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Mobile Estate Planning Council:Trends in Gift Planning

Presented by:

Joe ChickeyManaging Consultant

www.SHARPEnet.com

Danny Thomas

Alfred Bernard Noble

Andrew Carnegie

Chris Greicius

Where Does The Money Come From? PEOPLE!2015 contributions: $373.25 billion by source

SOURCE: GIVING USA 2016

Where Does the $$ Come From?

• On average, Americans give $1 billion a day

• All time high for second year in a row

• Relevant Facts: Increases in Giving From 2013 – 2015

• Bequest 25.8%

• Other giving by individuals 7.3%

• Independent, operating, community foundations 15.2%

SOURCE: GIVING USA 2016

ECONOMIC TRENDS

• 7-Year Bull Market

• Real Estate Boom

• Technology Success

• Wealth of the Few

• 95%/5%

GIVING TRENDS

• Stock Gifts

• Term of Years Trusts

• Real Estate Gifts

• Blended Gifts

• Business Succession

• Virtual Endowment

GIFTS OF QUALIFIED APPRECIATED PROPERTY

• Must Be Held For a Year and a Day

• Deductible at Fair Market Value

• No Capital Gains Due BecauseThere Is No Sale

• Advantage Remains Even if NoCharitable Deduction

The Charitable IRA

• Must be 70 1/2 or older

• May gift up to $100,000

• IRAs only

• Permanent for 2016 +

INDEPENDENT BEQUEST STUDY

Professor Russell James/Texas Tech

• 80% Give During Life, 6% at Death

• 50+ Group Followed for Life

• 80% of Matured Bequests 80+

• 65% Decide in Last 5 Years of Life

• 65% Who Give Were Asked

• 76% From Wills Signed in 80+

Independent Bequest Study

Professor Russell James/ Texas Tech

• Baby Bust 1924-1933

• Baby Boom 1946-1963

• Funded Trusts more popular

• Knowledge matters

• www.encouragegenerosity.com

Maybe It’s How are Brains are Wired

• Do Social Connections Matter?

• (Human connection versus “socializing”)

• What Behavioral Psychology Research Tells Us

• Neuroimaging Studies*

• Neural connections promote the “social cognition network”

• ”We cannot live only by ourselves A thousand fibers connect us with our

fellow men; and among those fibers, as sympathetic threads, our acIons run

as causes,and they come back to us as effects”

• -- Henry Melvill, 1885

*Social: Why Our Brains Are Wired To Connect, Matthew D. Lieberman, 2013

19091990

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

19121915

19181921

19241927

19301933

19361939

19421945

19481951

19541957

19601963

19661969

19721975

19781981

19841987

7 5 6 5 5 5 4 5 3 5 2 58 59 5

- 23%

- 27%+ 87 %

NUMBER OF LIVE BIRTHS IN AMERICA(1909-1990)

Num

ber

Of

Per

sons

Eac

h Y

ear

Year of Birth

Number of Persons Alive By Age

in 2010 and 2020

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

45464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100+

Age of Population

Nu

mb

er

of

Pers

on

s A

live

Number Alive in 2010

`

Number of Persons Alive By Age

in 2010 and 2020

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

45464748495051525354555657585960616263646566676869707172737475767778798081828384858687888990919293949596979899100+

Age of Population

Nu

mb

er

of

Pers

on

s A

live

Number Alive in 2010 Number Alive in 2020

`

Population Data

• Growing 1 year in every 5

• 1970 vs 2015 confirms

• Women 81/ Men 76

• Gender gap gone in 20 yrs

* Population Reference Bureau

Beaver

Beaver

Wally

Wally

IS GIFT PLANNING NEW?

• First CGA – 1450

• Sheep Farmers CLT – 1800s

• US Tax Reform Act 1969

GIVING / BIG THREE

• Belief in Mission

• Involvement

• Giver – Community Leader

“It’s a fool

who looks for logic

in the chambers

of the human heart.”

-Ulysses Everett McGill“Oh Brother Where Art Thou”

REGULAR GIFTS

• Relatively Small

• Repetition Anticipated

• Normally Cash

• Usually Unrestricted

SPECIAL GIFTS

• Larger Than Regular Gifts

• Repeated Less Often

• Often Made in the Context of a Campaign

• More Likely to Be Restricted

• Non-cash Gifts Typical

Honus Wagner

Wall Street Bull

ULTIMATE GIFTS

• Largest Gift a Person Is Capable of Forming Donative Intent to Make

• Normally a Once-in-a-Lifetime Decision

• Motivations Evolve Over Time

• Typically a Gift Through an Estate

CONCERNS WITH GIFTS THAT COMPETE

• Dying Too Soon

• Living Too Long

• Illness or Other Emergency

• Mental and/or Physical Disability

Each Planning Tool

is Different

• Some are primarily age-based

• Some are primarily wealth-

based

• Some are appropriate based on

elements of both age and wealth

Gifts of Cash and PropertyBequests & Gift Annuities

Term of Years TrustsCharitable Lead Trusts

Charitable Trusts for LifeLife Income Gifts for Others

Current Retirement Plan GiftsLife Insurance Proceeds

Retirement Plan RemaindersNEITHER?BOTH?

A1 B1

A2

C1

B3

B2 C2

A3 C3

AGE AND WEALTH-BASED MATRIX

Gifts of CashPooled Income FundsDeferred Gift Annuities

Gifts of CashAppreciated PropertyTerm of Years Trusts

Charitable Lead TrustsLife Income Gifts for Others

Gifts of Cash

Gifts of CashBequests

Gift AnnuitiesLife Insurance Proceeds

Retirement Plan Remainders

Gifts of Cash

Gifts of Cash

Gifts of CashAppreciated PropertyTerm of Years Trusts

Charitable Lead TrustsLife Income Gifts for Others

Current Retirement Plan GiftsDeferred Gift Annuities

Gifts of CashAppreciated PropertyPooled Income Funds

BequestsGift Annuities

Life Insurance ProceedsRetirement Plan Remainders

MAJOR GIFTS?PLANNED GIFTS?

Northern Trust “Transformational Giving”

• Is “Doing Good” enough

• Impact is more important than ever

• Entrepreneural spirit

• Asset Destination

• Transformational/Unique Outcomes

Doug Colbeth

Harriet Werley

Randy Pausch