EFTA01454210.pdf

12Ro7:2 .12121, : Optimizing Charitable Gifts to the impact of potentially higher income taxes on By Year 25, the PPVA account nets more than their giving goals. Over about 15 years, the same chari- double the taxable account table gift could be halved if it's subject to income taxes 1a.CGIA5 I lowever, few are willing to make an absolute transfer to ■laxatk inistrnal maul (net to daily) charity (or a charitable remainder trust) today to reduce ■ PPVAinvelmat aacunt (net to charity) that burden. The solution could be a PPVA. $119156436 PPVAs allow charitably inclined individuals to main- tain full ownership and broader investment options for 120.354240 earmarked assets throughout their lifetime, while defer- ring the income taxation of investment gains on those assets. A client can make deposits or take withdrawals (for personal consumption or charitable gifting), adjust the asset allocation and/or change the beneficiary desig- nation at any time. Assumes15percent ofiiMna(a9imetleeein1an8peaeltteamatter The net result, if the PPVA investment account ini mywreri fees tna SS rritlbri nresmient in a Vote acccurt and a is left to charities or foundations, is that all the vivo placement 'viable into accost 75 NMI of reeked wit ae assets pass undiminished by income and estate taxes. tared at ordinary ixome tate& ad ro withleisdsae myfebetue "Optimizing Charitable Gifts,* this page, shows the age 59b.(Why; rite is maned tote 47 went nYea lad values passing to charity for an initial allocation of 431Dement teeatier.(mild Ora tax rate is 20.1want ltwland 55 million in a PPVA versus a taxable account. 291 wart thereafter. Assuan that the he maingement fresaterit Simply by changing the location of the assets from a tar Montle n eta taxable nAntment alani the to thelpeted 01 taxable account to a PPVA investment account, the family can multiply their potential charitable legacy atustedgcs ixome thresh* tot Rented dednices assets (or substantially reduce the wealth needed to SAL! Fund Services fund a specific large gift). In addition, many public charities give donor recognition credit for PPVA investment account beneficiary designations, which not be efficient for local tax purposes. If that weren't arc fully revocable if the account owner is at least bad enough, new MICA and other requirements for 65 years old. US. persons with investments abroad make this process more complicated.' Practice tip: Name the charity as the primary ben- A PPVA investment account, properly structured, eficiary of the PPVA investment account, or, if the client could access US. onshore investments and hold them hasn't completely committed to leaving the PPVA to the without current U.S. taxation. In many places around the charity, consider naming the charity as the contingent world, the PPVA itself could completely defer taxation beneficiary of the PPVA. This could allow any of the on the investment portfolio while the individual resides primary beneficiaries (for example, a surviving spouse in that country. And, distributions could be deferred or children) to disclaim any part of the PPVA investment until the client returns to the United States, making taxa- account assets to charity. tion simpler. But, perhaps most important, the PPVA investment account could hold offshore investments U.S. Clients Residing Abroad and should be exempt from foreign financial institution Many advisors with U.S. clients living abroad are strug- reporting requirements. gling with the complications of how best to structure those clients' investments. Those clients typically can't Practice tip: The PPVA investment account also can access US. onshore investments, because they reside operate effectively for a non-US. person planning to abroad. Offshore investments, while readily available, reside temporarily in the United States. Offshore invest- don't provide the necessary U.S. reporting and might ments could be held while the client is a U.S. resident DECEMBER 2012 TRUSTS & ESTATES / wealthmanagennent.corn 23 CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 8(e) DB-SDNY-0112191 CONFIDENTIAL SDNY_GM_00258375 EFTA01454210