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Quote for today: It takes 16 times more financial investment to attract a new customer than it does to keep an existing customer...(John Sculley, former head of Apple Computer)

How to Talk Money with Mom and Dad The September 2009 issue of Money Magazine (available through had an interesting article on the how to talk with parents about money. Many of the point translate easily to fund raisers when they are exploring planning ideas for charitable estate planning. It would be a good idea to laminate the two page article as it has a excellent list of the documents everyone needs for good estate planning. The documents include: An inventory of assets, a list of debts and regular obligations, an list of important contact, financial power of attorney, health directives, a will, HIPAA authorizations for family members and a brief medical history.

See the helpful PDF flie of my Family Document Locater form for a method to obtain important information.


Gift Annuity with Life Insurance Gift annuity agreements can work for donors in interesting ways. I have just completed a comparison of how much life insurance can be purchased with the after tax income generated by a gift annuity agreement. Gift annuities can provide considerable leverage for donors who can obtain life insurance. The purpose of his exercise was to first determine the cost of replacing the a $100,000 gift. The second purpose was to determine how much additional insurance could be purchased by a qualified donor using all of the annuity after tax income.

I have created four Power Point slides to illustrate the advantages of this approach. Print the slide out in note form to obtain the commentary for each slide.

Since many charities have annuities which were established under previous rate schedules the after tax benefits from those agreements should be higher than what is listed on the current slides. When you have a donor whose personal portfolio has decreased and they are concerned about the amount of their legacy to a spouse or family, and if they are insurable this concept should work for them.


Kudos Corner

This is a new section where I will be highlighting some gift expectancies and gift program elements I think will be helpful and informative.

Kudos to Erik Whaley, Executive Director and Chief Development Officer of The Tuomey Foundation, Sumpter, SC for his first charitable gift annuity agreement. It was a stock funded annuity for a couple age 65, 66 with a 5.0% payout. Considering the size of the gift and the life expectancy of the donors it was decided to reinsure the payment with a commercial company. With the assistance of an investment advisor member of the Planned Gift Advisory Board this was accomplished with an insurance company which would accept the Foundation as a non-natural owner. The Foundation has launched a new web site and will shortly incorporate planned giving web content with Future Focus.


Kudos to Sharon Jones, CFRE, Vice President for Development and John Wilbur, Major Gifts Officer, HPC Healthcare, Inc. Temple Terrace, Florida. HPC is the parent corporation for LifePath Hospice and Good Shepherd Hospice.

John obtained the third annuity from a couple now aged 81 and 85. Even though this annuity was written at a lesser rate than previous annuity agreement due to the recent rate changes the couple experienced a dramatic increase in income (6.60%) when compared to the effective return from a certificate of deposit. It points out your current annuitants are your best prospect for further support.

Sharon obtained an initial annuity from a couple aged 82 and 85 with a stock gift of 1,000 shares of Cisco Systems. The discussion with the annuitants started over 12 months ago and they were waiting for their stock to rise over $20 per share which happened during the recent market rise. They had all the information available for their broker to make a quick DTC transfer and in spite of their summering in Michigan the annuity was completed within a few days. The stock with a cost basis of $5,025 and a value of $21,235 indicates there are still individuals with appreciated securities who will benefit from a gift annuity since the Cisco stock does not pay a dividend they increased their income from $0 to over $1,400 annually.


Big Financial Changes for Retirees in 2010 - Courtesy of Dick Kellogg, and Yahoo Finance

Retirees should start getting ready now for major changes next year that will affect their income and health expenses. The precise impact of these changes will vary by individual, so consumers should take stock of their financial situations and plan accordingly. Many economists say inflation will be a serious concern in a few years after the economy recovers, so factor this into plans as well. Here are five things to look out for:

No cost-of-living boosts for Social Security. Forecasters widely predict that a slowly recovering economy will produce little or no inflation in the near term. That's generally good news, but not for Social Security recipients, whose annual increases are tied to consumer price changes in urban areas. Health care, a major retiree expense, is not expected to see the same price moderation as will other sectors of the economy. So it's quite possible that Social Security beneficiaries will be seeing flat payments, but still face higher prices.

Higher Medicare Advantage costs. If you're one of more than 10 million subscribers to Medicare Advantage (NYSE: MA - News) plans, expect to pay more for coverage next year. The U.S. Centers for Medicare and Medicaid Services cut 2010 subsidies to private MA plans by 4 percent to 4.5 percent. Big private insurers offering the plans will be figuring out how to adjust to the reductions, but you can expect to see a combination of higher rates and drug costs along with reduced coverages. The plans were created by the Bush administration as a private-sector alternative to traditional Medicare plans. But MA costs the government about 14 percent more per person than regular Medicare, and thus became a target for expense cuts that could be used to help pay for theObama Administration's health reform plan.

New Roth IRA rules. Traditional IRAs are funded with pre-tax dollars and defer taxes until the funds are withdrawn. Roth IRAs, by contrast, are funded with post-tax dollars but investment gains are not taxed. Once you're 59 1/2, funds can be withdrawn whenever you wish, and the accounts may pass on in your estate so that your heirs enjoy the tax exemption as well. Moderate household income ceilings have prevented lots of people from creating Roths or converting traditional IRAs into Roths. Next year, however, the income ceiling for Roth conversions will be dropped, allowing anyone to convert as much of their qualifying retirement accounts into Roth IRAs as they wish. Of course, they will have to pay income taxes on their fund balances when they convert. But steep investment reversals in many retirement accounts may make that tax hit easier to take. And, should a market rebound in investment values occur, the gains will never be taxed if funds are switched into a Roth account. Also, the government is allowing conversion taxes to be spread over two years: 2010 and 2011. Taxes stemming from conversions made after 2010 will be fully due in the year of conversion.

Mandatory retirement plan withdrawals suspended. Last year's stock market collapse collided with rules requiring mandatory retirement plan withdrawals at the age of 70 1/2. Forcing retirees to cash in money-losing securities seemed especially unfair. Investment experts were widely advising people not to sell their securities at steep losses or risk losing out on any future market recovery. Congress agreed, but it was too late to waive the withdrawal rule for 2008. However, it will be in effect this year, so investors will have the choice of whether or not to take withdrawals from their plans. Investors should contact their retirement plan administrator for the steps to take if they decide to reduce withdrawals this year. The withdrawal decision can affect tax returns due in 2010.

Estate tax changes. Under current law, there is no estate tax next year. But in 2011, it reverts to the 2001 level, with tax rates of up to 55 percent on all but the first $1 million of an estate. No one thinks this approach will prevail. Democrats want this year's estate taxes to be made permanent. This would exempt the first $3.5 million and levy tax rates of up to 45 percent on the rest. Estate taxes have long been an ideological battleground and nothing less than rhetorical war should be expected as President Obama's tax-reform tax force develops recommendations that are due at the White House by early December. __________________________________________________

Excellent Postcard Tag Line

Just received a post card from Humana the major health insurance with an excellent tag line and comments that easily transfer to gift annuity promotions. Tag Line...Securing your Tomorrow Today. Copy...In a world of constant change, one of your biggest concerns is providing a secure future for yourself and your family. Change the last two words to read... and our charity.

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Phone: 910-295-6800

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