Pyramid - Cleveland Clinic · 2013. 12. 20. · Left: A rendering of one of the 24 Neonatal Intensive Care Level III rooms in the Jane H. and Lee G. Seidman Tower. The rooms are private

Charitable Gift Annuities: Passport to a More Fulfilling Retirement

Coynes Support Cleveland Clinic with Life Income Gifts

PyramidIdeas on financial, estate and gift planning for friends of Cleveland Clinic

Fall 2009

Retirement has placed beautiful vistas before Susan and Richard Coyne: the Grand Canyon rimmed with snow; the gilt spires of St. Petersburg; and Provence draped in lavender.

Smart charitable gift planning helps provide a means for the Coynes to feed their zest for travel. Mrs. Coyne is a retired principal and teacher, and Mr. Coyne retired as President and Executive Director of the Great Lakes Science Center in 2004.

To help offset the traditional income decrease in retirement while maintaining their desire to support charitable, health and educational organizations, the couple established several income-generating charitable gift annuities benefiting Cleveland Clinic.

The Coynes’ first charitable gift annuity benefiting Cleveland Clinic was “for the purpose of supporting its heart center and its cardiology programs.” Over time, grateful for the care Mr. Coyne received from the late Andrew C. Novick, MD, Eric Klein, MD, and others, the Coynes established several charitable gift annuities supporting the Glickman Urological & Kidney Institute, the most recent of which was in memory of Dr. Novick, its first chair.

The Coynes say they remain awed by Cleveland Clinic’s ability to reach and retain top national rank-ings in so many fields of medicine and research.

“Helping this world-class institution continue to carry out its missions translates to the positive economic impact Cleveland Clinic has on Cleveland and Northeast Ohio,” Mr. Coyne says, crediting Cleveland Clinic as an economic engine benefiting the greater community in a tough financial climate.

Susan and Richard Coyne

Inside This Issue • Letter from the Vice Chairman • Stock to Cleveland Clinic – New Transfer Process in Effect

• No Time Like the Present – Jane H. and Lee G. Seidman Gift $6 Million to Hillcrest Hospital

• Year-End Tax Planning – A Philanthropist’s Guide • Timing Makes a Difference

• Complimentary Booklet: Ways to Give • Education is Key to Cleveland Clinic’s Mission

• Campaign Draws Closer to Goal • New Pyramid Members

Continued on page 2

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The Coynes also are impressed by the positive steps Cleveland Clinic is taking, as the region’s largest employer, to improve the health of the community. Mrs. Coyne cites initiatives such as free Curves memberships for employees, the elimination of trans fats from cafeterias and the campus-wide smoking ban.

Mr. and Mrs. Coyne say they have found their philanthropic relationship with Cleveland Clinic rewarding in other ways.

“At Cleveland Clinic, as supporters, we enjoy many opportunities to meet medical and nonmedical leaders in various fields. The Ideas for Tomorrow speaker series and research and innovation talks are exciting and interesting. There is an atmosphere that encompasses sharing and enthu-siasm,” says Mr. Coyne. Mrs. Coyne adds that they especially enjoyed the chance to hear and meet historian Doris Kearns Goodwin and that she was impressed by a presentation on advances in female urological surgery of recent decades.

The Coynes also cite personal benefits from using the charitable gift annuity option to make donations benefiting Cleveland Clinic. Each charitable gift annuity has provided a significant one-time charitable tax deduction. A portion of the annual income payment to the couple also is tax-free.

Mrs. Coyne points out the benefit of charitable gift annui-ties continuing to generate income should one spouse pass on. Mr. Coyne finds comfort in the fixed percentage return through market fluctuations. Most important, gift annuities offer them a venue for meaningful charitable support. ▲

Stock to Cleveland ClinicNew Transfer Process in EffectRecently, Cleveland Clinic implemented an enhanced stock transfer process to better serve our benefactors. This initiative is made possible through a new relation-ship with BNY Mellon Capital Markets (MCM). MCM offers improved efficiency in transferring gifts of securities to Cleveland Clinic.

Please note: Dreyfus no longer will coordinate transfers of securities to Cleveland Clinic.

