Gift Planning Newsletter

SPRING 2012

A SIMPLE WAY

Holding Depreciated Securities?

Naming Penn State as the beneficiary of certain assets is a simple way to make a lasting impact.

In response to questions from our loyal alumni and friends, here are the details about making a gift using depreciated securities.

To Leave Your Mark on the World

You can easily modify the beneficiaries of the following assets at any time to meet your changing needs:  IRAs and retirement plans  Life insurance policies  Insurance annuities

Changing beneficiaries is also tax-smart. If you name loved ones as beneficiaries of these assets, federal income taxes can erode up to 35 percent of the assets. As a nonprofit organization, Penn State bypasses any taxes and receives the full amount.

Changing Beneficiaries To name or change a beneficiary, contact the administrator of the IRA or retirement plan, or your insurance company, for a change-of-beneficiary form. Decide what percentage of the plan’s value you would like us to receive and name Penn State, along with the stated percentage, on the beneficiary form. Return the form to your plan administrator or insurance company.

If you have stocks that have experienced significant declines and are now worth less than what you paid for them, consider using those stocks to make a gift to Penn State. For maximum tax savings, sell the stock, take any allowable loss, and then donate the cash proceeds to us. This way, you’ll obtain a charitable deduction for the cash gift, and you can offset the losses against any gains this year. If your overall losses exceed your gains, you can deduct up to $3,000 of the excess loss from ordinary income—and carry over excess losses to future years. To learn more, contact the Office of Gift Planning at 888-800-9170.

Leaving Something Behind An Alumnus’ Estate Gift Provides for the Future Continued from Page 1 contract engineering and manufacturing firm specializing in the development of medical devices. In recognition of his professional achievements, Vytas was posthumously honored with the College of Engineering Outstanding Engineering Alumni Award in 2010. “Vytas loved being an engineer,” Cathy recalls, “and he liked interacting with other engineers.” That enthusiasm for his field was part of what pleased him so much about reconnecting with Penn

State, as he explored the research and teaching in his old department. As Cathy notes, “he found it very exciting what the faculty and students were doing, the course offerings, and their plans for the future.” Thanks to his and Cathy’s gift, Vytas will leave a lasting mark on the department he loved.

Remember Penn State in Your Will A gift to Penn State in your will or living trust, known as a bequest, is a simple way to extend your support beyond your lifetime. A bequest allows you to make a significant difference without parting with any assets today. You can leave us a specific asset, a specific dollar amount, or a percentage of your estate. And you can change your mind at any time should your circumstances change. Best of all, this simple and straightforward gift can be added to your will in as little as one sentence. Contact us today to learn more.

How Will 2012 and 2013 Tax Law Changes Affect You?

Join Us

gift, you join a group of alumni and friends who share a love

Membership is offered to individuals who have included Penn

and vision for our University and, more important, our students.

State in their estate plans or as a beneficiary of a planned gift.

This inspirational group is called The Atherton Society, named

Your bequest commitment can help us reach the goals of For

for George W. Atherton, Penn State’s seventh president, and

the Future: The Campaign for Penn State Students. Sharing

his wife, Frances. Their efforts laid the groundwork for today’s

your intentions with us allows Penn State to ensure your wishes

achievements, much like your gifts do today.

are fulfilled in the future.

Gift Planning Newsletter

If you updated your estate plans in 2011, you’re in luck—this year promises to be much of the same.  Estate taxes: In 2012, the basic threshold amount—the amount you can own before your estate is subject to estate taxes—is $5.12 million. Most married couples who both die in 2012 can pass a combined estate worth approximately $10 million free of federal estate taxes through a portability provision. In 2013, the threshold amount drops to $1 million and portability between spouses ends, unless Congress makes changes.  Income and capital gains taxes: Rates remain the same for individual taxpayers in 2012.  Charitable IRA rollover: As of April, the charitable IRA rollover has not been extended by Congress.

