May, 2008

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. To return to the general planned giving pages, please close this browser window. This News and Information section has been compiled by Future Focus.

News Stories

Leave Less to the IRS (and the Lawyers)
Why do you need an estate plan? It lets you accomplish these crucial objectives:

• Ensure that your assets go to the people you choose, not those the state chooses.
• Specify who will care for your minor children.
• Defuse potential family conflicts over your assets.
• Minimize estate taxes and other transfer taxes.
• Avoid the costs, publicity and delays of probate.
• Help ensure that you and your affairs will be taken care of as you wish if you become incapacitated.

Even if your estate is modest, take care of the basics:

• Tell loved ones where to find your documents and a list of your accounts, assets and insurance policies.
• Draft a will and final letter of instructions.
• Establish durable powers of attorney and health care in case you're incapacitated.
• Update your account titling and beneficiaries.
• Consider funding a revocable living trust with your titled assets along with a "pour-over" will to ensure other assets avoid a costly probate process.
  4/30/08 gather.com

How to 'restart' Social Security benefits
Can you really start over with Social Security? People who took Social Security payments early -- before their full retirement age -- can later opt to pay back their benefits and qualify for a higher payment based on their current age. You might want to consider "restarting" your Social Security if:

• You started payments before age 65
• You're now in your late 60s or early 70s
• You have the cash or investments on hand to pay back the benefits.

When you apply for Social Security before full retirement age, your benefit amount is reduced. If you delay your application for Social Security beyond full retirement age, though, your future benefit increases year by year until age 70.

If you do want to restart your benefits, begin by filling out SSA Form 521, "Request for Withdrawal of Application." You'll need to write the Social Security Administration a check for the full amount of the benefits you've already received. (Fortunately, Social Security doesn't charge interest, but you still could be coughing up quite a sum. Someone who's received an $1,800 monthly check for five years would owe $108,000.). However, there are estimates that "restarting" your Social Security benefits could increase your checks by as much as 76% if you applied at 62 and are now 70. Such a boost could represent a very good return on the money you'd have to "invest" or pay back to the Social Security Administration. But whether this makes sense for you depends on your individual circumstances, so speak with your financial advisor before deciding to go ahead.
5/2/08 LA Times

Immediate And Deferred Gift Annuity Rates Are Lowered
Having conducted its annual review, the ACGA Rates Committee recommended a new, lower schedule of gift annuity rates for immediate gift annuities, effective on July 1, 2008. In addition, the deferred gift annuity rates which became effective on July 1, 2006 will also be lower. At its April 2, 2008, meeting the ACGA board approved these recommendations.

One of the primary activities of the ACGA (American Council on Gift Annuities) is the publication of suggested charitable gift annuity rates for use by charities and their donors. The Council retains the services of an actuarial firm to advise and consult on matters pertaining to life expectancies and related matters. The Council has a long and distinguished record in this area, and its suggested rates have long been recognized, not only by charities and donors, but also by state insurance departments and the IRS as being actuarially sound and in the best interests of all parties involved.

Editor's note - The new rates will take effect 7/1/2008. Until then, the existing (higher) rates are still in effect. Most charitable organizations that issue gift annuity contracts will continue to use the existing rates through the end of June. If so, a gift annuity contract made prior to the end of June would have a higher rate for the life of the contract. If you are considering a charitable gift annuity, a decision prior to the change in rates would mean a greater annual return for the annuitant. The difference can be illustrated with the following examples of a single life rate:

Phishing Scams, Frivolous Arguments Top the 2008 "Dirty Dozen" Tax Scams
Topping this year's list of scams is phishing, which encompasses numerous Internet-based ploys to steal financial information from taxpayers. New to the "Dirty Dozen" this year is a scheme, which IRS auditors discovered, that relates to unreasonable and/or excessive fuel tax credit claims. Tax schemes can lead to problems for both scam artists and taxpayers. Tax return preparers and promoters also risk significant penalties, interest and possible criminal prosecution. The IRS urges taxpayers to avoid these common schemes:

