The Las Vegas Philharmonic is dedicated to assisting our generous patrons and supporters in getting the most for their charitable dollars. There are many techniques for making charitable contributions that can dramatically improve our donors’ personal tax, estate and financial situations while allowing them to help advance the mission of the Philharmonic.

These are generically called planned gifts because they usually involve some type of advance planning to complete the gift. Examples would be a bequest in a donor’s will, gifts of life insurance, the use of certain types of charitable trusts, etc. Planned giving techniques can address many tax issues such as current income tax, capital gains tax, estate tax and gift tax. Due to the tremendous advantages from many of these techniques, they tend to be some of the largest charitable donations our donors will ever make. Donors know that their planned gifts provide significant funding for the future of the Philharmonic, allowing them to leave a legacy that will stretch across several generations of symphony patrons.

To assist our donors in learning about these unique opportunities, we have partnered with Financial Solutions, Inc. of Henderson, to provide education and consultation services for our donors. Financial Solutions, Inc. is a specialist in advanced charitable gift and trust planning. Be on the lookout for more information in upcoming issues of Con Brio and visit the new planned giving section on our website at www.lvphil.com.

Please call the Philharmonic at (702) 258-5438 or Financial Solutions, Inc. at (702) 451-1158, with any questions or to schedule a free consultation.

Life Insurance

Mr. Brahms owns several life insurance policies on his life. Some of these permanent policies are fully paid-up which means they no longer require premium payments each year to remain in force. He originally bought one of the policies to cover the cost of college for his daughter in case he passed away prior to her going to school. The need for this policy has long passed, and Mr. Brahms would like to do something for the symphony. He considered listing the symphony as the beneficiary until he learned of a better way to use the policy.

Mr. Brahms can donate the policy to the symphony today and receive a current income tax deduction to help reduce his tax burden this year. The symphony then becomes the owner and beneficiary of the policy. Since Mr. Brahms will not own the policy at his death, the insurance proceeds are excluded from his estate for death tax calculations. This technique gives the symphony access to the cash value if needed, and when Mr. Brahms passes away, the symphony receives the entire death benefit amount to help further their mission.

This is only one of many possible charitable scenarios involving life insurance. Life insurance is one of the most versatile products in terms of its charitable uses and applications. There are many ways to use existing and new policies to promote philanthropy.

Please call or email to set an appointment to discuss your particular situation to determine if charitable life insurance planning may be appropriate.

Life Estate Agreements

The Mozarts have lived in their current home for many years and own it free and clear. They have three grown children, none of whom want to keep the property once their parents have passed away. The Mozarts have been making arrangements to reduce the impact of estate taxes on their assets. They have always been big supporters of the symphony and would like to include it in their planning. Their advisors explained a technique that will allow the Mozarts to donate their personal residence to the symphony and receive a substantial tax deduction today while still enjoying the full use of their home for the rest of their lives.

This technique is called a life estate agreement. The Mozarts were able to donate their personal residence to the symphony now, subject to a life estate agreement which gives them the right to live in, control, lease out and use the property for the remainder of their lives. Upon their deaths, control of the property passes to the symphony which can then sell the home or use it to further their mission if needed. The Mozarts get a substantial tax savings immediately to help reduce their current income taxes and the value of the home is removed from their estate for death tax calculations.

This technique can be used with any qualified personal residence such as a vacation home. Many times inherited real estate is very difficult to deal with and can create problems for the survivors. Life estate agreements allow families to address those issues and receive substantial tax benefits and recognition from their favorite charity during their lifetime.

Please call or email to set an appointment to discuss your particular situation to determine if life estate agreement planning may be appropriate.

Charitable Lead Trusts

Jon Bach makes a significant contribution to the symphony every year. He plans to continue his current gifting plan for many years to come. When he learned that the symphony was beginning a capital campaign to build an endowment fund for the children’s programs, Mr. Bach wanted to maximize his annual gifts to help boost the campaign. In speaking with his advisors, Mr. Bach learned of a way to increase his annual giving without hurting his checkbook and maximize his tax savings this year.

