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July Issue 2 Newsletter

Quotes for today: They who give have all the things. They who withhold have nothing. Hindu Proverb


Traditional IRA to Roth IRA Conversion...... Seminar for your advisers Connell & Associates is offering a seminar for the professional advisors in your area to take advantage of the one time IRA 2010 conversion opportunity. The seminar entitled "Charitable Gift and Planning Options for Individuals Converting IRA Accounts" includes a 1 to 1 1/2 hour presentation, slide handouts, resource material and follow up personal proposals until the end of 2010 for interested advisors and their clients. If you are interested in a seminar presentation in your area Email and I will respond with available dates and a presentation cost proposal.

Are you promoting the new Roth IRA conversion opportunity? Here is an example from the Office of Gift Planning at Duke University from one of their publication advertisements.


Tax Uncertainty Continues.....Kiplinger advises not to expect much action on the tax logjam until a lame-duck Congressional session following the November mid-term elections. Such a delay may increase the likelihood of a short extension of the Bush tax cuts for everyone, but who knows. At this time last year, we never would have predicted the estate tax would be allowed to expire for 2010, yet that's exactly what we have today.


Life Insurance after Retirement....US News Retirement Blog lists five things to do with life insurance after retirement. NONE OF THEM INCLUDES CHARITY OPTIONS. For the full article here is the link. _____________________________________________________________
Insurance Information Institute....publishes an Insurance Handbook, in the 205 pages they cover the basis of all types of insurance. It should be a staple in your reference library. For a free download click this link.
The link has a permanent home on the Useful Links section of my web site.


Checklist for your Bequest Society.....Each time I work with clients to develop a Bequest Society I like to review key information. Use the following checklist to review and enhance your efforts.

1. Remind your board often the U.S. is just starting the great wealth transfer and bequests are one of the fastest growing source of American philanthropy.

2. Bequests may come from several sources; wills, trusts, life insurance, and retirement plans.

3. Bequests come in several types; Specific dollar amount, specific assets, percentage of estate residue, and a contingent which depends on some event, i.e. death of a family member as the primary beneficiary with the charity as a contingent beneficiary.

4. Many donors do not reveal they have made a charitable bequest with the most common reason they want to protect their privacy.

5. Interestingly 21% of bequests donors have had no prior affiliation with the charity but rather have chosen the charity because of the mission in which the donor believes.

6. Bequest donors like to be appreciated. Thank them often in many different ways. Appreciate them always.

7. As you recognize and thank donors, remember to always ask about new commitments from unknown donors, as you market various planned gift opportunities.

8. Build strong relationships with your donors as you encourage current gifts.

9. Develop policies to determine membership to your bequest society and have them approved by your board.

10. Choose a name and logo that clearly reflects the importance of the group, make it unique to stand out from all the Legacy and Heritage Societies from competing charities. The name may have an organizational or historical meaning. I was recently at the NC Zoo and their society is named the Lions Pride. When I was at the Santa Fe Opera, their society is called the Silver Rose Society.

11. Initiate a Discovery Letter signed by a person who will be recognized by name or office to consistent loyal donors.

12. Follow up new members with a welcome letter, invitation to the recognition event and special invitations to major events.


News and Notes....When was the first Social Security check issued? 1929, 1932, 1937, or 1944. Check the answer below.

Congress will start voting on a series of tax issues beginning on September 14, 2010. As the new tax information becomes available inform your best prospect of the changes.

New York Times article: Getting a Will: Six Common Questions, great overview, here is the link.

According to the US Department of Health and Human Services approximately 60% of individuals age 65 will require some type of long term care services.

When Social Security started, the life expectancy of a 65 year old was 12.5 years. Today that figure is 16.7 years for males and 19.5 year for females.

Failure to designate a beneficiary is the most common mistake individuals make with their Qualified Retirement Plans.

AARP reported in its April, 2010 issue: Americans who live to 65 have a 40% chance of entering a nursing home during their lifetime.

ANSWER: Social Security first check was issued in 1937.


