EFTA Document EFTA01454210

12Ro7:2 to the impact of potentially higher income taxes on their giving goals. Over about 15 years, the same chari- table gift could be halved if it's subject to income taxes I lowever, few are willing to make an absolute transfer to charity (or a charitable remainder trust) today to reduce that burden. The solution could be a PPVA. PPVAs allow charitably inclined individuals to main- tain full ownership and broader investment options for earmarked assets throughout their lifetime, while defer- ring the income taxation of investment gains on those assets. A client can make deposits or take withdrawals (for personal consumption or charitable gifting), adjust the asset allocation and/or change the beneficiary desig- nation at any time. The net result, if the PPVA investment account is left to charities or foundations, is that all the assets pass undiminished by income and estate taxes. "Optimizing Charitable Gifts,* this page, shows the values passing to charity for an initial allocation of 55 million in a PPVA versus a taxable account. Simply by changing the location of the assets from a taxable account to a PPVA investment account, the family can multiply their potential charitable legacy assets (or substantially reduce the wealth needed to fund a specific large gift). In addition, many public charities give donor recognition credit for PPVA investment account beneficiary designations, which arc fully revocable if the account owner is at least 65 years old. Practice tip: Name the charity as the primary ben- eficiary of the PPVA investment account, or, if the client hasn't completely committed to leaving the PPVA to the charity, consider naming the charity as the contingent beneficiary of the PPVA. This could allow any of the primary beneficiaries (for example, a surviving spouse or children) to disclaim any part of the PPVA investment account assets to charity. U.S. Clients Residing Abroad Many advisors with U.S. clients living abroad are strug- gling with the complications of how best to structure those clients' investments. Those clients typically can't access US. onshore investments, because they reside abroad. Offshore investments, while readily available, don't provide the necessary U.S. reporting and might .12121, : Optimizing Charitable Gifts By Year 25, the PPVA account nets more than double the taxable account ■ laxatk inistrnal maul (net to daily) ■ PPVA invelmat aacunt (net to charity) $119156436 120.354240 1a.CGIA5 Assumes15percent ofiiMna(a9imetleeein1an8peaeltteamatter ini mywreri fees tn a SS rritlbri nresmient in a Vote acccurt and a vivo placement 'viable into accost 75 NMI of reeked wit ae tared at ordinary ixome tate& ad ro withleisdsae myfebetue age 59b. (Why; rite is maned tote 47 went n Yea lad 431 Dement teeatier. (mild Ora tax rate is 20.1 want ltwland 291 wart thereafter. Assuan that the he maingement fresaterit tar Montle n eta taxable nAntment alani the to thelpeted 01 atustedgcs ixome thresh* tot Rented dednices SAL! Fund Services not be efficient for local tax purposes. If that weren't bad enough, new MICA and other requirements for US. persons with investments abroad make this process more complicated.' A PPVA investment account, properly structured, could access US. onshore investments and hold them without current U.S. taxation. In many places around the world, the PPVA itself could completely defer taxation on the investment portfolio while the individual resides in that country. And, distributions could be deferred until the client returns to the United States, making taxa- tion simpler. But, perhaps most important, the PPVA investment account could hold offshore investments and should be exempt from foreign financial institution reporting requirements. Practice tip: The PPVA investment account also can operate effectively for a non-US. person planning to reside temporarily in the United States. Offshore invest- ments could be held while the client is a U.S. resident DECEMBER 2012 TRUSTS & ESTATES / wealthmanagennent.corn CONFIDENTIAL — PURSUANT TO FED. R. CRIM. P. 8(e) CONFIDENTIAL 23 DB-SDNY-0112191 SDNY_GM_00258375 EFTA01454210