal Reserve BoardCurrent Release: December 9, 2010Next Release: March 10, 2011
Estimating Net WorthStep II
Age CharacteristicsMarket Valuation of Property by ClassConcentration of Creative Class Employment &
IncomeDividends, Interest & Rent (DIR) IncomeProprietors’ Employment & IncomeResidential Real Estate, Owned Businesses,
Investments
Scenario Building
Step IPopulation projectionsEconomic growth scenarioStep IIWealth ReleaseStep IIIReview & Verification
Estimating Net WorthStep III
Discounting assetsMotor vehicles, art, jewelry
ImmigrantsGroup quarters populationHigh amenities, vacation homes, retireesEconomic development projectsOther special cases
Tompkins County Technical Advisory Committee
• Suzanne Aigen, Aigen Agency• Martha Armstrong, Tompkins County
Area Development • Fred Ballantyne, TIAA-CREF and
former Community Foundation Board• Mary Berens, Cornell (ret.) and
Community Foundation Board• Phyllisa DeSarno, Economic Planning,
City of Ithaca• David Kay, CARDI, Cornell University• Paula Peter, The Solstice Group• Ed Marx, Tompkins County • Jean McPheeters, Tompkins County
Chamber of Commerce• Ed Morton, Chemung Canal Trust
Company and Community Foundation Board
• Karen Sharkey, Audrey Edelman USA Realty
• David Squires, Tompkins County, Director of Finance, and Community Foundation Board
• Frost Travis, Travis & Travis Development and Ithaca Rentals and Renovations
• Bryan Warren, Warren Realty
26
Average U.S. Net Worth by Age
Less than 35 35-44 45-54 55-64 65-74 75 or more$0
$200
$400
$600
$800
$1,000
$1,200
$106
$326
$661
$936
$1,015
$638
Age Cohort
Mea
n ne
t wor
th in
thou
sand
s of r
eal 2
007
dolla
rs
27
Average U.S. Net Worth by Work Status
Working for someone else Self-employed Retired Other not working$0
$500
$1,000
$1,500
$2,000
$2,500
$350
$1,961
$543
$124
Work Status
Mea
n ne
t wor
th in
thou
sand
s of r
eal 2
007
dolla
rs
28
Average U.S. Net Worth by Education Level
No high school diploma High school diploma Some college College degree$0
$200
$400
$600
$800
$1,000
$1,200
$143
$252
$366
$1,098
Education Level
Mea
n ne
t wor
th in
thou
sand
s of r
eal 2
007
dolla
rs
Median Age, 2010
20
25
30
35
40
45
Herkimer41.8 Ulster
40.8Putnam
40.7Oneida
40.7 Cayuga40
Madison38.6
Onondaga38.5
Dutchess38.4 New York
37.7 Oswego37.2
U.S.37
Cortland35.3
Tompkins31.5Y
ears
Percent of Group Quarters Population, 2010
0%
2%
4%
6%
8%
10%
12%
14%Tompkins
12.9%
Madison7.5% Cortland
7.2%Oneida6.4%
Ulster6.3%
Dutchess6.3% Cayuga
5.7%
Oswego4.1%
New York3.1%
Onondaga3.0% U.S.
2.7% Putnam2.2% Herkimer
1.7%
Percent of Dividends, Interest and Rent Income, 2009
0%
5%
10%
15%
20%
25%
Tompkins20.08%
U.S.18.02%
Ulster17.99%
New York17.81% Dutchess
16.92% Madison16.18%
Putnam16.17%
Onondaga15.93%
Oneida15.88%
Cortland14.37%
Cayuga14.03% Herkimer
13.66%Oswego12.05%
Population Growth2000-2010 (Annual)
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%U.S.1.1%
Tompkins0.6% Dutchess
0.6%
Putnam0.5% Ulster
0.4%New York
0.3%
Madison0.1%
Onondaga0.0%
Cortland-0.1%
Oswego-0.1% Oneida
-0.1%
Herkimer-0.3%
Cayuga-0.3%
Per Capita Income Growth2000-2010 (Annual)
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Putnam3.4% Tompkins
3.3%Dutchess
3.0%Ulster2.8%
Onondaga2.7%
Madison2.7% New York
2.6% Cortland2.5%
Herkimer2.5% Oneida
2.4%U.S.2.4%
Oswego2.4%
Cayuga2.4%
Many gifts, many generations
If people make a charitable gift of 5% of their estate to community endowments
YEAR 10
$126.5 million charitable gifts
Range from $6.33 to $33.5 million in total grants
$145.5 million community endowments
YEAR 50
$1.93 billion charitable gifts
Range from $96.58 million to $3.5 billion in total grants
$3.94 billion community endowments
LOOKING AHEAD
Everyone can be a philanthropist, with the help of professional estate planners
