Administrative Office 330 Wenneker Drive, St. Louis, MO 63124, Fax: , Issue: November 2013

Transcription

1 Administrative Office 330 Wenneker Drive, St. Louis, MO 63124, Fax: , Issue: November 2013 St. Louis Mission Statement The Society of Financial Services Professionals - St. Louis Chapter is dedicated to: 1) Enhancing the competence of financial service professionals through quality lifelong education; 2) Promoting public recognition of the high ethical standards and professional expertise practiced by our members; and, 3) Encouraging others to attain the professional designations and graduate degrees endorsed by our national organization. President s Message by Larry Vandeven, CLU, FLMI Greetings fellow Society members! It is hard to believe it is already November and the Holiday Season is upon us! November is also the final month of our Member Get a Member Special. In the event you are able to bring a new member on board during the month of November, you will receive 50% off your national dues during (a $161 savings). The St. Louis chapter is also waiving the local dues for any new member joining this month, making the total cost of a full membership $322, a tremendous value! Make sure you join us for lunch on November 20 th to view the live streaming video presentation, Now That the Dust Has Settled: A Re-look at Both the Tax Code and the Affordable Care Act Where Are We Now? This presentation will be packed with information every financial services professional needs to know. On December 5 th the topic turns to When Older Clients Falter. Chandelle Martel of Bethesda Healthcare and Gail Lee of Purcell and Amen will address both the legal issues and family dynamics needed to age successfully. As you are giving thanks this Holiday Season, don t forget our sponsors. Our sponsors contribute more than $7,000 throughout the year to make many of our events and programs possible. Please support them whenever possible. Best Wishes for a Happy Thanksgiving and a joyous Holiday Season! Larry VandeVen You can go anywhere for education, but you come here for wisdom!

2 Untapped Leverage of Charitable Giving With Life Insurance By Brian R. Seigel, J.D., Director of Advanced Planning A significant percentage of Americans donate money each year to charitable organizations. According to the Center on Philanthropy at Indiana University, 88% of households give to charity and in 2012, Americans donated an estimated $ billion to charities. 1 While staggering, this 2012 figure remains well below the 2007 high of $ billion. With this significant gap, charitable organizations across the nation continue to search for new donors and methods of donating to meet annual fundraising goals. One giving method receiving increased attention from charities is gifts of life insurance. Life insurance death benefits offer an opportunity for those making the gifts, the donors, to make substantial gifts they may not otherwise be able to make. The donor s modest premium contribution can be leveraged into a much larger gift of the death benefit for the benefit of the charity. Additionally, when structured appropriately, the charitable gift of a life insurance policy commonly results in an income, gift and/or estate tax deduction for the donor. Finally, a gift of life insurance can provide public recognition during the donor s lifetime for having made a cash gift of the death benefit to the charity. This public acknowledgment of a donor s significant lifetime cash gift should not be underestimated. Many high net worth donors give to charity because it enhances their image or the image of their company, permits them to leave a legacy that perpetuates them or their ideals, or allows them to be seen as a leader or role model in their local community. There are generally three ways to make a gift of a life insurance policy to charity including, (1) making a gift of an existing policy, (2) making the charity the beneficiary of an existing policy and, (3) helping the charity purchase a new policy. First, to make a charitable gift of an existing life insurance policy, the donor of the gift transfers all rights of ownership in the policy to the charity. The charity becomes the owner and beneficiary of the policy and the donor is entitled to an income tax charitable deduction that is generally equal to the fair market value of the policy on the date of the gift. If future premiums are required to fund the policy, the donor can make additional cash donations to the charity to provide the funds to pay those life insurance premiums. These additional cash donations may qualify as additional charitable deductions for income tax purposes. Upon the death of the insured, the charity receives the life insurance death benefit free of income, gift and estate taxes, and can use the proceeds to fund its operations or its endowment fund. Second, if retaining control of a life insurance policy is a concern, the donor may choose to retain ownership of the policy and name the charity as the beneficiary. Because control of the 1 Giving USA: Charitable Donations Grew in 2012, but Slowly, Like the Economy, Lilly Family School of Philanthropy, 2013.

