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If you have an asset/investment that:

• Has a very low basis and selling it would result in a very high capital gain
• Does not yield an income anywhere near what it should given its market value;

Then we have something that we would like you to consider.

A True Win-Win Situation

We are sure there are many charities in your philanthropic thinking and we have a way for you to support them - Planned Giving. Planned Giving is a way to create a true win-win situation - for you, your heirs, and for the charitable organizations you designate. All we ask is that if you decide to do this, you let Baker have a share.

Simply put Planned Giving is defined as a substantial gift to a nonprofit organization that involves financial and estate planning by the donor. It is a creative way for caring individuals to support the charities that matter to them. Depending on the type of planned gift, the results can include:

• Increased income to the donor — often taxed at capital gain rates or even tax free,
• Ability to diversify away from concentrated stock positions or illiquid assets,
• Wealth replacement, providing assets to your heirs as well as the charities of your choice, and
• Tremendous tax advantages — income and estate.

One Example: Wealth Replacement Trust

There are many different types of planned giving approaches. For the sake of simplicity we are providing an example of just one — a typical Wealth Replacement Trust for the “Smith's,” a couple approximately 60 years old. This example was taken from Harnessing the Power of a Charitable Remainder Trust, a book by Marc D. Hoffman and Leland E. Hoffman, Jr.

• The “Smith's” have $1,000,000 in assets with very low basis that are not paying any dividends.
• They donate these assets to a Charitable Remainder Trust (CRT), which will go to their favorite charities upon their death.
• They receive a tax deduction of approximately $167,000.
• They will receive income of $66,000 per year from the CRT for the remainder of their lives — estimated to be 25 years — for a total of $1,650,000.
• The “Smith's” create a second irrevocable trust — a Wealth Replacement Trust. They will make annual gifts of $23,420 per year (from the income from the CRT) for 12 years to purchase life insurance on both their lives.
• At their death:
  • Their heirs will get the proceeds from the insurance policies, approximately $1,355,000.
  • Their list of designated charities (including Baker Industries!!) will get a total of approximately $1,640,000.

This strategy is clearly beneficial to all concerned.

We can make it happen for you if you have interest.

For further information or to take the next step, please contact Turk Thacher at turk@bakerindustries.org, or call (610) 296-9795.