Marketing Testamentary Gifts in Tough Times Minnesota Planned Giving Council 33rd Annual Conference Marketing Testamentary Gifts in Tough Times Presented by Marc Carmichael R&R Newkirk Company

Donor Responses to Recession “Let’s postpone this (gift) discussion until the economy looks better” Reluctance to make ANY decisions Willingness to consider revocable, testamentary contributions

Bequests Remain Popular with Donors Why are donors more receptive to making major gifts at death? What special motivations are there for making gifts through estate plans? “If I had known I was going to live this long, I would have taken better care of myself.”

“In this time of recession and uncertainty, we need to take VERY good care of our money” - Bequest Donors

Bequests = 90% of Planned Gifts Why are donors more receptive to making major gifts at death? What special motivations are there for making gifts through estate plans? “If I had known I was going to live this long, I would have taken better care of myself.”

Gifts Through Estate Plans Enable Donors to Accomplish Goals: Plan a significant, future gift that doesn’t jeopardize current financial security Leave a legacy for good Provide a level of support that seemed impractical during life (e.g., tithing at death: “I bequeath 10% of my estate to XYZ charity”) Perpetuate their annual giving Reduce taxes on their estates

Your Bequest Can Perpetuate Your Annual Contributions* If Your $ 500 You Can $ 12,500 Annual $1,000 Perpetuate $ 25,000 Gifts $1,500 Them with a $ 37,500 Total: $2,000 Bequest of $ 50,000 $5,000 at Least: $125,000 *Leaving 25 times a donor’s annual gifts can “endow” the donor’s annual contributions forever, assuming a 4% annual rate of interest.

Charitable Bequests are 100% Deductible against Estate Tax

The Ideal Bequest Prospect Likes the organization, and may already be a donor Has sufficient wealth to make a bequest Is retired or nearing retirement age Doesn’t have kids (50% more likely to make charitable bequest)

But…there is no database on people who never had kids “Do I have any children? Well, (giggle), none that I know about!” --Bette Midler

What Does a Bequest Prospect Look Like?

Four Ages of Estate Planning? 30s-40s are making their first wills 50s-60s changing family situations 65-75 age group seek income security, money management 75+ reviewing plans for final dispositions

It’s a Matter of ASKING… “Will you include our organization in your will?”

NCPG Survey of Donors 2000 Where did donors first get the idea to make charitable gifts by will or trust? No. 1 answer: Publications received from the organization.

Wills Emphasis Mailings Six-brochure program mailed to target groups over 14-year time span $34 million in bequests 53% came from donors who received mailings (419 matured bequests) Only 13% of bequest donors who received mailings sent back cards

The “Iceberg Effect” in Wills and Bequests Programs Many planned giving officers say only 25% of donors disclose bequest expectancies in advance. Anticipate that 75% of matured bequests will arrive unannounced.

Free Marketing: All Your Other Publications Newsletters to your members/alumni/ users of your services Annual reports Journals and magazines Program guides Anything that goes out of your office

Obtain a Basic Wills Brochure

Media Advertising We advertised our new Heritage Society in a weekly paper. We had only one response, but she informed us of a $5 million bequest. – Marty Matula We advertise our wills seminars in the local obituary pages! – Dale Burgeson

Arthritis Foundation Found Gold with Wills Coupon in “Modern Maturity”

Salvation Army TV Commercials 1,600 requests for wills booklet after running TV ads in Pittsburgh area Commercials featured soap opera star discussing need for estate plans $25,000 cost

Telemarketing Success Story Telemarketing firm calls older supporters Prospects asked if they have wills/estate plans Wills booklet offered Would you consider a bequest to (charity)? Would you like a visit?

Message to Donors You need a will Here’s how to get a will Review your will regularly Here’s how to name us in your will (include your correct legal name and sample bequest language) Please tell us about your bequest

Why Review Estate Plans Now? Meltdown in stock market and housing prices may have “disinherited” some beneficiaries Changes in federal estate tax rules

Parent Makes Estate Plan in 2007 $100,000 stock portfolio to child #1 $100,000 IRA to child #2 $100,000 life insurance policy to child #3 Who wins? Who loses?

Why Review Estate Plans Now? Meltdown in stock market and housing prices may shrink bequests to some heirs but not others Anticipated 2009 changes in federal estate tax rules

Beneficiary Designations Are Easy – and There Are No Legal Fees Life insurance beneficiary IRA and other retirement account beneficiary designations POD (“pay on death” accounts (C.D.s and most other financial accounts) TOD (“transfer on death”) designations on brokerage accounts

Life Insurance in Gift Planning Valuable asset for giving No need to make or change a will Church can receive just a portion of policy

Almost Any Financial Account Can Be “Payable on Death” to Church

“Deferred Bequests” Can Help Charity and Family Members Charitable gift annuity in donor’s will Testamentary charitable remainder trust Testamentary charitable lead trust Bequest of remainder interest in farm/home QTIP trust for married donors

Charitable Planning for Spouses Charitable remainder trusts avoid taxes QTIP trust can take place of CRT – more flexible arrangement QTIP can empty into CRT for children

QTIP Trust to CRT at Death

Leave Us “Tax-Burdened Assets” U.S. Savings Bonds IRAs and deferred compensation Accounts receivable Installment payments on land sale contracts Unpaid commissions I.R.D.

Death Is a Tax Shelter…for Capital Gains Taxes Only

Taxes on Retirement Accounts Federal Estate Tax and State Death Taxes (some states) Federal Income Tax (IRD) State Income Tax

Websites Planned giving web page should tell the world you are glad to receive bequests Provide bequest phrases, including your organization’s correct legal name

Estate Planning Seminars 75% estate planning, 25% gift planning Lots of breaks Rotating roundtable discussions Individual Counseling Famous estates

Lexington House (859) 277-6135

Train Volunteers to Help You Ask for Bequests

Care & Feeding of Past Donors Heritage Societies Invitations to dinners and functions Tours of campus or facilities Thank-you letters to families of deceased Tangible recognition

Care and Feeding . . . We send birthday cards to donors with the note: Is this the year to have your driver’s license renewed? They appreciate it! Also, we’ve switched from Christmas to Thanksgiving cards – Nancy Perazelli One benefit of joining our Heritage Society: Members receive valet parking.

Professional Advisers Personal contacts Direct mail newsletters Advisory councils Website resources and e-mail Adviser seminars

Goals for Your Program Value of gifts or expectancies Number of gifts or expectancies Cash flow average Visits to prospects/ seminars/other marketing/cultivation

If It’s Just You . . . Get a wills brochure Promote bequests every- where, including web Start wills society Change stationery Send out survey card Train volunteers to help Make your own bequest Remember the legend of Wilko Schoenbaum

Do all this, and . . .