Planned Giving Manager Suite Planned Giving Manager/Mini Manager/Gift Annuity Manager Windows Version 6.6 Update May 2012

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1 Planned Giving Manager Suite Planned Giving Manager/Mini Manager/Gift Annuity Manager Windws Versin 6.6 Update May 2012 Dear PGM Client, I am pleased t annunce the release f Planned Giving Manager versin 6.6. PGM 6.6 includes: * Presentatins fr bequests t charity * Autmatic updating f mnthly IRS discunt rates via the internet * Prjectins fr grantr and super-grantr charitable lead trusts * Prjectins fr step and balln payment ( shark fin ) lead trusts * Diagrams fr utright gifts, bargain sales, and retained life estates * A new Windws 7 cmpatible Online Help frmat * Tax tables updated fr 2012 indexing fr inflatin * Miscellaneus additinal enhancements These enhancements are detailed n the fllwing pages. Please review them befre yu use yur updated sftware. If yu have any questins abut the sftware, please d nt hesitate t call Client Services tll free at We lk frward t helping yu get the mst ut f PGM 6.6. Sincerely, Gary M. Pfrzheimer

2 Tax Law Changes Summary f Enhancements Gift, estate, and generatin skipping tax rule exemptin fr 2012 accmmdated The exemptin fr gift, estate, and generatin skipping tax put int effect by the Tax Relief, Unemplyment Insurance Reauthrizatin, and Jb Creatin Act f 2010 was $5 millin in This amunt is indexed fr inflatin in 2012 and is nw $5,120,000. We have updated PGM with the indexed amunt fr This change is reflected in PGM and will affect the fllwing calculatins: Nn-grantr lead trusts in Basic Gift Illustratins Gift tax, testamentary, and estate plan mdels in Life Incme Prjectins All gift ptins (except grantr trusts) in Lead Trust Prjectins Estate Tax and Gift Tax functins in the Tls menu. Indexed trust and estate incme tax schedules applied in Lead Trust Prjectins Lead Trust Prjectins uses the federal incme tax table fr estates and trusts when it cmputes the incme tax n a lead trust s r regular irrevcable trust s taxable incme. PGM 6.6 incrprates fr this purpse the federal incme tax schedule fr estates and trusts fr IRS discunt rates updated thrugh June 2012 As with every update, we have included all mnthly IRS discunt rates up t the mnth f release in rder t ensure their accuracy. PGM 6.6 incrprates discunt rates thrugh June See the Other Enhancements sectin fr infrmatin n PGM s new autmatic IRS discunt rate updating feature.

3 Other Enhancements Presentatins fr bequests t charity PGM 6.6 includes a new Bequest t charity gift ptin in Basic Gift Illustratins and Life Incme Prjectins. Chse this ptin t illustrate the benefits f a bequest with charts, diagrams, r narratives. Cmpare a bequest t ther planned gifts, if yu wish. In additin, we have added fields under Custmize Organizatin Infrmatin t supprt this new feature. Using the infrmatin entered int these fields, the Prpsal Letter, Descriptin and/r Example, and Lng Descriptin and/r Example narratives can include yur rganizatin s sample bequest language and specific instructins n hw yur rganizatin shuld be identified in a dnr s bequest. IRS discunt rate updated autmatically via the internet PGM 6.6 updates the mnthly IRS discunt rate autmatically. Each time yu launch PGM after the 14 th f the mnth, it lks fr the next mnth s rate n PG Calc s website. If it finds it, it imprts it autmatically. If yu g several mnths between launches, PGM imprts all f the IRS discunt rates published since yur cpy f PGM was last launched. If this autmatic feature causes prblems fr sme reasn, yu can turn it ff under Custmize Setup - General and maintain yur rates manually as befre. See IRS discunt rate Maintaining in PGM in the PGM Help Index fr mre details n this feature. Greatly expanded lead trust calculatins The persistently lw IRS discunt rate, including June s recrd lw f 1.2%, has sparked great interest in charitable lead trusts. PGM 6.6 accmmdates this increased demand in the fllwing new ways: Grantr lead trust prjectins Lead Trust Prjectins can perfrm prjectins fr grantr lead trusts, including the incme tax savings frm the initial transfer, the estimated incme taxes payable by the dnr n incme earned during the trust term, and the prjected remainder that will be returned t the dnr n terminatin f the trust. Super grantr lead trust prjectins Lead Trust Prjectins can perfrm prjectins fr super grantr ( defective ) lead trusts. This type f lead trust is structured in such a way that it is treated as a grantr lead trust fr incme tax purpses (it earns an incme tax deductin and trust incme is taxable t the dnr), but as a nn-grantr lead trust fr gift tax purpses (it earns a gift tax deductin and trust assets are utside f the dnr s estate). Step payment lead annuity trust prjectins Lead Trust Prjectins can illustrate a lead annuity trust whse payments increase ver the term f the trust. Fr example, yu can illustrate a lead trust that makes a $50,000 payment in its first year and then increases its payment by 10% each year thereafter. An ptimizer feature enables PGM t cmpute fr yu the initial payment amunt that will yield a target deductin percentage, such as 100%. In additin, the Prpsal Letter, Descriptin and/r Example, and Lng Descriptin and/r Example narratives in Basic Gift Illustratins can describe the step payment lead trust. 2

