Charitable Remainder Trust:
Meet Our Team
a useful replacement for stretch IRAs
A
lot took place in 2020. One thing that can be easy to forget is that the Setting Every Community Up for Retirement Enhancement (SECURE) Act went into effect after being passed in late 2019. The SECURE Act promotes saving for retirement by making it simpler for small business owners to set up 401(k) plans, allowing businesses to enroll part-time employees in retirement plans, pushing back the age that required minimum distributions (RMDs) must be taken, and allowing 401(k) plans to offer annuities.
Pete Smith, Urban Forestry Program Manager
However, in order to offset the nearly $15.7 billion cost of these changes, the SECURE Act ended a popular “stretch IRA” estate planning strategy. Stretch IRA didn’t refer to a specific type of individual retirement account. Instead, it was a strategy for minimizing taxes on IRAs by passing them to children or grandchildren. Because the required minimum distributions could be calculated based on the younger relative’s life expectancy instead of the original owner’s life expectancy, distributions would be lower, income taxes would be lower, and the IRA could be “stretched” — compounding for decades, all while tax-deferred. Now, all distributions from inherited IRAs must be taken within 10 years after the death of the original accountholder, thereby incurring significant tax penalties.
What do you love about your work at the Arbor Day Foundation? I get to share the knowledge I have accumulated over a long career in forestry, urban forestry, and arboriculture with everyone in the Foundation. From conducting tree identification classes to advising our recognition programs to developing new Friends of Tree City Bulletins, I am able to shape the work we accomplish together. How did you develop a connection with trees? I grew up in the city, and although my Philadelphia neighborhood was quite shady, it was the time I spent at our small, wooded cabin in southeast Pennsylvania that offered the chance to experience a forest setting and to explore. As I grew to identify the different trees in that forest, I gained a new appreciation for the benefits a forest provides: from collecting firewood and hickory nuts to the wildlife that those forests support.
Is there a better way to pass these assets down? Yes. And it allows you to support a nonprofit while receiving a small charitable deduction. A charitable remainder trust (CRT) is a trust that distributes annual income to an individual beneficiary, either for life or for a term of no more than 20 years. The assets in the trust grow and compound on a tax-deferred basis while the individual beneficiary only pays taxes on the income received. At the end of either, the remainder of the trust’s assets are distributed to the charity named in the trust. This type of trust is not always the right option for everyone. But given the tax benefits of CRTs and the severe tax penalty now incurred when leaving an IRA to one’s child directly, leaving an IRA to a charitable remainder trust often means a child will end up with more money than if an IRA is left to them outright.
What is your favorite tree? It’s a little like asking a parent, “Who is your favorite child?” I remember those sugar maples in my backyard in Philly; the black birch outside my cabin window; finding the last remaining American chestnut tree in Wissahickon Valley Park in Philadelphia; and the pecans and live oaks from my time spent in Texas. But the regal white oak (Quercus alba) holds a special place for me because of its long life, massive size, durable and valuable wood, and its importance to the settlers of the eastern U.S. So many of the region’s most revered trees are white oaks, and that connection to history has always fascinated me!
50129401
Arbor Day Foundation
As always, we encourage you to talk with your legal counsel and financial planner when making estate planning decisions. If you are interested in learning more about charitable remainder trusts or other charitable giving vehicles that can support your family by doing good, please contact a member of our Development Team at plannedgiving@arborday.org. We would be happy to help you develop a giving strategy that meets your interests.