New delivery instructions and forms are available. Please call Valerie Maras, Treasury, Cleveland Clinic, at 216.636.7361 who will be delighted to arrange the transfer.

Planning Tip: Charitable gifts of appreciated stock offer a double tax benefit. In addition to receiving the charitable income-tax deduction for the full fair-market value of the stock, you could escape any potential tax on the capital gain.

Dear Friends,As another year comes to a close, I pause to reflect on the accomplishments of this past year. U.S.News & World Report again has ranked Cleveland Clinic as the No. 4 hospital in our country, positioned at or near the top of the list in many specialty areas. I am proud to work for an organization that doesn’t rest on past successes but continually looks for new and better ways to take care of our patients.

I wish to thank the many supporters of Cleveland Clinic who have contributed to our success. I invite you to read and enjoy the articles featuring a few of those friends who graciously have allowed us to share their stories. As Pyramid Legacy Society members, Susan and Richard Coyne and Jane and Lee Seidman have been generous with their time, talent and resources.

As this is the year-end Pyramid newsletter, we outline several options and ideas for you to reflect upon as you wrap up your 2009 charitable and financial plans. To assist you in this endeav-or, we provide several ways in which charitable deductions may help you save money on your taxes. If the ideas presented here are of interest to you and you would like to learn more, please know that our team of gift planning professionals and I would be pleased to assist you.

I hope that you are busy planning for special holiday events with

friends and family. Best wishes for a wonderful 2010!

Nelson J. Wittenmyer Jr., Esq.Vice Chairman Office of Institutional Relations and Development

Letter from the Vice Chairman Coynes Support Cleveland Clinic

with Life Income Gifts

Continued from page 1

Cleveland Clinic Gift Planning TeamStanding, from left: Antonia Franza, Stacey McKinley, Esq., Nelson Wittenmyer Jr., Esq., Joseph Calger, Katharine McHale, Esq., Amanda Steyer, Esq. Seated, from left: Susan Sasvari, Nancy McCann, Anne Corrette, Roberta Schnell

No Time Like the PresentJane H. and Lee G. Seidman Gift $6 Million to Hillcrest Hospital

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Jane H. and Lee G. Seidman view the current economic climate as

an urgent signal for more charitable giving. The lifelong Cleveland

residents felt especially compelled to give now to ensure the success

of a key project in their community.

The Seidmans recently pledged $6 million to Hillcrest Hospital,

a Cleveland Clinic hospital, to help fund a new 72-bed patient tower

at the Mayfield Heights, Ohio, location. They had contemplated the

gift for a long time and moved forward now because they feel the

Hillcrest project is essential.

“This expansion is a great investment in the Cleveland community,

and we are pleased to be a part of it,” Mr. Seidman says. “Hillcrest

Hospital is a great institution that will continue to serve patients for

many future decades.”

In addition to supporting a vital community asset, the couple’s

gift is offered in personal thanks. Six of their nine grandchildren

were born at Hillcrest Hospital.

Creative gift planning allowed the Seidmans to give now without

jeopardizing their personal financial health.

Coordinating their strategy with Cleveland Clinic’s gift planning

team allowed the Seidmans to maximize their 2009 tax savings and

minimize future estate taxes. It also let them make the commit-

ment today and share in the celebration of Hillcrest’s expansion.

Their generous gift was announced at Hillcrest’s Topping Out

ceremony in September, during which the final steel beam was

placed atop the Jane and Lee Seidman Tower. ▲

For assistance creating your personalized giving plan, please contact a member of Cleveland Clinic’s professional Gift Planning team at 216.444.1245 or toll-free 800.223.2273, Ext. 41245, or email [email protected].

Tax Planning Tip: The Seidmans’ gift was partially funded by life insurance. When a life insurance policy is used to fund a gift, it is removed from an estate and typically is not subject to probate costs. You receive an immediate tax deduction, and the proceeds avoid estate taxes.

Note: If you retain ownership but name Cleveland Clinic as the beneficiary, the face value of the policy will be included in your gross estate at your death, but your estate will be entitled to an offsetting charitable deduction.

Cleveland Clinic accepts life insurance gifts of all sizes, and we would be happy to help you decide which option is best for you.

