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This document does not provide individual financial, legal, tax, trading or investment advice.

Hypothetical 64-year-old retired Executive
Total net worth was $10 million before a gift to a charitable trust for $5 million
Currently giving additional $200k per year to his church
Has $300k in lifestyle expenses each year

Analysis showed significant shortfall

Hypothetical Executive

Recommendations:

Spend less or

Go back to work or

Pull back the money in the charitable trust

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Hypothetical 76-year-old spouse inherited business in poor financial shape.
Realized she could not afford bankruptcy.
Turned business around but dis-inherited all family members
Giving to charity whenever she has a chance
Sold the business for 10 million at age 83

Surprised Business Owner

Recommendations:

Charitable Remainder trust in the year of sale
Spend more

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Hypothetical couple
Retired with no children
Husband mid 70s, Wife mid 60s
Both excited about one specific charity, but….
Challenge:

H wants to contribute significant assets now
W is worried about her financial security
Both are determined

Retired Executive Couple

Recommendations

Standard Estate Planning
Negotiated a balance to charitable giving
modeled CRT unitrusts and annuity
Explained charitable gift annuity (Donee offered a solution)
Concluded the Charitable gift annuity best route for their situation

Improved cash flow and tax reduction and met W's concern for income
Better recognition – met husbands desire for recognition

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Hypothetical client is 73 years old with no heirs
Currently giving to charity sporadically
Sold a piece of property with $1.4 million gain
Wanted to reduce the tax liability
90% of assets went to charity on death
Had more than enough to meet cash flow needs
Did not want to give away assets during lifetime

Real Estate Sale

Recommendations:

Discussed CRT
CRUT had the better tax deduction
Able to diversify low basis stock
Client acted as trustee

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Hypothetical retired husband and wife have decided on a CRT to help alleviate some large deferred comp payments.

Considering leaving the remainder to a Donor Advised Fund or a Foundation but are unsure which would be the better option.

Generational Philanthropy

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Pros:

Flexible Grant Making- no mandatory distributions

Privacy – gifts can be anonymous

Low entry threshold and fees

Not much Admin

Pros and cons of using a DAF

Cons:

Donors or their beneficiaries receive no income stream

Loss of control – final authority is the DAF sponsor

Cannot benefit individuals or non charity entities

No QCDs to a DAF

Cannot convert a DAF to anything else

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Pros:

Legacy – Lasting philanthropic legacy

Flexible charitable purposes: Foundations can support a broad range of causes, direct grants, scholarships and special projects.

Recognition Opportunities

Control over charitable grants

Pros and cons of using a Foundation

Cons:

Administrative burden

Mandatory distributions – 5% annually

Lower tax deduction limits

Start-up and ongoing costs

Less Privacy

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

A pooled income fund (PIF) is a “deferred” type of charitable gift that provides income for the life of the donor and provides an immediate tax savings.

All capital gains of contributed asset will be avoided
Income can be paid to any family member including grandchildren
Cannot own S corp stock

The PIF trust document can define “income” to include any of the following items:

Interest and dividends

Rents & Royalties

Short Term Capital Gain; and

50% of post gift Realized Long Term Gain

Refresher on Pooled Income Funds (PIF)

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

A Young PIF is a PIF that is less than 3 years old

Rate is calculated either by

The Highest yearly rate of return of the PIF in the last three tax years immediately preceding the year of the transfer, or

If the PIF does not have 3 years of history – the deemed rate is one percent lower than the highest annual average of the monthly IRC § 7520 rates for the three calendar years prior to the transfer. Treasury Regs §1.642(c)-6

"Young"(PIF)

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Company worth $35 million
G1 is 89, owns 60% of the company and total NW of $20 MM
G2 is 65 and only wants to work for a few more years
G3 is running the company is 39, G4 is school age and younger
G2 is philanthropic, and very focused on the company future and transitioning to G3
G3 is work and company-focused not focused on Wealth Planning
Company is expected to grow rapidly- estimated worth of $125 million in 4 years
Estate exemption at this time was around $5 million
All are motivated to retain consolidated control of the company
Big Challenges: Convince G1 to do some planning, and include charitable planning and sell all generations on it

Family Business – Three Generations

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Concentrated Control

Created voting / non-voting shares to keep consolidated control and update Buy-Sell

All generations have adequate income

G1 Plan highlights

Gift $5mm shares to G3 through trust

Intent was to sell remainder to G3 for a note (did not happen)

Bequeath the note to a family foundation

G2 Plan Highlights

Intent to gift $5MM in shares to G3 and G4 in trust

Annual exclusion gifting to G4

Life insurance for tax exposure

Manage and contribute to family foundation

G3 Plan Highlights

Annual exclusion gifting

Life insurance for tax exposure

Participate and contribute to family foundation

Family Business - Conclusions

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Company worth 185 MM – LOI in 2018 for a 2019 sale
G1 is 93, G2 is 69 and G3 is 43, G4 is school age and younger
Big Challenge #1 G1 did not finish planning still owns company stock

Remaining stock worth over $25 MM

Stock given to trust $35 MM

G2 stock worth almost $70 MM
G3 stock worth $7 MM and has job with new company
5 other family members own stock

Family Business – 4 years later

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Discussed putting company stock into DAF prior to the sale

Opted out in case sale did not happen

Discussed setting up pooled income fund for G4 funded by G1 – 8 total GC
G1 gifting remainder of increased exemption
G1 Testamentary gift to Family Foundation
G2 Gifting to Young PIF for G4
G3 Establishing CLAT

Conclusions and Recommendations

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

62-year-old couple currently worth $38 MM

Wanted to know how much he could give away and still lead a comfortable lifestyle

Interested in giving to charity and the kids (has 3 adult children)

Does not want to spoil the kids

Interested in setting up dynasty trusts

Selling a business for $5 million with a 0 basis

Frugal Business Owner

This document does not provide individual financial, legal, tax, trading or investment advice.

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This document does not provide individual financial, legal, tax, trading or investment advice.

Had more than enough for his needs
Cash flow cushion of $680,000 per year adjusted for inflation
Could gift $21 million today
Estimated $1.9 million tax bill in 2019

Recommendations

Modeled CRUT and a Young PIF
Discussed family foundations
Discussed irrevocable Trusts
Mentioned Qualified Personal Residence Trust for both residences
Annual gifting to 12 nieces and nephews

Frugal Business Owner - Analysis

This document does not provide individual financial, legal, tax, trading or investment advice.

17 of 18

This document does not provide individual financial, legal, tax, trading or investment advice.

Decided against both PIF and CRUT

Set up irrevocable trusts for $5 MM now for grandchildren

Set up irrevocable trust for $5 MM now for children

Set up Spousal trusts

Frugal Business Owner - Conclusions

This document does not provide individual financial, legal, tax, trading or investment advice.

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TD Wealth Private Client Group is a brand of TD Wealth® which is a business of TD Bank N.A. (TD Bank).

TD Wealth Private Client Group is available to clients with at least $750,000 in investable assets and a total net worth of $3 million or more (exclusive of real estate).

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