Planting through the Pandemic
Creativity and determination have ensured that community tree planting can continue
T
he Arbor Day Foundation is known for being a convener and a connector — for our tree planting partners, donors, and the communities and people we serve. And even as the “new global pandemic reality” took hold and reshaped our lives last spring, we knew the importance of continuing that work. Team members across the Foundation began reaching out to partners and supporters to ensure they were safe and to learn how they were responding to the crisis. Based on what we learned, resource guides were compiled to support local tree planting organizations as they navigated this new environment. We suggested creative ways to gather while remaining safe to continue the essential work of getting trees in the ground, providing inspiration and guidance to partners still eager to make their events happen. During the spring of 2020, some events had to be postponed for the sake of public health. Others, however, were able to move forward with necessary adjustments. The Foundation worked diligently to help recalibrate and reconstruct more than 140 tree events and distributions. Together with members and partners, we have: • Planted trees in California to help rebuild a community after the Tubbs Fire decimated their vital tree canopy. • Planted fruit trees in Hawaii as part of the recovery efforts after a series of natural disasters in 2018 that created lingering food security issues.
•
211 N. 12th St.
•
Lincoln, Nebraska 68508
• Planted fruit trees in Pennsylvania to address ongoing food security issues and bring fresh, healthy food to affected communities in the Pittsburgh area. • Distributed trees in Kansas City to address environmental and social justice issues by ensuring low-canopy neighborhoods were given early access to the local tree reservation system. In addition to these successful events, many of our partners took advantage of the Foundation’s tree distribution programs by delivering trees by mail rather than hosting in-person planting or distribution events. Strategic thinking also led to tree distribution through other contact-free methods including drive-thru pickup and home drop-off. This creativity and flexibility ensured that tree planting could continue in communities across the country. The result of these combined efforts was a record number of trees distributed and planted in safe, socially distanced ways across the country and around the globe. By the end of fall 2020, the Arbor Day Foundation worked with local partners to hold 225 events with 276,482 trees planted or distributed across 42 states and 39 countries. This unexpected outcome of 2020 has been inspiring and has served as an important reminder that we are stronger together.
EMERALD ASH BORER: IMPORTANT RESPONSE TO A SLOW-MOVING CATASTROPHE
O
n December 26, 2004, the Sumatra–Andaman earthquake ruptured a 900-mile fault line with a force 1,500 times the force of the Hiroshima atomic bomb, creating tsunami waves reaching 80 to 100 feet, and killing more than 227,989 people in 14 countries. Within a matter of minutes, it became one of the deadliest natural disasters in human history.
The sudden devastation prompted a worldwide humanitarian response. Nations around the world provided more than $14 billion in aid. While governments pledged significant funds, public response outstripped the government response in both size and speed. This unprecedented and historic response demonstrated the world’s unity, capacity, and will to respond to sudden catastrophe. But what if a catastrophe isn’t sudden? What if it moves slowly? What if it is imminent but not instant? According to Daniel Gilbert, a psychology professor at Harvard, human brains aren’t wired to respond well to large, slow-moving threats. Essentially, it can be a struggle to comprehend and assess slow-burning and abstract
problems. We have the power and capacity but appear to lack the unity and will to prevent catastrophic outcomes if they approach slowly. And that’s a problem. It affects how we perceive issues like climate change, pandemics, and even metabolic diseases. Emerald ash borer (EAB) can be added to this list. This insect epidemic affecting ash trees was discovered in Detroit, Michigan, and Windsor, Ontario, in 2002. It is a slow-moving natural disaster. While many people experience a visceral response to the wildfires in Brazil, Australia, and California because the threat is immediate, visible, and violently destructive, EAB quietly poses perhaps the single greatest threat to North America’s tree canopy.
Attack on the Tree Dominating Urban Landscapes Ash trees are one of the most valuable and abundant North American woodland trees. It is estimated that 7 billion to 9 billion grow in the United States alone. In urban areas, ash has been one of the nation’s most popular trees for planting along streets and in parks. When Dutch elm disease decimated huge numbers of our nation’s most graceful street trees, ash was often the tree of choice for its replacement because of its rapid growth and ability to withstand harsh urban environments. In many communities, up to 40% of the trees are ash species or cultivars. After EAB arrives in a region, 99% or more of all ash trees die within eight to 10 years. It has destroyed 40 million ash trees in Michigan alone and tens of millions throughout other states and Canada. And even though EAB destruction is often devastating and total, communities frequently delay action until the costs of addressing the problem become prohibitive.
