Nest Eggs
Giving Back
April 1, 2012‘Giving Back’ Truly Has Its Rewards!
Did you know millions of Americans choose to “give back” to their communities by making donations to their favorite charities each year. In fact, according to the Giving USA Foundation and Center of Philanthropy at Indiana University, charitable contributions totaled more than $300 billion in 2011. Qualifying organizations are those that have been granted tax-exempt charity status by the IRS, and include churches, religious organizations, and various organizations that promote education, health and other social services to benefit the general public. Gifts of cash are probably the most common type of gift, but many have found that it is beneficial to make charitable gifts in other ways.
Direct gifts of appreciated securities. This method conserves the donor’s cash while helping to avoid capital-gains tax on the sale of the appreciated security. Generally, you may deduct the market value of the securities (determined at the time of the gift) on your current-year tax return.
Direct gifts of life insurance. You may choose to transfer a life insurance policy to an organization if the life insurance coverage is no longer required. Transferring the policy to an organization may provide benefits for you and the organization, and you may be entitled to an income-tax deduction in the amount of the policy’s value.
Charitable remainder trust. This technique lets you make a charitable contribution of assets (property or securities) into a trust in which the assets can be sold without generating current capital-gains tax. You may receive an income stream from the trust during your lifetime and receive a current income-tax deduction based on the present value of the future benefit to an organization. The organization receives the assets in the trust, usually upon the donor’s death.
Charitable lead trust. This type of trust is the opposite of a charitable remainder trust. An income stream is provided to the charity, while you transfer the remaining interest to your family. A charitable lead trust does not generally entitle the donor to an income-tax deduction in the year the trust is established. However, any income generated by the donated assets will be reported by the trust and not the donor. The trust is then entitled to a charitable deduction for any income it pays out to the charity. Unlike a charitable remainder trust, a charitable lead trust does not help you avoid capital-gains tax. The benefit of the trust is in the ability to give the assets to heirs at a substantially discounted value.
Charitable gift annuities. In this arrangement, the organization promises to pay the donor a constant income stream — an annuity — in exchange for a charitable gift. A portion of the value of the gifted assets is tax deductible to the donor.
Pooled income funds. A charitable nonprofit organization can create and maintain a pooled income fund consisting of assets contributed by many different donors. An organization pays the net income the fund earns to the various donors in proportion to their respective interests in the fund. The income depends on the fund’s performance and is taxable to donors.
Private charitable foundations, supporting organizations and community foundations. Creating a foundation lets your family control the allocation and investment of contributions made to an organization. The entire contribution must be used for the foundation’s charitable purposes. You may structure a private foundation as a corporation, managed by a board of directors, or as a trust, managed by trustees.
Wells Fargo Advisors does not render legal or tax advice. While this information is not intended to replace your discussions with your tax/legal advisor, it may help you to comprehend the tax implications of your investments and plan tax-efficiently going forward.
Trust services available through banking and trust affiliates of Wells Fargo Advisors. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice law in your state.
All estate planning services are provided with the participation of your personal attorney, who should review all such materials. Wells Fargo Advisors does not prepare will and trust documents; these must be drafted by your attorney.
Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.
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Saving the National Cathedral
March 26, 2012When I was a young boy I gravitated to the Washington National Cathedral. Who could blame me? It’s campus, or close, as it is called, is the place people dream of (read: J.K. Rowlings' Harry Potter series). Back then it boasted the Flower Mart, flooded with young children from surrounding neighborhoods such as Kalorama, Georgetown, Wesley Heights, Spring Valley, and all points D.C. A magical Bishop’s Garden teaming with lush boxwood and specimen roses, a forest laid out by Frederick Law Olmsted with a bridge that transported you from the wilderness on to the St. Alban’s School sports fields, and a greenhouse filled with gorgeous native plants curated by the Cathedral’s garden staff. And a College of Preachers done in the quintessential medieval Tudor style with a great hall. I could go on for days.
Who cares?
I do. I love the Cathedral. Perhaps you too have a personal connection to it either through N.C.S., St. Alban’s, Beauvoir, or as a chorister as was I?
Why I am writing about it?
The National Trust for Historic Preservation has declared that this national treasure is critically threatened. Currently the Cathedral is running on a very lean budget. Due to the economic downturn over the last decade the Cathedral’s endowment has eroded and revenues from contributions have declined substantially. What was once a $27 million operating budget is now $14 million and what was once a staff of 170 is now just 70. Couple this with $20 million in earthquake damage and an additional $30 million in pre-existing preservation needs and we have a crises.
How you can help?
Contribute to this hometown national treasure that George Washington and Pierre L’Enfant envisioned and has become one of our defacto and most prized spiritual centers for our great nation. To learn more, visit www.nationalcathedral.org.
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Take Stock of Market Indices
March 19, 2012Concerned about whether you money manager is doing well for you? Who isn’t? Following the most appropriate stock market index can aid you in comparing his or her performance.
THE OLD GUARD - The Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA) is the figure most often referred to on the news when the market’s daily activity is recapped. The DJIA is a price-weighted index of 30 major companies, such as McDonald’s, Wal-Mart and General Electric which attempts to accurately represent the United States’ service-based economy, the index is still heavily weighted toward energy stocks and stocks in cyclical industries, which often mirror the pace of economic growth and the demand for commodities.
THE BLUE CHIPS - The S&P 500
The S&P 500, like the Dow, is designed to track the performance of large companies, often called “large caps.” The S&P measures 500 stocks and is composed of a broad-based group of New York Stock Exchange-listed, American Stock Exchange-listed and over-the-counter stocks. The index is a good reflection of the United State’s service-based economy. For this reason, it’s considered the benchmark for comparing the performance of large-cap growth funds and money managers. Because the sectors are also evaluated individually, the S&P 500 is one of the best indicators for determining current market trends among specific industries.
THE MOVERS AND SHAKERS - The Nasdaq Composite Index
This index measures the performance of stocks that are traded over-the-counter. The index contains many seasoned & newer companies - mostly in the fields of technology and financial services. The companies are generally considered more speculative investment risks. Contrary to popular belief, it is a poor measure of small-cap stock performance because of the overwhelming dominance of a handful of large-cap technology names such as Microsoft and Dell Computer.
FLOAT LIKE A BUTTERFLY, STING LIKE A BEE - The Russell 2000 Index
The Russell 2000 is used to measure the performance of small-company stocks. The Frank Russell Company constructs the index by first determining the 3,000 largest U.S. companies based on market capitalization. The 3,000 companies represent about 98% of the equity securities in the country. The largest 1,000 companies comprise the Russell 1000 index and this represents about 90% of the total market capitalization of the Russell 3000 index. The smaller 2,000 companies comprise the Russell 2000 index and accounts for the remaining 10% of the total market capitalization of the Russell 3000.
Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE
Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.
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