3 life insurance policy is retained, the gift is not considered completed and the donor does not receive any corresponding income tax deductions during his or her lifetime. However, upon the insured s death, the death benefit gifted to the charity will qualify for the federal estate tax charitable deduction. Last, the charity may also purchase a new life insurance policy on the life of the donor. The charity will be the owner and beneficiary of the policy and will be responsible for any scheduled premium payments. The donor may make annual cash contributions to the charity to provide the funds necessary to pay those premium payments. To employ this strategy, the charity must generally have an insurable interest in the life of the donor. This insurable interest can be established by showing the donor had a history of giving to the organization. If the donor gifts funds to the charity to allow the organization to pay the policy s scheduled premiums, a charitable deduction for income tax purposes is generally available. However, the donor is not required to contribute funds for additional premium payments. As such, most charities prefer the gift of a life insurance policy guaranteeing no additional premium payments. Further, charities prefer life insurance policies that guarantee payment of the death benefit upon the death of the insured. Term life insurance, coverage that is designed to cover a temporary need and is therefore in force for a specified term, is generally not appropriate for this strategy because the insured will likely outlive the term (in which case the charity would receive nothing upon the insured s death). Additionally, variable universal life, indexed universal life and other types of permanent policies are not preferred because of their reliance on the performance of internal, non-guaranteed elements to remain in force and pay a death benefit. The preferred type of life insurance for charitable gifts is a universal life policy with a secondary guarantee. This type of policy provides that, as long as the stipulated premium(s) is made on a timely basis, the death benefit will be guaranteed to be paid by the carrier for the insured s lifetime. While the difference in policy type may seem insignificant, most charities have adopted policy acceptance guidelines outlining specific requirements for life insurance policies before they will be accepted as a gift. These guidelines generally require policies that: 1. Are issued by life insurance companies with solid financial ratings. 2. Will not require continued premium payments for an extended period, generally less than 5 or 10 years. 3. Are not encumbered by an existing loan. 4. Are permanent in nature and not term insurance. 5. Will not require the charity to make premium payments on policies if the donor ceases making payments. 6. Are not structured as permanent policies with term riders. 7. Have as many guarantees as possible that minimize the possibility of unexpected future increases to premium payments or the duration of those payments. Gifts of life insurance can provide considerable benefits to both the donor and the charity. For the donor, a gift of life insurance can:

4 Offer the opportunity to make a substantial charitable gift exceeding the amount the donor may have otherwise been able to donate. Make a large endowment to charity without significantly exhausting assets of the estate. Result in an income, gift and/or estate tax deduction. Allow public, lifetime recognition of the donor for making a large charitable gift of the life insurance death benefit. For the charity, a gift of life insurance can: Provide significant endowment funds to aid the charity s future operations. Offer predictable future endowment funds. Help to replace donations of a deceased major donor of the charity. While all of the listed benefits can be relevant factors motivating a donor to make a charitable gift of a life insurance policy, at the root of nearly all charitable gifts is the enjoyment and satisfaction of benefiting a cause in which the donor has a passion. The donation of life insurance provides a unique ability to enhance the charitable gift and the resulting benefits to both the donor and the charity. Continuing Education Series Video Teleconference LIVE November 20, 2013, 12-2:10pm. LIVE Topic: Now That the Dust Has Settled: A Re-Look at Both the Tax Code and the Affordable Care Act Where Are We Now? CE: Approved for two hours of L&H in MO and IL and CFP, CLE and. CPE in Missouri. Location: Des Peres Lodge 1050 Des Peres Road, Des Peres, MO RSVP: Joan_Hecker@sbcglobal.net or call the association office at Lunch will be provided. Cost: Members free, Guests $35

