Fostering Lifelong Learning - Episcopal Academy

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Development Charitable Lead Trusts — A Welcome Contribution to Ever Episcopal John. J. F. Sherrerd '47, retired investment banker, generous benefactor, and Ever Episcopal Campaign Co-Chair, has used a charitable lead trust in the past. He offers this comment: "For a supporter of The Episcopal Academy, a lead trust can be gratifying because of the direct and immediate benefit to the school. You can see and experience the results of your gift during your lifetime." In what is regarded as one of the largest single gifts to an American independent school, George School in Newtown, PA was awarded an extraordinary donation from an alumna in September 2007. The school reportedly will receive payments that will total $128.5 million over a period of twenty years from a charitable lead trust. What, you may ask, is a charitable lead trust A charitable lead trust (CLT) is a powerful way to transfer assets to your heirs at significantly reduced gift and estate tax cost, while supporting one or more charities with income payments for a period of years. If you want to help finance capital gifts during your lifetime but also want to transfer assets to your family at greatly reduced transfer costs, consider a lead trust. (A lead trust may also be designed to return assets to the grantor. This article focuses on the more common type, the non-grantor lead trust.) Because the income payments provide current, not deferred, support to a nonprofit, it is the only planned gift that can help finance a construction project. Briefly, this is how a non-grantor lead trust works: You place assets in a trust and direct that income distributions go to EA to finance a project of your choice. After a set period of time, the assets are transferred to the trust beneficiaries—often children or grandchildren—at reduced estate or gift tax rates. Lead trusts are timely now for four reasons. • Individuals may support philanthropic projects today while still transferring assets to their heirs. Thanks to new campus construction, there are many projects currently on EA’s drawing board. Lead trusts provide current support of Episcopal so you can see the results of your gifts. • For gift and estate tax purposes, assets are valued as of the date of the trust. If you fund the trust with assets that appreciate over the life of the trust, such as stock or commercial real estate, any appreciation will pass tax-free to your heirs. • A lead trust can be used to make pledge payments. If you’ve already made a commitment, you can use the trust income to pay your pledge payments. • The IRS discount rate (more formally known as the Section 7520 rate) dropped to 4.4% for January 2008—the lowest the rate has been since December 2004. The IRS uses a special discount rate to calculate the present value of remainder interests left by charitable trusts. Published monthly, the Section 7520 rate is based on the federal mid-term interest rate. The lower the IRS discount rate, the lower the calculated remainder value of a trust. In the case of a Charitable Lead Trust, where the remainder value goes to heirs, a lower discount rate translates into lower gift and estate taxes. Example: Cliff has an estate in the 45 percent federal tax bracket. His son will be in that bracket, too. For each $100,000 he leaves to his son off the top of his estate, Uncle Sam will get $45,000 and his son will get $55,000. Then, when the $55,000 passes from his son to the grandchildren, Uncle Sam may take another 45 percent, or $24,750, depending on the estate and gift taxes at that time. So the original $100,000 will shrink to $30,250 To minimize the tax bite and to help us, Cliff creates a $400,000 lead trust that will pay us 7 percent of its initial value, or $28,000, for 20 years—for a total of $560,000. When the trust ends, the principal will go to Cliff’s son. Based upon a 4.4 percent IRS discount rate, this plan will result in a $367,400 gift tax deduction. In other words, Cliff’s lead trust will reduce the transfer tax burden on $400,000 by 92 percent. If assets have appreciated during the life of the trust, his son stands to inherit considerably more than the original $400,000—all at minimal transfer cost. This is just one example. The size of the trust, its term and type and the annual payout are up to you. For more information, contact Carolyn Jaeger, Director of Planned Giving, at 610-617-2252 or jaeger@episcopalacademy.org. This information is provided as an educational service and is not intended as financial or legal advice, either in whole or in part. Consult your legal or tax advisor before making any decision regarding this information. 28 Connections
