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June Newsletter 2011

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Planned Giving Mentor

Of Counsel: Winton C. Smith, Jr., JD

Quotes for today: Make Friendship a Fine Art: In spite of all that doctors know, and their studies never end. The best cure of all when spirits fall, is a kind note from a friend. Coach John Wooden ____________________________________________________________

New Web Service Link: You will find a link on the picture on the left to the current issue of "Senior Spirit" a publication of the Society of Senior Advisors. The link will take you to the most recent newsletter with several topics of interest to seniors. This will help you understand the senior market and all the financial and psychosocial elements they face. It will enable you to design your marketing approaches to meet their needs as their charitable life and financial life merges.

The link is also on the main page and will connect to the most recent "Senior Spirit" publication. So check back often to get the latest news.


Question of the month? The cumulative stock market returns for 10 year periods have produced a profit in all but four years. Name the ending four years in which the stock market lost value? Answer below.


Rethinking Bypass Trusts....Whenever the Government changes tax laws it is an excellent opportunity to promote charitable estate planning.

Two recent changes in estate tax law make this a good time for prospects and donors to review the need for a bypass trust. First, the increase in the estate exemption level to $5 million. Second, the "portability" provision that could increase the exemption even more for surviving spouses.

The revisions in the estate tax law enacted in 2010 received a great deal of attention. In the past, an individual's Will often included a bypass trust to enable a couple to use each spouse's estate exemption. Without a bypass trust a couple usually was able to use only one exemption amount, the surviving spouse, but not both.

A bypass trust is designed to help and individual and their spouse to minimize the taxation of their combined estate by taking full advantage of each spouse's estate tax exemption, the amount he or she can leave to heirs tax-free. When the first spouse passes away, a sum up to the deceased spouse's unused exemption is left to a bypass trust. The trust then can pay income, and in some cases principal, to the surviving spouse. Upon the survivor's death, the assets remaining in the bypass trust, including any appreciation form investments, are transferred to heirs free from estate tax. This arrangement enables the first spouse's estate to support the surviving spouse without inflating the size of the second spouse's estate and the eventual tax levied on it.

The portability provisions of the new estate tax law can change the equation for bypass trusts. The new law allows the surviving spouse to utilize the first spouse's remaining exemption, eliminating the need to transfer assets to a bypass trust to take advantage of the first spouse's exemption.

While portability reduces the need for bypass trusts, it does not necessarily make them obsolete, especially considering the current estate tax law is only effective for 2011 and 2012.

Donors should be directed to a knowledgeable attorney who can help them ensure their estate plan serves the specific needs of their family regardless of changes to the tax code. This is a significant time to suggest the inclusion of charity provisions in the new or revised plan.

Source: TRowe Price Take Notes, June 2011,



Guess who's scamming seniors?.....AARP's research found that almost 6 million Americans in the 55+ age group attended these so-called "free-lunch seminars" in 2009 alone. In a year long investigation by FINRA, SEC and NASAA determined these seminars actually were sales presentations and not educational events. Among the findings 13% were fraudulent. Leaders attempted to persuade participants to invest in companies or investment opportunities that didn't exist. Yet another 23% of the seminar presenters offered unsuitable advice for seniors, meaning financial products that were too risky or didn't match participants' needs.

As you prepare your seminars be mindful of your promotional wording.


Charitable Giving with Life Insurance....Cannon Insights provides an excellent primer on planning gifts of life insurance. I recommend this article to you as not only a source for your newsletters but as an opportunity to educate your board on this gift opportunity that does not cost anything to execute. Link to full article.


News and Notes....The median net worth of 115 million American households is just $96,000 (Source: Survey of Consumer Finances).

Taxes paid - in 2008 the top 1% of US taxpayers paid 38% of all federal income taxes. The bottom 90% of taxpayers paid 30% of all federal income taxes (Source: IRS).

The life expectancy of a new born American male in 1900 was 46.3 years, whereas the life expectancy today is 75.3 years (Source: National Center for Health Statistics).

To rank in the top 2% of all US taxpayers in 2008 required an adjusted gross income (AGI) of at least $253,197 (source: IRS).

Today, a husband and wife both aged 65 have approximately a 47% chance that at least one of them will live to his or her 90th birthday and a 20% chance of living to their 95th birthday (Source:

Almost half of those near retirement are predicted to run out of money and will not be able to cover their basic expenses and uninsured health-care costs (Source: Employee Benefit Research Institute, July 2010 data).

To spend $14.3 trillion (i.e. our current debt ceiling) you would have to spend $1million a minute for the next 27 years, 2 1/2 months (Source: BTN Research).


Seminar for Professional Advisors....If you work with professional advisors I am currently offering a new seminar called: Case Study Approach to Integrating Charitable Gift Annuities into Wealth Preservation, Wealth Enhancement and Portfolio Diversification. It includes 16 case studies and related material to encourage professional advisors to discuss charitable solutions to their clients.

This seminar will help professional advisors unlock the hidden potential in donor assets and increase your gift annuity program.

The cost is $2,500 plus travel expenses for the two hour presentation which has been previously approved for CEU credits in some states. To discuss available dates send me an email requesting further information.


Answers....The stock market produced a loss for the 10 year periods ending in 1938, 1939, 2008 and 2009.

Comment: The cumulative returns had a dramatic effect on gift annuity program investments since any annuity with a relatively high rate of return set up in 1999 or 2000 probably went negative as the investment return did not produce a sufficient return to produce a residuum for the charity.


Kudos Corner

This is a new section where I will be periodically highlighting some gift expectancies and gift program elements I think will be helpful and informative, not all gifts are included.




James E. Connell and Associates is a national consulting service devoted to increasing resources for charities using the power of charitable estate and gift planning techniques.

Pinehurst office: PO Box 3335, 15 Pinewild Drive, Pinehurst, NC 28374
Phone: 910-295-6800

Northeast office: 20982 Bayside Avenue, Rock Hall, MD 21661

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