An Overview of Planned Giving Jackie W Franey AASP Regional Workshop Best Practices and Big Ideas in Development Operations February 11, 2011

Gifts of Stock Securities are held two ways Physical certificates physical certificates – in owner’s name held by broker/DTC transfer – in street name Physical certificates require signature guarantee stock power form Valuation based on gift date average of the high and low on date of gift donor irrevocable transfers securities mutual funds valued once per day

Types of Planned Gifts Revocable Gifts Irrevocable Gifts bequests beneficiary designations life insurance Irrevocable Gifts charitable gift annuities charitable remainder trusts (CRTs) charitable lead trusts pooled income funds

Revocable Planned Gifts Bequests named as specific, residual or contingent exact legal name stewardship and cultivation important Life Insurance donor names charity as beneficiary Retirement Plans spousal waiver

Will and Revocable Living Trust What type of bequest?? specific, percentage, residual, contingent? what type of asset will you receive? illiquid assets expenses to maintain asset until you can sell joint owner with other charities IRS filing due?? estate tax return for estates over $5 million Any legal issues to consider?? FASB and valuation requirements

Estimating the Value of a Bequest Sometimes more art than science determine net value from the inventory preliminary estimate – what about debts and taxes?? certain percentage for services/expenses subtract specific bequests Reporting to Finance/FASB Total Inventory Value $238,762.70 Admin Costs/Fees (10%) $ (23,876.00) Total specific bequests $ (50,000.00) Net residual value $164,886.70 x 25% remainder interest $ 41,221.68

Irrevocable Planned Gifts Life Income Gifts asset is used to establish gift, income to donor and/or other income beneficiary and remainder to charity charitable remainder trusts charitable gift annuities Life Income Gift asset is used to establish gift, income to charity and remainder to donor family charitable lead trusts Life Insurance donor makes charity owner and beneficiary of policy charity responsible for making premium payments donor takes deduction, no “incidents of ownership”

Charitable Remainder Trusts What type of trust?? Charitable trust established during lifetime unitrust or annuity trust donor retains the right to change remainderman Testamentary trust qualified charitable remainder trust nonqualified with a charitable interest perpetual trusts (payout income, principal untouched) FASB requirements if irrevocable remainder beneficiary when no age of beneficiaries

Estate Settlement Overview of the Process Notice of Administration notification from personal representative/executor copy of will or language Named as Beneficiary will, revocable trust, charitable trust, beneficiary designation, etc. Inventory or accounting provides estimate of length of process provides estimate of distribution Estimating the value of a bequest/distribution Receipt and release

Basic Questions to Ask What assets are in the estate or trust? anything new? What assets were sold for how much, to whom? What debts, taxes and expenses were paid? did charity pay taxes? Was money reinvested? how invested, what was the return? how much income was received? Fees on income? What will be distributed? when? partial distribution?

Partnering with Finance Procedures for recording gift will declared valid by probate no uncertainties receiving gift amount of bequest can be determined how value/distribution determined?? restrictions?? Audit approaches vary Assessment of controls in place calculations, expecting distribution, wording Periodically review trust statements fees, asset allocation, distributions