Gina and George are a charitably inclined couple. George, age 68, is a personal injury lawyer and makes between $750,000 and $1,500,000 per year. Gina , age 69, runs a craft company and after expenses makes about $10,000 per year. They have two adult children. Max is 30 and single and a musician. Jenny is 28 and married and works in Human Resources. Both children are “off the payroll” and financially independent but neither lives an extravagant life.
Gina and George have 2 estate planning objectives: (1) They want their estate to benefit their children and the causes they believe in. (2) They do not want to pay any estate tax. They are committed Christians and believe in tithing 10% of their annual income and donating it to charities. Some years they scramble at the end of the year to determine which charities to give their money to. They also want to leave $1,000,000 of their net worth at the death of the second spouse to a specific list of charities. Their current net worth is $8 million. Besides their $1,000,000 house which is titled JTWROS, George has 4 million in an investment account titled in the name of his revocable trust with Gina as the primary beneficiary. The investment account has substantial capital gains of $1.5 million. Another $2.5 million is in a 401(k) account at George’s work with Gina as the primary beneficiary. Finally, Gina also has $500,000 in an IRA with George as the primary beneficiary.
Based on the information, answer the following questions and prepare an EMAIL to your client. Make sure you have one paragraph to address each question.
1) Recap Gina and George’s objectives.
2) What charitable giving strategy do you recommend for their annual giving objective? How does the strategy work?
3) What are the advantages and disadvantage of the annual giving approach you recommended.
4) What charitable giving strategy do you recommend to help them meet their estate giving goal? How does the strategy work?
5) What are the advantages and disadvantages of the estate giving approach you recommended.