Jane and Lee Seidman watch as the banner bearing the name of the new Hillcrest Hospital bed tower is revealed at the Topping Out ceremony in September.

Lee G. and Jane H. Seidman with Delos M. Cosgrove, MD

Left: A rendering of one of the 24 Neonatal Intensive Care Level III rooms in the Jane H. and Lee G. Seidman Tower. The rooms are private and feature leading-edge technology along with soft colors and lighting.

Right: A rendering of a patient room in the Seidman Tower,offering state-of-the-art technology and hotel-like amenities.

Example

You still have time to affect taxes for the current year and

position yourself for the most favorable results for the future.

Year-end gift planning can help you minimize your current

income by increasing charitable deductions within the

framework of a sensible overall financial plan. Encouraged by

incentives in the tax laws, you, as a taxpayer, may approach the

planning process as a challenge. A charitable gift can be a

powerful planning tool when you consider the benefits and the

various options available through Cleveland Clinic, where

dedicated gift planning professionals are available to help you

assess your year-end giving options.

In general, taxpayers tend to have less control over other tax

deductions, such as those for state and local taxes and mortgage

interest. However, all charitable gifts provide a charitable tax

deduction, either immediate or deferred, offering great flexibility

with regard to the amount, the timing and the choice of asset

used to fund the gift. Year’s end may be an ideal time to make

a gift to support Cleveland Clinic and your favorite program or

medical service.

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Year-End Tax Planning A Philanthropist’s Guide

Cash

Cash is the most common type of charitable gift for

its simplicity. A cash gift to Cleveland Clinic generates a

charitable deduction in the year in which it is made.

You may be surprised to learn that the cost of the gift may

be much less than the amount of the gift.

There is almost no limit on the charitable contributions

you can make in any year. The tax savings generated by

a charitable deduction will depend upon your marginal

income tax bracket; that is, the tax you would have paid on

the gift offset by the deduction. The charitable deduction

you can claim in a single year is limited to 50 percent of your

adjusted gross income (AGI). Any amount above the 50

percent ceiling can be carried over for five additional years.

If you are in the 28 percent tax bracket, a $10,000 charitable deduction would save you $2,800 in income tax ($10,000 x 28%). The net cost of your gift would be $7,200.

Generally, a gift of cash has an immediate effect on

Cleveland Clinic. But if you would like your gift to leave a

legacy of patient care for generations to come, you may

want to consider an endowment. An endowment is a fund

invested in perpetuity for current income and for long-term

growth. A designated percentage of the annual income is

allocated each year to benefit the medical area, physician

or research project of your choice. By leaving the principal

intact, an endowment ensures that support will be available

year after year.

The sun is still shining, but Cleveland’s air has a chill in it signaling that, soon, 2009 will draw to a close. Now is a good time to settle into your easy chair and revisit your charitable and financial plans.

Example

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Also consider planning your endowment with a pledge of

$10,000 per year over 10 years. Cleveland Clinic requires a

minimum of $100,000 before the fund becomes endowed

and begins making allocations to your designated area.

Once established, future gifts can continue to be made

to your fund, building on it to have a greater effect on the

future. This is a wonderful way to involve your family in

your charitable endeavors because the establishment of an

endowment creates an enduring legacy.

Securities

We won’t soon forget the tumble of the stock market late

in 2008. Since then, the market has posted a substantial

gain, allowing some long-term investments to climb back

into positive territory. To lock in the full value of an appreci-

ated investment such as stock, you may want to consider

using it to fund a year-end gift to Cleveland Clinic.

Stock always has been a popular gift alternative to cash

because charitable gifts of appreciated stock offer a double

tax benefit. In addition to receiving the charitable income-

tax deduction for the full fair-market value of the stock,

you could escape any potential tax on the capital gain.

You decide to transfer securities valued at $15,000 purchased four years earlier for $5,000. In your 28 percent tax bracket, making this a gift to Cleveland Clinic will produce a $15,000 charitable deduction, saving you $4,200 in income taxes (28 percent of $15,000).