A Problem That Cannot Be Ignored So, how do we short-circuit our tendency to ignore slow-moving threats? The Arbor Day Foundation has spent years working with communities across the country and has developed a model that we believe is helpful. When EAB reached the Foundation’s home state of Nebraska, we worked with a local funder — the Peter Kiewit Foundation. They approved a three-year challenge grant totaling $300,000 to leverage additional contributions to a fund for EAB Recovery Grants. These grants are available to communities within the program area to cover costs for tree planting efforts and events that raise EAB awareness and recovery. The proactive recovery effort promotes planting a variety of trees to create a more diverse and resilient tree canopy in participating communities. “(The funds) support the emerald ash borer tree recovery program in portions of western Iowa and across Nebraska,” said Kiewit Foundation Community Investment Officer Paul Ternes. “We like the program not only because it can work in many communities but also because it’s a model that prepares communities for the next time they face such a crisis.” Kiewit Foundation funds have been matched by the Iowa West Foundation as well as individual private donors. During 2020, the EAB Recovery Grants program held several tree planting events in Nebraska and western Iowa communities, building on the Arbor Day Foundation’s successful Community Tree Recovery program. Since the program’s inception in 2012, the Arbor Day Foundation has held more than 775 recovery events across the country and distributed more than 5 million trees. As the tsunamis in 2004 taught us, individuals can often respond more quickly and generously than governments. But governments can make recovery programs more efficient. The EAB Recovery Grants program creates a reason for local governments to start planning their EAB response now instead of waiting until the crisis and its associated costs become overwhelming. For more information about emerald ash borer, visit arborday.org/eab. If you are interested in helping create an EAB Recovery Grants program in your community or state, please contact the Arbor Day Foundation Development Team at OakSociety@arborday.org.
A r b o r D ay F o u n d at i o n O a k S o c i e t y I n s i g h t s
3
EMERALD ASH BORER: IMPORTANT RESPONSE TO A SLOW-MOVING CATASTROPHE
O
n December 26, 2004, the Sumatra–Andaman earthquake ruptured a 900-mile fault line with a force 1,500 times the force of the Hiroshima atomic bomb, creating tsunami waves reaching 80 to 100 feet, and killing more than 227,989 people in 14 countries. Within a matter of minutes, it became one of the deadliest natural disasters in human history.
The sudden devastation prompted a worldwide humanitarian response. Nations around the world provided more than $14 billion in aid. While governments pledged significant funds, public response outstripped the government response in both size and speed. This unprecedented and historic response demonstrated the world’s unity, capacity, and will to respond to sudden catastrophe. But what if a catastrophe isn’t sudden? What if it moves slowly? What if it is imminent but not instant? According to Daniel Gilbert, a psychology professor at Harvard, human brains aren’t wired to respond well to large, slow-moving threats. Essentially, it can be a struggle to comprehend and assess slow-burning and abstract
problems. We have the power and capacity but appear to lack the unity and will to prevent catastrophic outcomes if they approach slowly. And that’s a problem. It affects how we perceive issues like climate change, pandemics, and even metabolic diseases. Emerald ash borer (EAB) can be added to this list. This insect epidemic affecting ash trees was discovered in Detroit, Michigan, and Windsor, Ontario, in 2002. It is a slow-moving natural disaster. While many people experience a visceral response to the wildfires in Brazil, Australia, and California because the threat is immediate, visible, and violently destructive, EAB quietly poses perhaps the single greatest threat to North America’s tree canopy.