Roth Conversion Deadline..... A reminder that anyone who converted a regular IRA to a Roth IRA in 2009 has until October 15, 2010 to "undo" the conversion without penalty. This can be attractive if the Roth balance has declined since the conversion took place. Reversing the switch and returning the funds to the regular IRA wipes out any tax on the conversion.


The Largest Tax Hike in American History......The following is an excerpt from a recent article by Karlan Tucker (full article) {Note: Connell and Associates takes no political position on this commentary. Taxes are consistently low on the giving scale, but they do get individuals to the planning table.}

The increase in taxes will be so dramatic that Nancy Pelosi has prevented the 2011 federal budget from being discussed on the floor of Congress for fear the public will then realize how onerous the tax hikes are going to be and revolt in their voting this November.

Infact, Pelosi is making history by not allowing a discussion or vote on a 2011 budget, thus taxing and spending in 2011 without an official budget. How bad are taxes going to be? Well, if they aren't already, they will soon become your single largest expense in life. How would you feel if out of every dollar you earned, 50 cents or more were taken from you?

We are taxed in so many areas that we forget how big an impact it is having on us. Consider some of the ways money is taken from us:
Federal income tax
State income tax
City taxes
County taxes
Property taxes
Sports stadium taxes
Public transportation taxes for light rail, subway, bridges, etc.
Airport taxes
Sales taxes
Gasoline taxes
Withholding from your paycheck for Medicare/Medicaid/Social Security
Toll road taxes
License plate taxes
Hotel taxes
Car rental taxes
Behavior taxes on cigarettes, etc.

Did you know that if LeBron James had accepted the offer to play for the New York Knicks, he would have had to pay $12 million in New York state taxes, but by going to Miami and benefiting by a state that has no state income tax, he saved $12 million?

I hope you feel like you have had money burning a hole in your pocket, because Uncle Sam is going to help you with that problem.

Here what's coming in less than 165 days: Remember the promises from our current president that no one making less than $250,000 will get a tax increase? Well, he must have forgotten he said that.
Currently all federal tax brackets will be hit:

The 10 percent bracket will rise to 15 percent
The 25 percent bracket will rise to 28 percent
The 28 percent bracket will rise to 31 percent
The 33 percent bracket will rise to 36 percent
The 35 percent bracket will rise to 39.6 percent

Itemized deductions and personal exemptions will be phased out, which is the same thing as raising taxes even higher than just the effect of the above bracket increases.

The estate tax exemption will be $1 million, and the top bracket for the death tax will be 55 percent.

Capital gains will rise from 15 percent to 20 percent.

The dividend tax when stock is held for less than one year goes from 15 percent to 39.6 percent. This will then rise another 3.8 percent, to 43.4 percent in 2013.

Obamacare will add over 20 new taxes, the first to go into effect on January 1.

Health savings accounts will no longer be available, nor will flexible spending accounts or health reimbursement accounts.

Typically, businesses expense their purchases of equipment to effectively reduce their income by the same amount to save on taxes. Not any longer. Now, we have to depreciate our equipment purchases, thus another tax increase.

The Alternative Minimum Tax will ensnare a projected 28 million families, up from four million last year.

Charitable giving from IRAs will no longer be allowed.

What will our government do with all this additional revenue? Spend it, of course.

Obamacare is projected to save $140 billion 10 in ten years. On June 30th, however, our Congress spent a record $166 billion in one day, wiping out the supposed 10 years of savings that nationalizing our health care system is supposed to create.

Taxing us to death is not the answer. Somehow our government has to learn restraint. They have to stop spending. In a good economy, taxes bring in $2.5 trillion per year. Our government is spending $3.5 trillion plus annually. As of May 2009, 46 cents of every dollar spent by our government is being borrowed. I was sitting in the audience when the President of the Federal Reserve Bank of Kansas City, Tom Hoenig, said that just to meet the future promises of Medicare, Medicaid and Social Security, we would have to have a marginal tax rate of 80 percent.

I believe we have to stop the spending spree and lower taxes, thereby creating the environment for a healthy economy. ______________________________________________________________


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, not all gifts are included.

Kudos Corner will return next issue.


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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