You also could avoid capital gain tax on the $10,000 gain, saving an additional $1,500 (15 percent of the $10,000 gain). The net cost of this gift is $9,300 ($15,000, less $4,200, less $1,500).

To receive a charitable deduction for this year’s taxes, your gift must be made on or before Dec. 31, 2009. Different rules govern different assets for determining the gift date.

CashIf your gift is mailed, the postmark date is the date of the gift. If you charge your credit card, the day the charge is authorized is considered the gift date.

Securities (Stock)If your gift is electronically transferred, the gift date is the date it enters Cleveland Clinic’s account. If a physical certificate is mailed, as with cash, the postmark is the gift date. If the physical certificate is hand-delivered, the date it arrives is considered to be the date that Cleveland Clinic receives it.

Real EstateThe day the signed deed is delivered to Cleveland Clinic is the gift date. If your state law requires recording of the deed to fulfill the title, then the date of recording is the gift date.

IRAsBecause an IRA Rollover gift is a cash gift, the date of the postmark is the gift date. If the cash is wired, the gift date is the date the wire is received by Cleveland Clinic’s bank account.

Life InsuranceFor a transfer of ownership, the date the policy is transferred into the name of Cleveland Clinic is the gift date.

Timing Makes a Difference

Alternatively, you may have securities in your portfolio

that have decreased in value, in addition to those that have

increased. In that case, a better choice may be to sell the

stock whose value has decreased and contribute the

proceeds to Cleveland Clinic. You can use the loss on the

sale of the stock to offset the capital gain on liquidated stock

that has increased in value. In both cases, your gift generates

a tax-saving charitable deduction.

Example: You are a generous supporter of Cleveland

Clinic and make a gift of $25,000 each year. This year, due

to the economy, the value of some of your stocks has slipped.

In fact, one stock is now worth half of the $50,000 you

originally paid five years ago.

If you decide to sell the stock and make a gift of the

$25,000 cash proceeds to Cleveland Clinic, you can use

the $25,000 loss on the sale to offset gains from other

investments. In addition, you can deduct the $25,000 gift,

saving $7,000 in your 28 percent federal tax bracket.

Year-end tax planning can help you minimize your current income by increasing charitable deductions

within the framework of a sensible overall financial plan.

Continued on page 6

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Example

Real Estate

A gift of real estate is another form of appreciated property.

Ownership of real estate, which may be a personal

residence, farm, vacation home or commercial or rental

property, can be transferred to Cleveland Clinic. As with

stock, a real estate gift also offers the double benefit of a

charitable deduction on the fair market value of the property

at the time of the transfer and could avoid capital gain tax.

If you are considering a plan to make an estate gift of your

personal residence to Cleveland Clinic, you may find that

you can lock in substantial benefits by accelerating your

plans and making the gift now. In addition to potential tax

savings, this type of gift offers one additional special benefit.

You can continue to live in and enjoy the property for the

rest of your life. You retain a “life estate,” but you can deduct

the value of the “remainder interest,” which is the right of

Cleveland Clinic to receive your property outright at the end

of your lifetime.

This is an especially good time to consider such a

gift – low interest rates have the effect of increasing the

deductible value of the remainder interest you transfer to

Cleveland Clinic.

You would like to make a gift of your lake home to Cleveland Clinic one day, but you would still like to enjoy the vacation retreat during your lifetime.

The lake home is worth $450,000. When you learn that you can deduct more than $217,000, the projected remainder interest, you decide to make this gift and transfer ownership to Cleveland Clinic now. The deduction of $217,000 will save you $60,760 in federal income tax in your 28 percent tax bracket.

Note: During the time you continue to use the home, you still will be responsible for regular upkeep of the home and the costs associated with it, such as taxes, etc.

IRA Rollover

You still have time to take advantage of the Emergency

Economic Stabilization Act of 2008. As the owner of a

traditional or Roth IRA, you may instruct your IRA manager

to distribute directly to Cleveland Clinic up to $100,000.

This gift does not offer a charitable deduction, however,

the distribution is not included in your taxable income.

You must be at least age 70 ½, and the gift must be

outright to Cleveland Clinic. The provision is set to

expire Dec. 31, 2009.

