Planned Giving News Magazine

The following is intended as general information and does not represent legal or tax advice. Individual circumstances vary - please consult your legal and tax advisors about your specific situation. As a monthly news source, some information may remain on this page for several weeks.

NEWS SOURCES | ARCHIVES OF PAST MONTHS

Economy Continues Sluggish Expansion - (9/2/04) - U.S. manufacturing grew more slowly in August, a research group reported yesterday, adding to other signs that the economic expansion continued to lose steam in recent weeks.
The Institute for Supply Management's index of manufacturing activity fell to 59 last month, its weakest reading of the year, from 62 in July. The figures are based on a survey of purchasing managers, with a reading above 50 indicating growth and a number below that level reflecting a decline.
The report followed other recent reports that have showed stalling job creation, weak income growth, slowing home sales, falling exports and slipping consumer confidence.
Washington Post

Confidence reading falls in August - (9/1/04) - The Conference Board's consumer confidence index declined to 98.2 in August from a revised reading of 105.7 in July -- the largest drop in the index since February.
August's level of confidence is the lowest since May. Confidence had risen for each of the past four straight months.
"On balance this is a poor report and should lead people to cut estimates for jobs gains in August," said Robert Brusca, chief economist at FAO Economics.
CBS Marketwatch.com

Consumer Spending Rises - (8/31/04) - Consumer spending increased 0.8 percent in July after a revised 0.2 percent decline in June. With spending rising faster than incomes, the personal savings rate fell from 1.3 percent to 0.6 percent, the lowest since December 2002.
Disposable incomes (after taxes) increased 0.1 percent in July after no change in June Income growth was a disappointment, but the spending numbers came in strong as expected. Economists surveyed by CBS MarketWatch were expecting incomes to rise 0.4 percent in July.
CBS MarketWatch.com

Oil Prices Drop - (8/28/04) - The price of crude oil dropped almost 8 percent this week, its biggest weekly decline since April 2003, amid signs that some of the speculators who helped push the price close to $50 a barrel have begun to bail out.
The number of futures contracts that are betting on a higher oil price and are owned by interests generally outside the oil industry, including speculators, declined by more than 10 percent in the week ended Tuesday, according to data released yesterday by the Commodity Futures Trading Commission.
"It's being chipped away at," James R. Steel, the New York research director for Refco, said of the bet by hedge funds and other speculators on higher oil prices. "But there is not an exodus yet."
NY Times

US Economy Grew Slower - (8/27/04) - The United States economy grew more slowly in the second quarter than previously stated, as it struggled under an increasing trade deficit and a slowdown in consumer spending, the Commerce Department said in a report today.
The adjustment in the annual gross domestic product rate - a rise of 2.8 percent, from the 3 percent first estimated a month ago - represented a sharp decrease from the 4.5 percent rise in the first three months of this year. Consumers, whose spending accounts for about two-thirds of all economic activity, and a surge in imports, had a particularly strong impact on the slowdown.
NY Times

Gifts of Real Estate
Three years ago, an alumnus approached a major university about making a $250,000 bequest. But on learning the donor owned valuable vacation property he no longer used, the school suggested he instead donate it using a charitable trust. He did, reducing his capital-gains tax, earning a big deduction on his income tax, and securing steady income for himself and his wife until they die, when the school will receive the remainder.

"Gifts of real estate can be among the largest gifts a charity might receive," says the school's director of planned giving. The university, which has received real estate gifts in the last 10 years worth roughly $30 million, is among a growing number of schools and charities that solicit real estate gifts.

Real estate "equity," or the value of property minus debt, represents more than half the wealth in the United States, but less than 2 percent of gifts to charity, or roughly $4 billion a year, says Chase Magnuson, president of Real Estate for Charities in Carlsbad, Calif.

Real estate can be given through a charitable trust which will generally sell the property and invest the proceeds in a diverse portfolio that can provide a broader investment pool than just holding real estate. While every transaction is unique, the donor will often avoid taxes on any capital gain in the property and receive a deduction on his income tax.

The trust will make payments to the donor (and another beneficiary if desired) equal to set percentage of the value of the trust until they die, when charity will receive the remainder of the trust.

Real estate gifts also can free donors from expenses such as upkeep, taxes and insurance related to property.

While each proposal needs to be carefully evaluated, considering a real estate gift to charity is often a win-win situation. The donor is able to make a very significant gift to a charity that the donor cares about and the charity in turn receives a gift that can be larger than what the donor is capable of giving in cash.
from the Philanthropy Journal by Todd Cohen

Medicare officials seek to boost use of discount drug card
The temporary discount drug cards created under the new Medicare law can save senior citizens as much as 18 percent off retail prices on brand-name drugs, and 65 percent off national average prices for generic drugs, boasts Mark McClellan, Medicare's administrator. Moreover, if seniors switch some of their brand-name drugs to generics, the savings can be as great as 92 percent off retail prices. The cards cost $30 a year at most, and some are free.

So, if the card is such a no-brainer, then why aren't seniors pushing their way to the front of the line? Why the slow uptake?

At the end of July, two months after the cards took effect, 4 million Medicare beneficiaries had a card, out of 33 million eligible people. And only 1.7 million had signed up on their own, while the other 58 percent had been enrolled automatically by their Medicare HMOs. About 1 million people were getting the $600 federal subsidy available to low-income beneficiaries, even though 7.2 million were eligible because their incomes fell below cutoff levels ($12,569 for individuals and $16,862 for couples). Even though such eye-opening savings are available, finding the best card is difficult, and many angry seniors refuse to try the system out.
Marilyn Werber Serafini, National Journal 8/30/04

TOP OF PAGE | CLOSE WINDOW

Greenspan Issues Warning on Retirement Benefits
The chairman of the Federal Reserve, Alan Greenspan, warned today that the Federal government might have to scale back promises to the elderly in programs like Social Security and Medicare.

"As a nation, we owe it to our retirees to promise only the benefits that can be delivered," Mr. Greenspan said at a conference here that was sponsored by the Federal Reserve Bank of Kansas City. "If we have promised more than our economy has the ability to deliver to retirees without unduly diminishing real income gains of workers, as I fear we may have, we must recalibrate our programs."

Mr. Greenspan has expressed similar views many times in the past, but he went further today by warning that political leaders cannot count on continued rapid rises in productivity and faster economic growth to solve the problems ahead.

Economists have warned for years that retirement and health care costs will soar as the nation's baby-boom generation reaches retirement age and as the number of active workers shrinks as a share of total population.

Mr. Greenspan's message was almost equally uncomfortable for Democrats as for Republicans.

By implicitly calling for reductions in future benefits to the elderly, Mr. Greenspan attacked a basic tenet of Democratic vows to protect benefits come what may. But Mr. Greenspan conspicuously avoided any mention of the solution eagerly proposed by President Bush and many other Republicans: to partly privatize the Social Security system by letting people divert some of their payroll taxes to individual savings accounts they can control.

Noting that the share of the American population older than 65 will climb from 12 to 20 percent by 2035, the Fed chairman said the United States needed to increase savings, increase spending on education and maintain the pace of productivity growth.
NY Times 8/27/04 Edmund L. Andrews

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