YOU’RE INVITED! The Atherton Society When you support the future of Penn State through a planned

Gift Planning Newsletter

Leaving Something Behind An Alumnus’ Estate Gift Provides for the Future When Vytas Pazemenas first came to Penn State as a freshman in 1957, just a few years after his family fled the Soviet occupation of Lithuania, he hoped that a college degree would be a path to a better life in the United States. By the time he returned in 2008 as the featured speaker in the College of Engineering’s Gaelen Entrepreneurship Speaker Series, he had parlayed his degree in electrical engineering into an impressive career capped by the founding of his own successful firm. “He came here as a refugee when he was eleven years old and didn’t speak English,” says his wife, Catherine O’Donnell Pazemenas. “But he worked very hard.” And Penn State offered Vytas an opportunity to forge an exciting future. “He really appreciated the

Penn State Office of Gift Planning

Office of Gift Planning 214 The 103 Building University Park, PA 16802 814-865-0872 Toll-free: 1-888-800-9170 giftplanning@psu.edu

www.giftplanning.psu.edu

Michael J. Degenhart Executive Director

Patricia L. Roenigk, Esq. Director, Individual Gift Planning

Brian J. McCullough, Esq. Gift Planning Officer

Jeanne M. Sallade Assistant Director

Larry J. Mroz Gift Planning Officer

Terri L. Assael Gift Planning Assistant

Thomas L. Parrish Associate Gift Planning Officer

Remembering Penn State

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Vytas Pazemenas

education he got there,” Cathy recalls. “He thought it was an all-around great engineering background.” Inspired by the quality of the instruction, facilities, and research efforts he saw during his visits, Vytas hoped to deepen his relationship with Penn State. “Education was very important to his family and to him,” Cathy says. “And he thought that any other students would be very, very fortunate to get the same kind of education that he did.” Sadly, Vytas passed away in 2009 after a sudden, brief illness. But in the months before his death, he took steps to ensure that he would have an impact on Penn State students in the future: He and Cathy established a bequest to Penn State’s Department of Electrical Engineering

through their living trust. Cathy later worked with the Office of Gift Planning to structure a gift that will establish a named department head position, a faculty chair, or other endowment, depending on the department’s needs and the funds available when the bequest is ultimately realized. “Regardless of its final form, the Pazemenas’ gift will give the department crucial support to keep our research and teaching moving forward,” says College of Engineering Dean David Wormley, who remembers Vytas fondly as a consummate professional with a vibrant intellect. In a career built upon his technical abilities and entrepreneurial talents— he’d started his first business, repairing televisions, at age fifteen—Vytas held various engineering and leadership positions with established companies, and ultimately founded his own company in Irvine, California. Aubrey Group, named after the hero in Patrick O’Brian’s series of nautical novels, is a Continued on Page 6

Inside This Issue: PAGE 2: An exciting new gift option PAGE 3: A unique gift that helps you to preserve family wealth PAGE 5: A simple change that helps Penn State students PAGE 6: Remember Penn State in your will

ESTATE PLANNING TIPS TO HELP YOU ACHIEVE YOUR CHARITABLE GOALS

SUPPORT PENN STATE

Paul and Eleanor Chadderton

Without Giving Up Assets for Your Heirs Preserve Family Wealth with a Charitable Lead Trust

Penn State Launches New

DONOR ADVISED FUND The Pennsylvania State University Charitable Gift Fund is a donor advised fund that allows Penn State donors to invest their charitable dollars and direct contributions to both the University and other nonprofit organizations. “The Pennsylvania State University Charitable Gift Fund was created to help generous individuals and their families manage and simplify their philanthropic activities,” says Rodney P. Kirsch, senior vice president for development and alumni relations. “This launch comes after years of research and preparation, and we are proud to be offering our alumni and friends one of the most innovative approaches to giving available today.” Through this fund, you can make gifts of cash, appreciated assets such

To learn more about this unique giving opportunity, please contact Mike Degenhart at 888-800-9170.

as securities or real estate, and other resources to a fund that is invested and administered on your behalf by the University’s partners, investment firm Kaspick & Company and DAF technology and services provider Crown Philanthropic Solutions, LLC. An account can be established with a gift of $25,000, and it can be increased with additional contributions of $1,000 or more. You may choose to have your gift(s) invested in one of eight investment options, much like mutual funds, that reflect different growth and income strategies. This fund offers an important alternative to other approaches to charitable giving. Gifts to the fund can be made when they will be most financially advantageous for you, and the fund then provides you

with tremendous flexibility in the timing and targeting of your charitable support. Gifts can be counted as tax deductible as soon as they are committed to the fund, allowing you to manage the impact of significant tax events. You may allocate your gift to the program or charity of your choice at the time that it is given, or you may wait to direct your giving until you have further defined your philanthropic priorities. At least 50 percent of the distributions from your account must ultimately be gifted to Penn State, and the remainder can go to the University or to other qualified charitable organizations.