Class Notes Edited by THE Alumni OFFICE If you are interested in becoming a class agent, please contact Bruce Konopka at 610-617-2233, or Jen Slike 610-617-2294 ext. 3143, in the Development Office for more information. Celebrate the Memories Alumni Weekend 2008 and A Farewell to Merion and Devon May 2nd – May 4th 2008 Class Reunions Class of 1938 – 70th Reunion Class of 1943 – 65th Reunion Class of 1948 – 60th Reunion Class of 1953 – 55th Reunion Class of 1958 – 50th Reunion Class of 1963 – 45th Reunion Class of 1968 – 40th Reunion Class of 1973 – 35th Reunion Class of 1978 – 30th Reunion Class of 1983 – 25th Reunion Class of 1988 – 20th Reunion Class of 1993 – 15th Reunion Cameron, Bill ’79, and William Stewart MacIntosh (wearing his new EA sweater). Honorary Alumni John Familetti, Hon., Episcopal Academy chef, was the featured souschef on the Food Network Program “Dinner Impossible.” Chef Robert Irvine’s task for the program was to prepare dinner for the 600 guests attending Episcopal’s commencement on June 8, 2007. The show aired on Food Network on August 8, 2007. 29 Please send us your news and notes! 31 Please send us your news and notes! 32 Please send us your news and notes! 33 Class Agent: Bart Linvill Please send us your news and notes! 34 Class Agent Needed Please send us your news and notes! 35 Class Agent Needed Please send us your news and notes! 36 Class Agent: John Haas Sherman Mehl reports: “Dear friends, a recent letter from John Haas said that we still had 12 classmates on the rolls. I note that two thirds of the soccer team halfback line is among them, Stan Harris and Sherm Mehl. For myself, I have passed the torch to a son, Sherman, who with his team from Greensboro, NC have placed the last several years in the National Soccer Championships (the Pictured is the Episcopal Men’s Over 35 Indoor Soccer Champions at Rocket Sports. The team name, “5 N 10” was chosen to reference the 5 Inter-Ac Varsity Soccer Championships won over 10 years from 1980-1990. Pictured from left to right: Kneeling – Brett McGovern ’89, Greg Bozzi ’83, Wren Smith ’86, and Andrew Gerardi ’89. Standing – Chris Bozzi, Brandon Whitaker ’91, Bob Mascioli ’86, Greg Johnson ’86, Greg Bolton ’86, and Mark DePillis ’83. Teammates missing from the picture are Gerald Dragonetti ’83, David Lorry ’84, and Bill Keffer ’84 (the team’s spiritual advisor). over 50 age group) and placed in the top 5 (not first) each year. The 2007 games were in Bellingham, WA. As ever, Sherman Mehl – PS: My eyes are not as good as they once were.” 37 Class Agent: Kingsley Weston Please send us your news and notes! 38 Class Agent: J. Craig Huff Craig Huff and Frank Nagle are leading the effort to organize a great 70th Reunion for the Class of 1938. Craig has sent a note encouraging all to attend and reports that he, Frank, Emlen Cresson, John Jacobs, Jim McGowan, and Philip Sharples plan to be on hand for the festivities. Ernest Brown, Richard Kay, and Nelson Degerberg are among several others who will try to attend. Spouses are welcome, of course! 39 Class Agent: Heyward Wharton Please send us your news and notes! 40 Class Agents: Jack Hopkins, Harry Toland, and R.T. Toland Please send us your news and notes! 41 Class Agents: J. Tyler Griffin, Roger Miller, and Karl Rugart Please send us your news and notes! 42 Class Agents: Bill Nagle and Woody Woodring Please send us your news and notes! winter 2008 29
Page 1 and 2: Connections The Magazine of The Epi
Page 3 and 4: Fostering Lifelong Learning The hea
Page 5 and 6: Jennifer Rea’s kindergarten class
Page 7 and 8: 2008 Travel Grants advance their co
Page 9 and 10: Several of the suggestions made by
Page 11 and 12: Ever Episcopal Campaign Hits $80 Mi
Page 13 and 14: various reasons) tell you what happ
Page 15 and 16: Merion 4th Graders Explore WWII Fro
Page 17 and 18: Football (Boys) 1st Team Bobbie Fit
Page 19 and 20: During Haverford/AIS Weekend winter
Page 21 and 22: Middle School Junior Honors Art Stu
Page 23 and 24: Reunion Celebrations Class of 2007
Page 25 and 26: Save-the-Dates - Two Alumni Network
Page 27 and 28: Pictured left to right: Sonja (Voll
Page 29: Sophomore Kelsey Baldwin poses with
Page 33 and 34: Abby (age 4) and Reilly Rose (age 2
Page 35 and 36: EA Alumni celebrated the wedding of
Page 37 and 38: Anne Putnam ’96, James Casey ’9
Page 39 and 40: Patrick O’Neill ’98, Mike Ianna
Page 41 and 42: Lexi Nicholls ’01 and Megan Hayes
Page 43 and 44: A Tradition of $ 2,075,000 Goal The

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