YoungAssociates serves nonprofits in a variety of fields, including arts, history, and medicine

Family Planning at Retirement—A List for Your Adult Children

It’s common for parents to feel reluctant to bring up their estate and burial plans with their adult children. A good first step for all parties is to consolidate important information in one location and discuss. The following is a good starting point which, of course, you should adapt for needs:

  • Personal data
    • Social Security number
    • Safe combination
    • Internet passwords
  • Contact information
    • Doctors
    • Attorney
    • Insurance agent
    • Accountant
    • Financial planner
    • Bookkeeper
  • Location of key records
    • Medical (e.g., medications, allergies)
    • Trusts
    • Wills
    • Powers of attorney
    • Birth certificate
    • Marriage license
    • Military records
    • Deeds
    • Tax documents
  • Location of property
    • Addresses for yacht/airplane/timeshare
    • Keys and gate codes
    • Contact information
    • Insurance
  • Details about your personal collections
    • Children need to know that old lamp is an original Tiffany, the pottery turn-of-the-century Rockwood, you have gifted the Rothko at your death to a museum.
  • Savings and investment accounts
    • Bank (including safe deposit box)
    • Retirement
    • College
    • Brokerage
  • Pensions and insurance
    • Life, disability, long-term care
    • Employee/military benefits
    • Annuities, 401s, IRAs

Defensive Strategy for the Fiscal Cliff

By January, Americans are likely to be facing what sailors call “headwinds.” Our clients know I am a sailor and today I want to call upon that experience write about “beating”—a sailboat cannot sail directly into the wind, so “beating” is the closet course to the wind that can be achieved.

The payroll tax cut in effect for the past two years is scheduled to end December 31, and there is little visible support in Congress to extend this provision. So, a worker’s portion of his/her Social Security taxes will rise from the current 4.2% to 6.2% and, if self employed, the rate would increase from 10.4% to 12.4%. These increases, plus the likelihood of higher marginal rates and a possible reduction in tax deductions, will make it harder for many Americans to set aside appropriate funding for their retirement. As a development professional hearing such concerns, you might consider asking donors if they can accelerate income into 2012 and postpone deductions for 2013 because write offs will be more valuable when rates are higher.

An old adage describes “beating” as sailing for twice the distance at half the speed and three times the discomfort. Under current law, the estate tax will revert at the end of the year to a $1 million annual exemption and a tax rate of 55% on the value of estates above that amount. You would be well advised to see if your high net worth taxpayers have considered making gifts this year to reduce their estate value.

Charitable Deduction Calculator Updated for 2012

It can be said that donors save by receiving a charitable deduction for their gift, but have you ever leveraged this fact in your solicitations?

You are visiting with a donor who has given your charity $2,000 in each of the last three years. After your terrific presentation, the donor says, “Given the economy, I want to hold my giving to last years’ amount, so put me down for $2,000.” Do you accept the pledge or reframe the discussion?

Consider testing this formula before your visit: Assuming you know or can estimate the donor’s tax bracket, you also know that a gift of $2,000 in, for example, the 35% bracket saves $1,076 in taxes. Ask your donor to consider a gift of $3,077, which would result in a $2,000 reduction of their net worth.

Since individuals currently represent 47.4% of all federal revenue, YoungAssociates has been advising clients to cultivate their donors in anticipation of a flurry of possibilities for individuals making more than $200,000 ($250,000 if married). For those high-income households, President Obama would preserve the Bush tax rates at the low end (10%, 15% and 25%) but raise the top two rates to 36% and 39.6%. To aid you in this approach, we have updated the original charitable deduction calculator shared in 2009 with these proposed rate adjustments. Keep in mind the capital gains rate is proposed to increase to 20% and tax dividends at ordinary income tax rates for those making more than $200,000 ($250,000 if married).

Until December 31, 2012, only estates valued at more than $5.12 million are subject to an estate tax up to a 35% top rate. Barring congressional action, all estates worth more than $1 million will be subject to the estate tax at a top rate of 55%. President Obama would reinstate the estate tax at 2009 levels—meaning estates worth more than $3.5 million would be subject to the tax at a rate of 45%.

The charitable deduction calculator below will give you an estimate of a donor’s potential contribution given this strategy.

Note: JavaScript must be enabled to use this calculator. If you can see this message, please enable JavaScript in your browser and refresh the page.

Note: Enter only numbers, no dollar signs or commas (eg, 1000 not 1,000).


Making a gift of instead would include the original donation amount, plus the charitable deduction the donor receives.

This calculator is for estimation and discussion purposes only. High-income prospects, we assume, have other itemized deductions. For more ways to leverage your solicitations through greater use of the tax code and other elements in the negotiation of a gift, contact us.