4 Balln payment ( shark fin ) lead annuity trust prjectins Lead Trust Prjectins can illustrate a lead annuity trust whse payments are small fr all but the final year r final few years f the trust, then becme very large in the final year r final few years f the trust. Fr example, yu can illustrate a lead trust that makes a $1,000 payment in each f its first 19 years and then a $1 millin payment in its 20 th and final year. An ptimizer feature enables PGM t cmpute fr yu the balln payment amunt that will yield a target deductin percentage, such as 100%. In additin, the Prpsal Letter, Descriptin and/r Example, and Lng Descriptin and/r Example narratives in Basic Gift Illustratins can describe the balln payment lead trust. New DemClip n illustrating step and balln payment lead annuity trusts We ve created a new DemClip t guide yu n hw t get PGM t illustrate step payment lead annuity trusts and balln payment lead annuity trusts. Benefits and Tax Cnsequences chart simplified We have simplified the Benefits and Tax Cnsequences chart prduced by Lead Trust Prjectins t make it easier t fllw as yu read dwn the page. Default changed fr handling f transfer tax and principal We have changed the default chice fr the handling f transfer tax and principal in Lead Trust Prjectins frm Deduct transfer tax frm riginal principal t Pay transfer tax frm ther funds. This means that when there is transfer tax t pay, by default each gift ptin illustrated will be funded with principal amunt yu ve entered rather than the principal amunt minus the transfer tax wed. CLAT payut rate default reduced frm 7% t 5% Recgnizing that with the mnthly IRS discunt rate at rck bttm lead annuity trust payut rates have tended t decline, we have reduced the default payut rate fr these trusts frm 7% t 5%. Expanded ability t illustrate utright gifts Outright gift diagrams are nw available in Basic Gift Illustratins. In additin, yu can nw illustrate utright gifts in Life Incme Prjectins, including in an estate plan r testamentary plan mdel. While an utright gift typically is nt cnsidered a planned gift, these enhancements will facilitate cmparisns f utright gifts with the many types f planned gifts that PGM has lng illustrated. As part f expanding utright gift capabilities, we have eliminated the ptin in Basic Gift Illustratins t dnate less than 100% f the gift amunt. Yu can accmplish the same gal by chsing t cmpare different principal amunts in the Principal Value Cst Basis windw. Expanded ability t illustrate bargain sales Bargain sale diagrams are nw available in Basic Gift Illustratins. Expanded ability t illustrate retained life estates Retained life estate diagrams are nw available in Basic Gift Illustratins. In additin, yu can nw illustrate retained life estates in Life Incme Prjectins. An additinal refinement is that yu can specify in the retained life estate fllw-up windw under Gift Optins whether 3

5 the gift will be funded with a hme r a farm. Yur chice determines the text that appears n presentatins. Online Help Frmat Windws 7 cmpatible PGM 6.6 uses a new frmat fr its Online Help. While the new frmat lks a little different frm the ld ne, tpics are rganized the same as befre and cntext-sensitive help is just as rbust. A significant advantage f the new frmat is that it runs seamlessly in Windws 7 and Windws Vista, as well as in Windws XP and Unlike with previus versins f PGM, there is n need t dwnlad a patch f any kind fr Windws 7 r Windws Vista. Updated Help cntent We have updated PGM Online Help t reflect all changes in the sftware. We als have updated all tax tables with schedules fr the 2012 tax year. Revised standard disclaimer text We have revised the standard disclaimer text that appears at the bttm f each presentatin t indicate that the illustrated benefits may vary depending n several factrs, including the timing f yur gift, rather than n just the timing f yur gift. If yur disclaimer previusly matched the ld default text, it will be changed t the new default. Otherwise, yur disclaimer text will be left unchanged. Actuarial Calculatins chart includes cst basis in investment in cntract We have added a line t the Actuarial Calculatins chart fr gift annuities that displays the dnr s cst basis in the investment in cntract (the nn-charitable prtin f the annuity). This value must be reprted by gift annuity dnrs wh must reprt all reprtable capital gain in the year f their gift. Typically, this ccurs because the dnr is nt the annuitant. Add disclaimer language t Acknwledgement Letter We ve added the fllwing disclaimer language t the Acknwledgement Letter: Please cnsult with yur tax advisr befre claiming a charitable deductin fr yur gift. "Invested by managers f endwment benefit ptinal The fllwing benefit fund in the Prpsal Letter, Descriptin and/r Example, and Lng Descriptin and/r Example narratives fr remainder trusts, pled incme fund gifts, and lead trusts is nw ptinal: Yur gift will benefit frm expert asset management, prvided by the same prfessinals wh manage [Charity] s endwment. Yu can pt in r ut by answering a new questin in the Narrative Fllw-Up Questins windw. Reference name ptinal in gift annuity disclsure statements Yu nw can chse t use yur charity s legal name thrughut gift annuity disclsure statements r t substitute a reference name after the first appearance f the legal name. Previusly, PGM always substituted a reference name after the first appearance f the legal name. G t the secnd editing windw in Custmize Organizatin Infrmatin t make this chice. As described in the Gift Annuity Agreement Changes sectin belw, yu can make a similar chice fr gift annuity agreements. Templates revised t keep deductin amunts sensible We have raised the beneficiary age in several f the templates that include a charitable remainder annuity trust (CRAT) s that the CRAT des nt fail the 5% prbability f exhaustin test, which wuld disqualify the trust and negate the charitable deductin. 4