Do you want to benefit from the tax savings that result from supporting Penn State, yet you don’t want to give up any assets that you want your heirs to receive someday? You can have it both ways—with a charitable lead trust. Plus, the current low interest rates make this giving option more attractive than ever! How It Works This trust pays Penn State an income for a certain length of time. When the term is up, the remaining trust assets go to your family or other beneficiaries you select. Is a Lead Trust Right for You? Good candidates for a charitable lead trust want to:  Forgo access to an asset, without depriving heirs of it later on.

 Act on this giving opportunity during these times of extremely low interest rates. This is the most tax-efficient time to implement this strategy into your plans.  Ultimately transfer property to loved ones at minimal tax cost. Your professional advisor can help you decide if a lead trust is an effective way for you to support Penn State programs and meet your financial goals.

How You Benefit The gift or estate tax savings from a lead trust are based on the current value of the income paid to Penn State over the trust term. The greater the trust’s payment amount or the longer the trust term—or both—the greater the value of the gift to Penn State and hence the lower the overall taxes to you or your estate. The size of your trust and its term are up to you.

Two FREE Guides Return the enclosed reply card today to receive two FREE brochures to help with your gift planning. Provide More for Your Heirs and Cut Taxes guides you through the basics of a charitable lead trust, and The 3 Easiest Ways to Leave Your Legacy outlines the simple process of making gifts to Penn State through beneficiary designations. We’d also like to send you My Will Planning Guide, a useful 23-page booklet to help you collect and organize important information. The guide is also available in CD format. Just check the boxes on the reply card and we’ll send yours today!

Remembering Penn State

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Why We Chose a CLT Example: For each $1 million you leave to your heirs over the threshold amount—the threshold in 2012 is $5.12 million, but it drops to only $1 million in 2013—estate taxes will consume up to $350,000 and your heirs will get $650,000 (assuming your estate is subject to estate taxes at your death). With a lead trust, you can transfer $1 million to your heirs after your death, leaving only $22,700* subject to estate tax, instead of $1 million. To accomplish this, you create a $1 million lead trust from your estate that will pay Penn State $65,000 annually for 17 years. When the trust term ends, the remaining trust assets will go to your named beneficiaries. Want to Learn More? The lead trust is a good giving option for many of our alumni and friends— especially during these tough economic times. For more information about how this gift could work for you, contact Mike Degenhart at 888-800-9170. * Based on annual payments and a 1.4 percent charitable midterm federal rate; this rate changes monthly. © Penn State University and The Stelter Company The information in this publication is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.

As longtime supporters of Penn State and parents of two Penn State graduates, Paul and Eleanor Chadderton feel great loyalty to the University. As business owners and active members of the Sharon community, Paul says they “have seen firsthand the important role the University plays in our area.” When the couple decided to extend their support with a gift to Penn State Shenango, they were thrilled to learn about a charitable lead trust (CLT), a gift that just “made sense to me,” Paul recalls. They appreciated the flexibility offered by a CLT. “It’s going to support our local campus for a few years and then whatever is left, our kids will still get something out of that,” Paul says. The Chaddertons’ CLT, created through a gift of $500,000, is providing a $20,000 annuity to Penn State Shenango for ten years, to be used at the chancellor’s discretion to meet pressing campus needs. The trust’s first distribution provided $15,000 in scholarship support to students attending Penn State Shenango. The remaining $5,000 partially funded a spring break service trip in March 2011, when fourteen students traveled to Peru to help indigenous families replace their traditional open-pit fire kitchens with cleanburning stoves and chimneys. The couple experiences great satisfaction knowing that their gifts support deserving students as well as the local community. “It makes you feel really good to know that you are helping somebody,” Paul says. “We’ve kept track of some of these kids [after graduation], and a lot of the students we’ve sponsored have really excelled. These things make us want to do a little bit more and a little bit more.”

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