Attack on the Tree Dominating Urban Landscapes Ash trees are one of the most valuable and abundant North American woodland trees. It is estimated that 7 billion to 9 billion grow in the United States alone. In urban areas, ash has been one of the nation’s most popular trees for planting along streets and in parks. When Dutch elm disease decimated huge numbers of our nation’s most graceful street trees, ash was often the tree of choice for its replacement because of its rapid growth and ability to withstand harsh urban environments. In many communities, up to 40% of the trees are ash species or cultivars. After EAB arrives in a region, 99% or more of all ash trees die within eight to 10 years. It has destroyed 40 million ash trees in Michigan alone and tens of millions throughout other states and Canada. And even though EAB destruction is often devastating and total, communities frequently delay action until the costs of addressing the problem become prohibitive.
A Problem That Cannot Be Ignored So, how do we short-circuit our tendency to ignore slow-moving threats? The Arbor Day Foundation has spent years working with communities across the country and has developed a model that we believe is helpful. When EAB reached the Foundation’s home state of Nebraska, we worked with a local funder — the Peter Kiewit Foundation. They approved a three-year challenge grant totaling $300,000 to leverage additional contributions to a fund for EAB Recovery Grants. These grants are available to communities within the program area to cover costs for tree planting efforts and events that raise EAB awareness and recovery. The proactive recovery effort promotes planting a variety of trees to create a more diverse and resilient tree canopy in participating communities. “(The funds) support the emerald ash borer tree recovery program in portions of western Iowa and across Nebraska,” said Kiewit Foundation Community Investment Officer Paul Ternes. “We like the program not only because it can work in many communities but also because it’s a model that prepares communities for the next time they face such a crisis.” Kiewit Foundation funds have been matched by the Iowa West Foundation as well as individual private donors. During 2020, the EAB Recovery Grants program held several tree planting events in Nebraska and western Iowa communities, building on the Arbor Day Foundation’s successful Community Tree Recovery program. Since the program’s inception in 2012, the Arbor Day Foundation has held more than 775 recovery events across the country and distributed more than 5 million trees. As the tsunamis in 2004 taught us, individuals can often respond more quickly and generously than governments. But governments can make recovery programs more efficient. The EAB Recovery Grants program creates a reason for local governments to start planning their EAB response now instead of waiting until the crisis and its associated costs become overwhelming. For more information about emerald ash borer, visit arborday.org/eab. If you are interested in helping create an EAB Recovery Grants program in your community or state, please contact the Arbor Day Foundation Development Team at OakSociety@arborday.org.
A r b o r D ay F o u n d at i o n O a k S o c i e t y I n s i g h t s
3
Charitable Remainder Trust:
Meet Our Team
a useful replacement for stretch IRAs
A
lot took place in 2020. One thing that can be easy to forget is that the Setting Every Community Up for Retirement Enhancement (SECURE) Act went into effect after being passed in late 2019. The SECURE Act promotes saving for retirement by making it simpler for small business owners to set up 401(k) plans, allowing businesses to enroll part-time employees in retirement plans, pushing back the age that required minimum distributions (RMDs) must be taken, and allowing 401(k) plans to offer annuities.
Pete Smith, Urban Forestry Program Manager
However, in order to offset the nearly $15.7 billion cost of these changes, the SECURE Act ended a popular “stretch IRA” estate planning strategy. Stretch IRA didn’t refer to a specific type of individual retirement account. Instead, it was a strategy for minimizing taxes on IRAs by passing them to children or grandchildren. Because the required minimum distributions could be calculated based on the younger relative’s life expectancy instead of the original owner’s life expectancy, distributions would be lower, income taxes would be lower, and the IRA could be “stretched” — compounding for decades, all while tax-deferred. Now, all distributions from inherited IRAs must be taken within 10 years after the death of the original accountholder, thereby incurring significant tax penalties.
What do you love about your work at the Arbor Day Foundation? I get to share the knowledge I have accumulated over a long career in forestry, urban forestry, and arboriculture with everyone in the Foundation. From conducting tree identification classes to advising our recognition programs to developing new Friends of Tree City Bulletins, I am able to shape the work we accomplish together. How did you develop a connection with trees? I grew up in the city, and although my Philadelphia neighborhood was quite shady, it was the time I spent at our small, wooded cabin in southeast Pennsylvania that offered the chance to experience a forest setting and to explore. As I grew to identify the different trees in that forest, I gained a new appreciation for the benefits a forest provides: from collecting firewood and hickory nuts to the wildlife that those forests support.