5

6 Calendar of Events All meetings are at the Des Peres Lodge unless noted Society of FSP Calendar All meetings are at Des Peres Lodge unless otherwise noted November 20, 2013, 12-2:10pm. LIVE Video Teleconference LIVE Topic: Now That the Dust Has Settled: A Re-Look at Both the Tax Code and the Affordable Care Act Where Are We Now? December 5, am Topic: When older clients falter Speaker: Chandelle Martel with Bethesda HealthCare and Gail Lee, GCM with Purcell and Amen About the presentation: Most of our clients are either aging parents or baby boomers with aging parents. How do we prepare our clients and their parents to age successfully so that when they falter, the family is prepared? How do we help families who have failed to plan or who's plans have fallen short? We will address both the legal issues and family dynamics needed to age successfully January 23, am. Topic: Somebody Moved the Cheese! Estate Planning in an ERA of Super High Exemptions and Portability Speaker: Steven B. Spewak, J.D., LL.M. About the Presentation: Although the estate and gift tax exemption was scheduled to roll back to $1 million dollars per person on January 1, 2013, in an abrupt about face, an estate tax exemption of $5.25 million per person, indexed for inflation, along with portability was instead made permanent (at least until Congress changes the law again). With the vast majority of Americans no longer subject to estate tax, is there a further need for what until now has been mainstream credit shelter and marital trust planning? With portability on the table, is there still a reason to split assets equally between husband and wife? With no estate tax issues for most, will joint revocable

7 trusts become the norm as opposed to the traditional separate trusts? What planning opportunities remain available for those individuals who may face an estate tax problem? All these questions and more will be answered. February February 19, 2014 VTC 12:00-2:10 PM. Live March 18, 2014, 8-9am Topic: IRA Retirement Distribution Fundamentals. Speaker: J. Matthew Meyer, CLU, ChFC About the presentation: Learn the fundamentals of IRA Distribution Planning. Topics include: Coordination of retirement income sources, Post retirement investment planning, and IRA distribution rules. Presentation will focus on practical what everyone should know areas. April 9, 2014 Topic - Business and Estate Planning for Farmers and Ranchers Speaker Teresa Reis Bippen, Esq. MetLife About the Presentation: Farmers and Ranchers This course focuses on several strategies for farmers and ranchers who are concerned with business succession and wealth transfer issues. The course opens with a current description of the agricultural industry which is experiencing booming land prices which means many farmers and ranchers are now facing challenges in transferring their farm business. In addition to the booming land prices, farmers and ranchers are concerned about passing on the family farm and their own personal retirement needs. The techniques are varied and range from the family one-way buy-sell solution to self-cancelling installment notes to irrevocable defective grantor trusts. Some of the techniques include a case study demonstrating exactly how the technique may work in a particular client situation. May 21, VTC, 12-2:10pm. LIVE June 19, am. Topic: ILITs Keep the Death Benefit Outside the Estate: Duh! What Else You Should Know... Speaker: Brian Seigel, JD

8 About the Presentation: While professional advisors generally understand the purpose and basic mechanics of irrevocable life insurance trusts (ILITs), many are not familiar with the nuances that can create unique planning opportunities. This presentation will provide FSP members with an understanding of flexibility that can be created with ILITs and how to avoid some of the traps encountered in ILIT administration. If you are interested in being better positioned to advise your clients about ILITs, this is a meeting you won t want to miss! Be sure to check out our new Library Series at the St. Louis County Public Library. Public Invited bringing awareness to our local society through educating the consumer. Looking for volunteers to join the following committees: Programs Social Media-Technology University Relations If you are interested please send an to Joan_Hecker@sbcglobal.net

9 Thank you Annual Sponsors Platinum Sponsors The Comprehensive Business Advisor, LLC" Gold

10 Sponsorships Available We are looking for annual sponsors. If you would like to be a sponsor or would like more information about sponsorship, please contact Joan Hecker at , or send an to Joan_Hecker@sbcglobal.net. About the Society of Financial Service Professionals (FSP) The standard-bearer for excellence in professionalism, advanced continuing education, and ethical guidance, FSP is a national network of credentialed professionals working in diverse financial disciplines. The Society has created high-level connections amongst the country s top financial advisors for nearly 80 years. FSP members assist the public in achieving personal and business-related financial goals. Consumers can obtain free financial information or find a Society member in their community by calling the Society s toll-free National Consumer Referral Service at or by visiting and clicking on Consumer Info. Society of FSP- St. Louis Vision Statement To be recognized as the pre-eminent organization in the St. Louis area of credentialed professionals in the financial services industry who are committed to working together as a team to help the public achieve their financial goals and to provide a strong commitment to providing superior educational opportunities to credentialed professionals.