The technique used is called a charitable lead trust (CLT). Mr. Bach established the trust with a term of five years, meaning that the trust ends after five years. He contributed some municipal bonds to the trust that he already owned inside his investment accounts. The CLT is required to pay income annually to the symphony’s capital campaign. Since the interest from the bonds is roughly equal to what Mr. Bach normally contributes to the symphony every year, he set the trust up to pay double the amount of his usual annual gift (his normal gift amount plus the bond interest).
By using this technique, Mr. Bach is entitled to a substantial immediate tax deduction to help reduce his current tax burden. The symphony receives twice as much as usual from Mr. Bach in the form of income from the trust. At the end of the five years, all the assets remaining in the trust go back to Mr. Bach.

When all was said and done, Mr. Bach was able to maximize his current tax deductions and greatly enhance his gifting program in return for letting the trust “borrow” some of his municipal bonds. Since the extra amount going to the symphony came from bond interest that Mr. Bach wasn’t spending anyway, it was much easier for him to increase his giving for a temporary period of time without affecting his day-to-day checkbook.

This is only one of many uses for charitable lead trusts. For example, they are also commonly used to reduce or eliminate gift taxes on assets being transferred between generations (i.e. parents want to give assets away to kids without incurring gift taxes).

Please call or email to set an appointment to discuss your particular situation to determine if charitable lead trust planning may be appropriate.

Charitable Remainder Trusts

Mr. & Mrs. Beethoven have been longtime supporters of the arts and specifically the symphony. They are retired and living off the income from their pensions and retirement savings. The Beethovens own a piece of vacant land that they inherited many years ago. They have been reluctant to sell the property because they would have to pay large capital gains taxes. The land produces no income, and in fact is an expense to them due to property taxes. In reviewing their estate plans, their advisors explained a special way to convert the land into an income stream they can use in retirement while making a legacy gift to the symphony.

The technique used is called a charitable remainder trust (CRT). The Beethovens established a CRT and donated the land to it. This provided them with an immediate tax deduction they could use to reduce their current income taxes. The trust then listed and sold the vacant land. Since the trust is considered a charitable entity for tax purposes, there was no capital gains tax due from the sale. The cash from the land sale was then invested in income producing investments. Now the trust pays income every month to the Beethovens and will continue to pay income for both their lifetimes. They have turned their cash draining vacant land into a permanent income stream which allowed them to buy season tickets to the symphony for their three children!

Once Mr. & Mrs. Beethoven have both passed away, the remaining assets inside the trust will pass directly to the symphony to help fund many special programs and insure the future of the organization. The name “charitable remainder trust” comes from the fact that the remaining assets pass to charity. Those remaining trust assets are also exempt from estate taxes when the Beethovens pass away.

Charitable remainder trusts are very popular vehicles for making large charitable gifts while maximizing current tax and income benefits for donors. The uses for CRTs are almost endless and almost any type of asset can be used. Cash, stocks, bonds, mutual funds, other marketable securities and real estate are all very commonly used to establish CRTs.

Please call or email to set an appointment to discuss your particular situation to determine if charitable remainder trust planning may be appropriate.

Bequests

Ms. Chopin has enjoyed the symphony for many years and volunteers as a member of the Guild to help support the many events they host each year. She would like to include the symphony in her final plans by making a bequest through her will. After speaking with her advisors, Ms. Chopin learns there are several different types of bequests for her to choose from. The following list highlights some of the choices:

Specific Bequest: Ms. Chopin may bequest a specific item that is easily identified from her other assets such as “my ABC Bank savings account #12345” or “my original Stradivarius violin”.

Residual Bequest: Instead of naming specific assets, Ms. Chopin could simply state that she intends for her residual estate to go to the symphony. Her residual estate is everything left over after her specific bequest items have been distributed.

Percentage Bequest: Another option is to leave a specific portion of a particular asset or the residual estate to the symphony. For example, she could state that 50% of her residual estate should go the symphony with the other 50% going to her niece.

Contingency Bequest: Ms. Chopin would like to leave assets to her niece as a first choice. However, Ms. Chopin can name the symphony as the contingent beneficiary of her assets in the event her niece predeceases her or is otherwise unable to receive the assets.

Indirect Charitable Bequests: Ms. Chopin can also use her will to establish other charitable gifting vehicles such as charitable remainder trusts, charitable lead trusts, donor advised funds, etc. These options allow Ms. Chopin to address many other possible needs or desires for her estate while still including the symphony in her planning.

Please call or email to set an appointment to discuss your particular situation to determine what type of charitable bequest may be appropriate.