Is there a better way to pass these assets down? Yes. And it allows you to support a nonprofit while receiving a small charitable deduction. A charitable remainder trust (CRT) is a trust that distributes annual income to an individual beneficiary, either for life or for a term of no more than 20 years. The assets in the trust grow and compound on a tax-deferred basis while the individual beneficiary only pays taxes on the income received. At the end of either, the remainder of the trust’s assets are distributed to the charity named in the trust. This type of trust is not always the right option for everyone. But given the tax benefits of CRTs and the severe tax penalty now incurred when leaving an IRA to one’s child directly, leaving an IRA to a charitable remainder trust often means a child will end up with more money than if an IRA is left to them outright.
What is your favorite tree? It’s a little like asking a parent, “Who is your favorite child?” I remember those sugar maples in my backyard in Philly; the black birch outside my cabin window; finding the last remaining American chestnut tree in Wissahickon Valley Park in Philadelphia; and the pecans and live oaks from my time spent in Texas. But the regal white oak (Quercus alba) holds a special place for me because of its long life, massive size, durable and valuable wood, and its importance to the settlers of the eastern U.S. So many of the region’s most revered trees are white oaks, and that connection to history has always fascinated me!
50129401
Arbor Day Foundation
As always, we encourage you to talk with your legal counsel and financial planner when making estate planning decisions. If you are interested in learning more about charitable remainder trusts or other charitable giving vehicles that can support your family by doing good, please contact a member of our Development Team at plannedgiving@arborday.org. We would be happy to help you develop a giving strategy that meets your interests.
Planting through the Pandemic
Creativity and determination have ensured that community tree planting can continue
T
he Arbor Day Foundation is known for being a convener and a connector — for our tree planting partners, donors, and the communities and people we serve. And even as the “new global pandemic reality” took hold and reshaped our lives last spring, we knew the importance of continuing that work. Team members across the Foundation began reaching out to partners and supporters to ensure they were safe and to learn how they were responding to the crisis. Based on what we learned, resource guides were compiled to support local tree planting organizations as they navigated this new environment. We suggested creative ways to gather while remaining safe to continue the essential work of getting trees in the ground, providing inspiration and guidance to partners still eager to make their events happen. During the spring of 2020, some events had to be postponed for the sake of public health. Others, however, were able to move forward with necessary adjustments. The Foundation worked diligently to help recalibrate and reconstruct more than 140 tree events and distributions. Together with members and partners, we have: • Planted trees in California to help rebuild a community after the Tubbs Fire decimated their vital tree canopy. • Planted fruit trees in Hawaii as part of the recovery efforts after a series of natural disasters in 2018 that created lingering food security issues.
•
211 N. 12th St.
•
Lincoln, Nebraska 68508
• Planted fruit trees in Pennsylvania to address ongoing food security issues and bring fresh, healthy food to affected communities in the Pittsburgh area. • Distributed trees in Kansas City to address environmental and social justice issues by ensuring low-canopy neighborhoods were given early access to the local tree reservation system. In addition to these successful events, many of our partners took advantage of the Foundation’s tree distribution programs by delivering trees by mail rather than hosting in-person planting or distribution events. Strategic thinking also led to tree distribution through other contact-free methods including drive-thru pickup and home drop-off. This creativity and flexibility ensured that tree planting could continue in communities across the country. The result of these combined efforts was a record number of trees distributed and planted in safe, socially distanced ways across the country and around the globe. By the end of fall 2020, the Arbor Day Foundation worked with local partners to hold 225 events with 276,482 trees planted or distributed across 42 states and 39 countries. This unexpected outcome of 2020 has been inspiring and has served as an important reminder that we are stronger together.