The planned gift newsletter to be mailed this month begins with a letter from Dick Couper that states, "Providing timely financial, tax and estate planning information has always been a goal of Hamilton Plans." To be sure, one of the objectives of planned giving at Hamilton is, "To do well by doing good." Each of you will find a page from the newsletter in your materials titled 2003 Personal Planning Checklist that provides some helpful personal planning ideas and gently introduces the main objective — encouraging charitable contributions of all kinds to Hamilton.
The checklist includes concepts such as reviewing the requirements of "qualifying" dividends before selling securities, establishing Roth IRAs for children and grandchildren as soon as they start their first jobs and the use of charitable remainder trusts to re-balance portfolios.
The biggest news with regard to tax reform is what may come. As I reported at these meetings previously, the Senate passed the CARE Act of 2003, S. 475, by a 95 to 5 margin. Since then, the House passed similar legislation 408 to 13 and the legislation is expected to move "quickly to conference." The legislation includes a number of initiatives for charitable giving including lifetime tax-free rollovers from IRAs to charitable organizations (outright and in trust) and an income tax charitable contribution deduction for those who do not itemize.
I believe that outright contributions of IRA assets may become an important planning option for Hamilton's most generous benefactors, those that contribute up to their limits of deductibility. Although no income tax deduction would be allowed for the transfer from an IRA to Hamilton, the donor does not recognize the distribution as income either. The donor maximizes his or her contributions to Hamilton, while managing his or her minimum distributions from the IRA. As you know, IRAs are an asset of little value to non-spousal heirs, as they may receive approximately thirty cents on the dollar as a beneficiary of an IRA.
In closing, I am reminded of the most important planned gift maxims. First, donors make contributions because they believe in the institution — donative intent is paramount. Second, as I have said many times in these meetings, everyone does planned giving — the President, every trustee, every development officer. For example, recently President Stewart and Mary Evans visited an alumnus and asked me to follow up. The alumnus, a former trustee in his fiftieth reunion year, is in the process of completing a contribution.
Among Hamilton's most ardent planned gift advocates is Dick Couper. He and Patsy, as well as his remarkable parents, have made every type of planned gift possible and encouraged scores of others to do likewise. Dick, perhaps you would like to add your insights.
Benjamin P. Madonia III
2003 Personal Planning Checklist
_____1. Review requirements of "qualifying" dividends before selling securities.
_____2. If you do not itemize deductions, you might benefit by doubling your annual charitable contributions every other year, allowing you to itemize in the years you make the gifts without affecting the standard deduction in the other years.
_____3. Use all tax advantaged retirement savings opportunities.
_____4. If you have stocks that are down and you do not have much confidence in their future performance, consider selling to realize a loss that can be used to offset otherwise taxable gain. If your loss exceeds your gain, you can deduct up to $3,000 of loss against ordinary income and any excess can be carried forward into future years.
_____5. If you wish to adjust your portfolio and have appreciated assets, consider transferring some assets to a qualified charitable remainder trust. No capital gains will be paid by you on the initial transfer or by the tax exempt trust when the asset is sold. The income tax deduction may offset the tax due on the sale of securities outside of the trust.
____ 6. Reduced tax rates mean greater disposable income, the economic measure with the highest correlation to charitable giving. Increased disposable income and stock market indices trending upward suggest that year-end 2003 may be a good time to review charitable plans for Hamilton.
____ 8. Consider establishing a Roth IRA for gainfully employed children or grandchildren.
Hamilton makes a number of resources available to you, including the following: