Stock by SabeerAli1


									Stock Market Making You Queasy?
Author Louenn Rosenbush published the following article in Cornell University's Financial
Planner Spring Newsletter 2001. The article provides an excellent overview of how stocks,
Charitable Gift Annuities and Charitable Remainder Trusts can offer potential tax-saving
benefits for charitable gifting. If you have clients who may benefit from this type of gifting,
contact any of the Southwest Michigan community foundations listed at the end of the article.

Sixty-one percent of Americans have investments in stocks or mutual funds and enjoyed the
decade-long expansion in the financial markets. Unfortunately, the market performance over the
last 12 months has alerted us to the downside of investing. However, as the chart below shows,
we still have had extraordinary gains. Is it time to diversify and lock in your gains?

                                     Stock Market Expansion
                      1/2/90      12/31/99      12/31/00      1999-2000
                      2,753.20    11,497.12     10,786.90     -6.2%
                      359.42      1,469.25      1,320.28      -10.1%
                      454.80      4,069.31      2,470.50      -39.3%

Many feel locked into their stocks due to the capital gains tax due upon sale and the uncertainty
of what to reinvest in. These concerns are further amplified in today’s markets as the desire to
sell at the top is juxtaposed against the fear of a further decline in stock prices.

Are you aware of the potential tax-saving benefits of charitable gifts made with appreciated
securities? By giving stock you can convert your highly appreciated, low-yielding assets into a
supplemental source of income and maximize your tax benefits. Gifts of stocks and bonds are on
the rise, and many Cornellians are using them to support their alma mater.

Your gifts can be outright gifts or can be used to fund a life income vehicle that pays you
quarterly income for the rest of your life. Consider a life income agreement with Cornell

By giving securities to establish a Life Income Arrangement, you could:

          Lock in investment gains and diversify
          Increase your income
          Receive an income-tax charitable deduction
          Reduce income taxes and capital gains taxes
          Reduce estate taxes
          Provide a legacy gift for Cornell
          Give yourself financial security and peace of mind
Charitable Gift Annuity A charitable gift annuity can be established with a gift of $10,000 or
more funded with cash or marketable securities. You and, if you wish, another beneficiary will
receive income from your gift for life – at an annuity rate of up to 12 percent, depending on your
age(s) when you establish the annuity. A portion of the quarterly payments may be tax-free. You
may designate your gift for any college, department or program.

         Gift Annuity Rates
    One Life           Two Lives
Age   Rate       Ages       Rate
90+   12.0%      90-95      9.6%
85    10.5%      85-85      9.0%
80    9.2%       85-80      8.4%
75    8.2%       80-80      8.0%
70    7.5%       80-75      7.5%
65    7.0%       75-75      7.3%
60    6.6%       75-70      7.0%
55    6.1%       70-70      6.8%
50    5.8%       65-60      6.3%

Charitable Remainder Trust A charitable remainder trust combines charitable giving with
other financial goals, including life or long-term income with a payout rate of 5% to 7% and
capital appreciation. At Cornell, you can establish a charitable remainder trust with a gift of
$50,000 or more funded with cash, stocks, bonds, or real estate. The trust will pay you a life
income, either a fixed amount (annuity trust) or a percentage of the trust income (unitrust).

Example: A husband and wife, both aged 65, fund a charitable remainder unitrust with $50,000
in appreciated securities that cost them $25,000 several years ago. They choose a 5% payout rate
and receive a charitable deduction of $17,801. Their first year’s income will be approximately
$2,500. Future income will vary with the trust value. Assuming a 10% total return for the trust,
the before-tax benefit to income recipients over their life expectancies is estimated to be over
$119,000! After their lifetimes, the remaining principal estimated to be over $169,000 passes to
Cornell! Reprinted with permission of Cornell University Publishing, Financial Planner Spring
Newsletter 2001

Your local community foundations in Southwest Michigan can assist you in helping your
clients establish an annuity or trust that will benefit their favorite local charitable
organization. For more information, contact any of the following Foundations:

Albion Community Foundation
Allegan County Community Foundation
Athens Area Community Foundation
Barry Community Foundation
Battle Creek Community Foundation
Berrien Community Foundation
Branch County Community Foundation
Homer Foundation email: not available Phone (517) 568-3495
Kalamazoo Community Foundation
Marshall Community Foundation
Michigan Gateway Community Foundation
Sturgis Area Community Foundation
y Community Foundation rhabicht @mgc
Sturgis Area Community Foundation

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