Tax Benefits of Gifts of Cash Versus Stock

CASH STOCK

Value of gift $10,000 $10,000

Marginal income tax rate 28% 28%

Tax savings from deduction $2,800 $2,800

Capital gains if sold* $6,000 ($10,000 - $4,000)

Capital gains tax rate* 15%

Capital gains tax avoided* $900

Net cost of gift $7,200 $6,300

An additional $900 is saved by giving appreciated stock.*Long-term stock is used for this illustration, cost basis is $4,000

Continued from page 5

Beginning Jan. 1, 2010, taxpayers with an adjusted gross income of over $100,000 will be able to convert their regular IRAs to Roth IRAs. Amounts that are converted to Roth IRAs will be taxable, but under a special rule, the income can be reported half in 2011 and half in 2012. With the current markets, many taxpayers will make significant conversions to Roth IRAs in January 2010 before markets fully recover, thereby minimizing the income tax on conversions.

Many advisors will counsel their clients to use Roth conversions in 2010. This may cause high taxable income in 2011 and 2012. To offset the taxable income, consider making a charitable gift. Charitable deductions are a good opportunity to avoid tax on that income.

Thinking Ahead

Example

Example

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Life Insurance

Many people think of life insurance only as emergency

funding, but it can be a much more flexible asset.

Ownership of an insurance policy includes several rights and

benefits, including the right to change the beneficiary and to

reassign ownership.

By making Cleveland Clinic the beneficiary of your life

insurance policy, your estate will be allowed an estate tax

deduction equal to the amount of the proceeds. But if you

wish to gain an immediate charitable deduction, you could

make an irrevocable assignment of your life insurance policy

to Cleveland Clinic. Upon such assignment, you are allowed

an immediate charitable deduction for the lesser of the

policy’s fair market value or the net premiums paid.

Charitable deductions also are allowed for contributions

that let Cleveland Clinic pay subsequent premiums to keep

the policy in force.

You purchased a $25,000 whole-life policy to ensure funds for your children’s education. The annual premium payment is $500. Your children have graduated and are financially independent. Your policy now has a fair market value of $11,000, and the net premiums you have paid total $11,500.

If you assign ownership of the policy to Cleveland Clinic, your charitable deduction will be $11,000, and in your 28 percent tax bracket, you will realize an immediate tax savings of $3,080. If you continue contributing to Cleveland Clinic an amount equal to the annual premium payment, Cleveland Clinic will make the premium payment, and you will receive an additional charitable deduction and tax savings of $140 for each contribution.

Cash Out a Charitable Gift Annuity

We outlined the benefits of a charitable gift annuity in the

last issue of Pyramid. In the happy event that you no longer

need income from the gift annuity, you may choose to relin-

quish the interest income and make a gift of it to Cleveland

Clinic. By stopping the flow of income from the annuity,

you accomplish the following: You reduce your income,

thereby reducing the amount of federal income tax you owe,

and you can claim an immediate charitable deduction.

Five years ago, you gave Cleveland Clinic $400,000 to establish a charitable gift annuity that pays you 6.8 percent, or $27,000 per year for the rest of your life. You are financially comfortable, so you no longer need this additional income and would rather not pay the additional income tax on it.

Consequently, you decide to relinquish the income interest to Cleveland Clinic and take a current charitable deduction for its $158,400 value. In your 28 percent federal tax bracket, this will save you almost $44,352 in income tax this year.

Note: Low interest rates increase the value of income interest with gift annuities. Given the current interest rates, this is an excellent time to consider a charitable gift of income interest.

This article has focused on charitable deductions for

current tax benefits and how your gifts will have a positive

impact now on your finances and for Cleveland Clinic. In the

spring issue of Pyramid, we will discuss testamentary and

estate gifts that will support the future of Cleveland Clinic. ▲

Would you like to learn how you can fulfill your charitable goals while securing your financial future?

The tax benefits of a charitable deduction can offer powerful financial advantages when coupled with your charitable intent to support the medical mission of Cleveland Clinic. To help you determine the best giving options for your situation, we invite you to complete and return the enclosed pre-paid reply card to request your Cleveland Clinic Ways to Give brochure.

