1. …and the role of Charitable Planning...
WEALTH BUILDING
…and the role of Charitable Planning...
By: K. Gene Christian, Regional Director
Charitable Estate and Gift Planning Services
Providence Health System - Oregon
/phone
/Fax

2. Development and implementation of
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING TRADITIONALLY, WHAT IS IT?
Definition:
Development and implementation of
planning strategies which will minimize
taxation while moving a person(s)
toward financial independence.

3. 1. Develop a unified credit shelter estate plan (will or living trust)
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING TRADITIONALLY, HOW IS IT ACCOMPLISHED?
1. Develop a unified credit shelter estate plan (will or living trust)

4. 2. Fund 401Ks, IRAs, ROTHs, VULs, etc. for tax-sheltered growth
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING TRADITIONALLY, HOW IS IT ACCOMPLISHED?
2. Fund 401Ks, IRAs, ROTHs, VULs, etc. for tax-sheltered growth

5. 3. Buy Life Insurance to replace income earner(s)’ salary.
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING TRADITIONALLY, HOW IS IT ACCOMPLISHED?
3. Buy Life Insurance to replace income earner(s)’ salary.

6. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING TRADITIONALLY, HOW IS IT ACCOMPLISHED?
4. Place what is left into investments/real property to produce capital gain and/or high cash flow.

7. It assumes that wealth accumulation
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING WHAT IS THE ROLE OF CHARITABLE PLANNING IN WEALTH BUILDING?
Definition:
It assumes that wealth accumulation
decisions should be based as much on what
the wealth-holder values, as the value of
the wealth-holder’s assets.

8. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING
WHY IS THIS IMPORTANT?
Nearly 80% of all Americans have “charitable receptivity.”
80%

9. $$$ There are only three potential heirs in estate planning... People
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING E. WHY IS THIS IMPORTANT?
There are only three potential heirs in
estate planning...
$$$
People
Government
Charity

10. The Nation is aging rapidly
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING OPPORTUNITIES IN THE NEW MILLENIUM?
The Nation is aging rapidly
You bet!
Combined taxation remains relatively high
Financial markets over 15 years have soared
Huge transfer of wealth occurring
Three affluent generations alive simultaneously

11. ...and the role of Charitable Planning...
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING A CASE ILLUSTRATION
WEALTH BUILDING
...and the role of Charitable Planning...

12. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING CASE PROFILE
Bob (age 59) and Alice (age 58) Auburn
He owns/manages a small residential construction company
She is an independent contractor currently consulting for ODOT

13. Nearing retirement - they want to travel more
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING CASE PROFILE - cont.
Nearing retirement - they want to travel more
Don’t want to dramatically affect children’s inheritance - close family

14. They have a $1,865,000 estate: $300,000 life insurance on him
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING CASE PROFILE - cont.
They have a $1,865,000 estate:
$300,000 life insurance on him
$125,000 life insurance on her
$628,000 his SEP-IRA
$310,000 her 401(k) & IRAs from past employers
$12,000 in ROTH IRAs
$170,000 home paid off
$320,000 rental properties (four homes)

15. Life Insurance His SEP IRA Home ROTHS Rental properties
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING A VISUAL LOOK AT THE AUBURN’S ESTATE...
Life Insurance
His SEP IRA
Home
ROTHS
Rental properties
Her 401(k) & IRAs

16. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING Sale vs. Unitrust
I. Analysis of Increased Income
Sale vs. CRT
Value of Rentals $320,000 $320,000
Closing Costs ($ 22,400) ($ 22,400)
Taxable Value $297,600 $297,600

17. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING Sale vs. Unitrust
I. Analysis of Increased Income - cont.
Sale vs. CRT
Taxable Value $297,600 $297,600
Or. Cost Basis $ 88, N/A
Cap. Gain Tax ($ 55,963) $ -0-
Dep. Cost Basis $ 5,000 N/A
Cap. Gain Tax ($ 26,311) $ -0-

18. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING Sale vs. Unitrust
I. Analysis of Increased Income - cont.
Sale vs. CRT
Legal/App. Fees $ ? ($ ,500)
Investable Funds $215, $ 297,600
Pre-Tax Income (6%) $ 12,920 $ ,856
31.1-YR Exp $770,854 $1,065,390
PV of Income $264, $ 365,480

19. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING Sale vs. Unitrust
II. Analysis of Tax Deduction
Sale vs. CRT
Tax Deduction $ $64,171
Tax Savings (34%) N/A $21,891

20. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING Sale vs. Unitrust
III. Analysis of Estate Tax
Sale vs. CRT
Asset Included
In Estate $215, $ -0-
Estate Tax (37%) ($ 79,671) N/A

21. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING SUMMARY OF BENEFITS
KEEP IN ESTATE
1. Lifetime after tax cash flow from rentals:
$751,808
PUT IN CRT
1. Lifetime after tax
cash flow from
6% pay CRT:
$752,151
NOTE: See footnotes section in booklet for formulas used

22. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING SUMMARY OF BENEFITS
KEEP IN ESTATE
2. Lifetime value of income tax deduction benefit:
-0-
PUT IN CRT
2. Lifetime value of income tax deduction benefit:
$159,244
NOTE: See footnotes section in booklet for formulas used

23. WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING SUMMARY OF BENEFITS
KEEP IN ESTATE
3. Rentals value at the end of lifetime:
$653,869
PUT IN CRT
3. CRT value at the end of lifetime:
$965,235
FOOTNOTES TO “KEEP IN ESTATE vs. CHARITABLE TRUST’ SLIDE
KEEP
1. Triple-net leases generating 6% annualized ordinary income. Therefore
6% x $320,000 = $19,200 on first year’s income. Assuming growth in
annual income of 4% (as property values rise) x 31.1 years (joint life
expectancy) x 66% (assumes combined ordinary income tax rate is 34%)
= $751,808 in total after-tax income.
2. Lifetime value of income tax deduction benefit - not applicable.
3. Rental properties’ value at the end of joint lifetimes is $320,000 x 4%
average growth each year x 31.1 years = $1,037,887 - estate taxes
@ 37% = $653,869.
CONTINUED ON NEXT PAGE...
NOTE: See footnotes section in booklet for formulas used

24. PERSONAL ESTATE PERSONAL AND
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING KEEP IN ESTATE vs. UNITRUST
KEEP CRT
1. $ 751, $ 752,151
$ 159,244
3. $ 653, $ 965,235
$1,496, $1,959,345
PERSONAL ESTATE PERSONAL AND
CHARITABLE ESTATE
FOOTNOTES TO “KEEP IN ESTATE vs. CHARITABLE TRUST” SLIDE CONT...
PUT IN CRT
1. CRT 6% on $297,600 = $17,856 in first year’s income. Assuming
growth in annual 4% (as CRT value rises) x 31.1 years (joint life
expectancy) x 71% (assumed blended ordinary cap gain rate of 29%)
= $752,151 in total after-tax income.
2. Charitable income tax deduction is $64,171 x 34% (assumes combined ordinary
income tax rate is 34%) = $21,818 in tax avoidance. Therefore $21,818 invested
at 6.6% average earnings each year (10% overall - 34% tax rate) x 31.1 years
= $159,244.
3. CRT value at end of lifetimes is $297,600 x 4% average growth each year x 31.1
years = $965,235.

25. NICE & BIG PERSONAL ESTATE
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING STANDARD WEALTH ACCUMULATION
$1,865,000
TODAY
31.1 years pass
NICE & BIG
PERSONAL ESTATE
2033 AD

26. = CRT NICE & BIG BIG ESTATE BIG CRT TODAY Rentals 2033 AD
WEALTH BUILDING AND THE ROLE OF CHARITABLE PLANNING Adding the Charitable Dimension
TODAY
CRT
Rentals
2033 AD
………………………………………………………………………….
NICE & BIG
BIG ESTATE
MUCH LARGER PERSONAL & CHARITABLE ESTATE!!
BIG CRT =
PLUS

29. REFERENCE MATERIAL Special Committee on Again (U.S. Senate)
American Association of Retired Persons (AARP)
Social Security Administration
The Oregonian
OHSU notes and material
The National Committee on Planned Giving
National Woodlands Magazine
Successful Money Management Seminars
Fortune Magazine
Crescendo Software Company
The Legacy Companies, LLC