6 Cnversely, we have reduced the payut rate in several f the templates that include a charitable lead annuity trust (CLAT) s that the value f the CLAT payments t charity des nt exceed the funding amunt f the trust. Templates added t simplify use f new lead trust and bequest features We have added templates t the Lead Trusts template flder that will give yu a head start in illustrating step lead trusts, balln lead trusts, grantr lead trusts, and super grantr lead trusts. We ve als added a template t the Other Gift Plans template flder that will help yu illustrate bequests. Exprt t PwerPint default clr scheme changed t dark n light backgrund Yu can set up specific frmatting fr exprting PGM graphs and diagrams t PwerPint, including the clr scheme. We have changed the default fr this clr scheme frm light n dark backgrund t dark n light backgrund. Gift Annuity Agreement Changes Cautin: If yu change yur selectin fr any f the ptins described belw, yu shuld re-file prttypes f yur gift annuity agreements with every state fr which yur charity s agreements are affected by yur change(s) and that has yur charity s agreements n file. New Custmize questin allws ne r tw signing fficers fr agreements Yu nw can indicate under Custmize Organizatin Infrmatin that yur gift annuity agreements shuld have ne signer, ne signer plus an Attest line, r tw signers fr the charity. If yu chse tw signers, yu can enter a name and title fr the secnd signer as well as the first, if yu wish. Previusly, PGM supprted nly ne signer r ne signer plus an Attest line. PGM s agreements have been revised t supprt these expanded signing ptins. NY agreements can include "Attest signature r nt Regulatrs in New Yrk have indicated recently that they will n lnger apprve prttype gift annuity agreements that include a secnd charity signature line with Attest abve it. Instead, a charity that wants t have tw signature lines must include the name and title f the secnd signer under the secnd signature line and Attest must nt appear abve it. That all said, charities that use agreements with an Attest line that were apprved by New Yrk in years past can cntinue t use them, and, in fact, must re-file their agreements with New Yrk if they wish t change t the tw signature frmat that New Yrk nw accepts. We have revised the agreements and added ptins under Custmize Organizatin Infrmatin s that yu can include either an Attest line r a secnd fficer signature line n New Yrk agreements while including an Attest line n agreements fr all ther states. Reference name nw ptinal in gift annuity agreements Yu nw can chse t use yur charity s legal name thrughut gift annuity agreements r t substitute a reference name after the first appearance f the legal name. Previusly, PGM always substituted a reference name after the first appearance f the legal name. As nted earlier, yu can make a similar chice fr gift annuity disclsure statements. G t the secnd editing windw in Custmize Organizatin Infrmatin t make these chices. 5

7 Bug Fixes Detailed Cash Flw Analysis chart culd shw Sale when it shuldn t have The Detailed Cash Flw Analysis chart prduced by Life Incme Prjectins and Lead Trust Prjectins wuld shw "Sale" abve each year in which investment assumptins changed, including years fr which capital gain was explicitly nt recgnized ("Recgnize capital gain in [year]" was answered "N"). The Detailed Cash Flw Analysis chart n lnger displays Sale in this situatin. Default fr DGA date f first payment with 2/29 gift date is incrrectly 2/28 If it was a leap year and yu entered a 2/29 gift date fr a deferred gift annuity, the default date f first payment was set t 2/28 f the fllwing year if the annuitant s age n the date f gift was 64 r lder. Hwever, because 2/28 f the fllwing year was less than ne full year after the date f gift, yu wuld get an errr message telling yu that the deferred annuity must be deferred until at least 2/29 f the year. Of curse, 2/29 was an invalid date in the year after a leap year. PGM nw defaults the date f first payment t 3/1 f the fllwing year in this rare situatin. 6