If you wish to discuss, in confidence, a plan that best suits your needs, please call Cleveland Clinic’s gift planning professionals at 216.444.1245. You also may send an email request to [email protected]. We look forward to assisting you.

Complimentary Booklet: Ways to Give

Since the founding of Cleveland Clinic in 1921, “educating those who serve” has been an essential element of its mission and is one of its cornerstones of care, along with patient care, the campus master plan and basic and clinical research.

Philanthropy helps support the full spectrum of educational efforts, from the Cleveland Clinic Lerner College of Medicine to the internship and residency program to hosting educational confer-ences and symposia around the world.

In addition to programs training physicians, new nurses now are training through the Huron School

Education is Key to Cleveland Clinic’s Missionof Nursing and experienced nurses are furthering their skills through the Stanley Shalom Zielony Center for Advanced Nursing Education.

The scope and excellence of these education efforts have attracted tremendous support from benefactors, including planned gifts to assure success in future years. Over the last seven years, more than 200 education projects across Cleveland Clinic have benefited from more than $184 million in philanthropic giving. ▲

To learn how you can be part of these endeavors, please contact our Gift Planning team at 216.444.1245 or at [email protected].

Campaign Draws Closer to Goal Campaign for Cleveland Clinic as of 10/19/2009

The Pyramid Legacy Society was established in 1992 to honor and show appreciation to all patients, friends and alumni worldwide whose support is building a legacy for Cleveland Clinic through their charitable gift plans. These farsighted individuals are Building the Foundation for Tomorrow’s Healthcare.

Anonymous Friends

Charles H. Avner

Reo E. Houseman*

Nora Kilby

Audrey J. and Thomas R. Ruthman

Walter C. Sweet, PhD and Mona L. Sweet

Nancy N. Vacc

John A. and Jane Z. Woodrow

* Deceased

Do your estate plans include Cleveland Clinic? Let us know!

EVERY GIFT MAKES A D IFFERENCE

Call 216.444.1245.

Online Honor Roll: New This YearOur annual Cleveland Clinic benefactor lists are now located on our Giving Website. Go to clevelandclinic.org/giving and search for your name. (If you choose, your name and/or gift may remain anonymous)

The Cleveland Clinic FoundationOffice of Institutional Relations and Development/DV3

9500 Euclid Avenue, Cleveland, OH 44195clevelandclinic.org/giving

New MembersPyramid Legacy Society

Gift planning helps support Cleveland Clinic’s mission of providing excellent patient care while conducting research and advancing medical progress. More than 1,000 planned gifts to Cleveland Clinic total $456 million of the $1.21 billion campaign support to date.

Through your planned gifts toward Today’s Innovations, Tomorrow’s Healthcare: Campaign for Cleveland Clinic, you can become a member of the Pyramid Legacy Society. Please call our Gift Planning team at 216.444.1245 for more information. ▲

To learn more, visit clevelandclinic.org/givingor email [email protected].

Campus Master Plan

$184million

$284million

$506million

$239million

Basic and Clinical Research

Patient Care

Medical Education

Campaign goal: $1.25 billionCampaign total to date:$1.21 billion

Pyramid is published by the Office of Institutional Relations and Development for friends and benefactors of Cleveland Clinic. Its purpose is to identify opportunities that may be helpful in your charitable giving as well as your tax and financial planning. Please consult your professional advisors as to the applicability of any item to your situation. Cleveland Clinic, founded in 1921, integrates clinical and hospital care with research and education in a private, not-for-profit group practice. Cleveland Clinic depends on the generosity of individuals, families, corporations and foundations to ensure its continued excellence in patient care, medical research and education.

Cleveland Clinic realizes that individuals would like to learn more about particular programs, services or developments. We also fully respect the privacy of our patients. If you do not wish to receive any materials containing such information, please write to the Office of Institutional Relations and Development/DV3, 9500 Euclid Ave., Cleveland, OH 44195.

VOLUME 17 ISSUE 3

Anne S. Corrette: Editor

Elaine DeRosa Lea: Managing Editor

Joseph Calger, Elizabeth Lear: Contributing Writers

© 2009 The Cleveland Clinic Foundation

Pyramid