Opportunities For Giving

GIVING TO LATHROP COMMUNITY, INC.

AN AFFILIATE OF THE KENDAL CORPORATION

Lathrop's Gifts and Bequests Committee, led by a resident and whose membership is comprised of residents from both communities, has developed a brochure which will shortly be distributed to all residents. This is the beginning of a "New" Gifts and Bequests Campaign for Lathrop.

The document outlines numerous opportunities for residents and their families to contribute to Lathrop to enable current and future residents to benefit from quality programs and services.

Below is the content of the brochure:

I. Why does Lathrop Community, Inc. (LCI) need gifts and bequests?

Charitable giving to LCI helps our community to be stronger financially, more affordable and more responsive to the needs of residents.

Lathrop's income is derived from several sources: monthly fees paid by residents, net proceeds from sales when units are resold, income from invested funds and, finally, gifts and bequests. It is this last source of income that is addressed in this brochure.

The purpose of the Gifts and Bequests Committee is to help improve LCI's financial position and, by so doing, to improve the quality of life at Lathrop for current and future residents. One way to moderate the fee increases paid by residents and to insure LCI's long term financial stability is to increase Lathrop's income -for example, from gifts and bequests. Gifts to LCI, a 501(c) (3) organization (under IRS rules), are tax deductible to the donor.

II. In what areas does Lathrop most need our support?

Areas being considered include establishing a fund to provide financial support to those residents who need assistance with payment of their fees, construction of capital projects, resident activities, and certainly a fund for general or unrestricted projects.

The support of these projects and activities through donations reduces Lathrop's dependence on debt financing and will significantly improve the quality of life at Lathrop.

Since LCI's beginning more than eighteen years ago, residents have donated cash or stock shares to Lathrop; others have bequeathed a portion or all of their entrance fee refund to Lathrop and some have established Charitable Life Annuity Trusts.

Over the years, residents have voluntarily supported Lathrop in a variety of ways, such as the donation of goods at bake sales, tag sales and Thrift Shop sales. They have also donated assets, such as a fine new piano. They have given their time, labor and energy to conduct exercise classes, the construction of woodland walking trails and performances at concerts.

III. How does one give?

A. Outright Gifts

There are many assets that may be given to the Lathrop Community to advance its mission. Gifts of cash, appreciated securities, tangible personal property, or paid-up life insurance policies give Lathrop the benefit of having the money almost immediately to support whatever purpose the donor may choose. Outright gifts often provide the largest tax benefit to the donor. For those individuals who choose to support Lathrop with appreciated assets, such as securities, there is an added advantage. Their federal charitable deduction will be equal to the fair market value of their gift, not their basis. By giving the property the donor will avoid all capital gains tax.

B. Planned (or deferred) gifts - A unique partnership

Planned gifts (sometimes also referred to as "life income gifts") are ways for a donor to provide future support to an organization while insuring that his or her own financial security - or that of a loved one, remains intact. There are many varieties: annuities, pooled income funds and charitable remainder trusts, to name a few. While planned gifts may differ, all share some common benefits for the donor:

•  A lifetime income for a designated beneficiary (or, in some cases for a term of years, up to 20)

•  A federal charitable income tax deduction for some portion of the gift

•  An ability to avoid capital gain tax when the gift is funded with appreciated property, such as real estate or tangible personal property

•  The security of knowing the high quality of gift administration by Lathrop

•  The potential to reduce estate taxes, and

•  The knowledge that the gift will help contribute to the quality of life for residents in the community

Planned gifts may be funded with a variety of assets, including cash, appreciated securities, real estate as well as other assets that hold value. If created under a will to benefit a loved one, assets such as those from a pension plan may also be used.

Regarding the advantages noted above, there are differences in the details and the tax characteristics. With some basic information, such as the birthdates of the beneficiaries and the fair market value of the asset to be contributed, it is possible to generate information specific to any donor's situation.

C. Bequests

Bequests are a popular way of carrying out one's intentions after protecting one's assets during a lifetime. A bequest can be for a specific amount of money, a specific financial asset, such as a pension plan or real estate, or tangible personal property, such as a painting. There are other forms, as well, such as a residual bequest, providing LCI with whatever remains after other gifts have been made. A bequest provision may also be contingent upon some other event, such as the premature passing of someone named under the will. Some Lathrop residents have bequeathed to Lathrop some or all of their entrance fee refund.

D . Real Estate

Real estate provides an especially attractive option. A resident may donate a house or marketable real property to Lathrop either outright, in a trust to provide income or while retaining the right to use the property for life. In all cases there may be significant tax benefits.

E. Life Income Gifts

1. Charitable Gift Annuity

A charitable gift annuity is a simple contract with a charitable organization, such as LCI. In exchange for an asset such as cash, or appreciated securities, LCI guarantees that it will pay the beneficiary (usually the donor) and/or another beneficiary a fixed and guaranteed income for life. The rates are highly competitive and are established by a national organization. The exact rate is a function of the age(s) of the designated income beneficiaries. Donors can increase their income significantly by funding the annuity with low-yielding assets. The table below illustrates the rates that are currently in effect, as well as the deductions to which a donor would be entitled, based upon a $10,000 gift. The current minimum for participation in a charitable gift annuity is $5,000.

Age                          Annuity Rate[1]           Charitable Tax Deduction

One life (70)                     6.5%                                  $3,952

Two lives (72+70)             6.0%                                  $3,204

One life (75)                     7.1%                                  $4,433

Two lives (77+75)             6.4%                                  $3,769

One life (80)                     8.0%                                  $4,905

Two lives (82 + 80)           7.1%                                  $4,269

[1] The rates quoted in these examples are currently in effect. Before entering into a gift annuity agreement it is important to determine the rates in effect at the time.

Example

A Lathrop resident, age 75, decides to fund a charitable gift annuity with stock worth $11,000 that was bought 18 years ago for $1,000. The stock currently earns a mere 1.5%.

•  The stock is given to Lathrop which sells it for $11,000 in order to fund the promised income stream for the resident.

•  The annuity would yield 7.1% income, or $781.

•  A one-time income tax deduction of $4,876 can now be claimed as a charitable gift.

•  A large portion ($449) of the annuity income is taxed at a capital gains tax rate while a smaller portion ($45) is received free of any tax obligation.

So this gift to Lathrop increases the donor's income, avoids the capital gains tax from the sale of the stock and the individual is entitled to claim a charitable tax deduction. In turn, Lathrop received funds to support an improved quality of life for all Lathrop residents - the proverbial "win-win" situation.

2. Pooled Income Fund

A pooled income fund provides an opportunity for many, similar gifts to be commingled and invested to provide the beneficiaries with a lifetime of income. Like a mutual fund, each beneficiary is assigned "shares" of the fund and will receive income on a pro rata basis. They are highly sensitive to the economy. All of the income a beneficiary receives is taxed at ordinary income rates. Additionally, they may be created with particular investment objectives, such as a high income fund or a balanced income fund allowing for both income and growth over time. LCI does not currently offer a pooled income fund; however, if there is sufficient interest LCI will explore all available options.

3. Charitable Remainder Trusts

These are separately invested trusts (minimum contribution of $100,000) which provide annual payments of a fixed amount (annuity trust) or fixed percentage (unitrust) of the value of the trust to the beneficiary or beneficiaries. Income will be provided for either a specified term of years or until the death of the last income beneficiary. These trusts can be used creatively to provide for the education of a grandchild or multiple grandchildren, to meet the needs of supplemental retirement income or to provide for more than two individuals. They can be funded with a variety of assets, including cash, appreciated securities - even real estate.

Choosing Among The Options

If you are considering making a gift to Lathrop, either outright or planned, we urge that you consult with your financial or legal advisor.

Lathrop's Committee on Gifts and Bequests will be glad to answer any questions that you may have and will hold your inquiry in the strictest of confidence. We welcome your comments.

Gifts and Bequest Committee:

Harry Colt, Chair ( Lathrop Easthampton resident)

Homer Perkins (Treasurer)

Ralph Bailey (Lathrop Northampton resident)

Kathy Rice ( Amherst Branch Mgr., Greenfield Savings Bank)

Addison Cate ( Lathrop Easthampton resident)

Frank Conant, ( Lathrop Easthampton resident)

Ex-officio: Audrey Bozzo (President, Board of Directors, Northampton resident)

CHANGINGTHEWAYPEOPLETHINKABOUTRETIREMENT

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