1. Phishing Phishing is a tactic used by Internet-based thieves to trick unsuspecting victims into revealing personal information they can then use to access the victims' financial accounts.
2. Scams Related to the Economic Stimulus Payment Some scam artists are trying to trick individuals into revealing personal financial information that can be used to access their financial accounts by making promises relating to the economic stimulus payment, often called a "rebate."
3. Frivolous Arguments Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe.
4. Fuel Tax Credit Scams The IRS is receiving claims for the fuel tax credit that are unreasonable.
5. Hiding Income Offshore Individuals continue to try to avoid paying U.S.taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans.
6. Abusive Retirement Plans The IRS continues to uncover abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs).
7. Zero Wages Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed.
8. False Claims for Refund and Requests for Abatement This scam involves a request for abatement of previously assessed tax using Form 843, "Claim for Refund and Request for Abatement."
9. Return Preparer Fraud Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes.
10. Disguised Corporate Ownership Some people are going as far as forming domestic shell corporations in certain states for the purpose of disguising the ownership of a business or financial activity.
11. Misuse of Trusts For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts.
12. Abuse of Charitable Organizations and Deductions The IRS continues to observe the misuse of tax-exempt organizations.

IRS Watches Scams That Fall Off the List While the IRS has seen a decline in the occurrence of some of these scams, other problems, such as abuse of the American Indian Employment Credit and misuse of structured entity credits, continue to be areas of concern. The absence of a particular scheme from the Dirty Dozen should not be taken as an indication that the IRS is unaware of it or not taking steps to counter it.
3/13/08 IR 2008-41

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THE ECONOMY: SEVEN INDICATORS - From CNN Money (as of 5/5/08)

The Indicator	What It's Telling Us	Next Update
Consumer Confidence	At 5-year low	May 27
Retail sales	Moderately better than expected for March	May 13
Leading Economic Indicators	Up slightly	May 19
Manufacturing Activity (ISM)	Unchanged in April	June 2
Industrial Production	Rebounded in March	May 15
Job Growth	Minus 20,000 in April	June 6
Inflation (CPI)	Running at 4%	May 14

Recent Economic News

April Retail Sales Dipped, but Some Sectors Held Up - 5/14/08 Reuters in the NY Times
United States retail sales weakened modestly in April, but outside the hard-pressed auto sector they were more resilient than many economists had forecast, a government report showed on Tuesday. The report echoed recent data showing underlying economic durability, including fewer job losses in April than feared and a surprisingly strong pace of first-quarter productivity. The Commerce Department said overall retail sales declined 0.2 percent, but if cars were excluded, sales rose 0.5 percent. Economists expected total sales to slip 0.1 percent, but had forecast a gain of just 0.2 percent excluding autos.

U.S. April CPI up 0.2%, core rate up 0.1% - 5/14/08 MarketWatch
U.S. consumer inflation moderated in April, the Labor Department said Wednesday. The consumer price index increased 0.2% in April after a 0.3% gain in the previous month. The core CPI, which excludes food and energy costs, was up 0.1% in April after rising 0.2% in March. Economists were expecting the CPI and the core rate to rise 0.2%. Energy prices moderated after a large jump in March. However, food prices rose 0.9%, the largest gain since 1990.

Retail sales drop for 3rd time in past 5 months -5/13/08 MarketWatch
U.S. retail sales fell for the third time in the past five months in April, led by a big decline in auto sales, the Commerce Department reported Tuesday. Retail sales fell 0.2% on a seasonally adjusted basis after a 0.2% gain in March. Sales were up 2% in the past year. Sales over the past three months were down 0.4% compared with the prior three months. The figures are not adjusted for price changes. Sales were slightly stronger than the 0.3% drop expected by economists surveyed by MarketWatch.

Economic growth seen at only 0.2 percent - 5/13/08 Reuters
The U.S. economy will barely grow in the second quarter after sluggish growth early in the year, while inflation is expected to rise, said a survey released by the Philadelphia Federal Reserve on Tuesday. The economists surveyed forecast gross domestic product in the current quarter would expand at an annualized rate of 0.2 percent, sharply below their prior forecast of 1.3 percent. The government's preliminary reading of first-quarter U.S. GDP, released on April 30, said it grew at a rate of 0.6 percent, the same pace set in the fourth quarter.

Trade Deficit Narrowed in March -5/9/08 NY Times
Domestic demand for imports fell in March by the most since 2001, the latest indication that the economic slowdown has forced Americans to rein in their spending habits, the government reported on Friday. Americans shied away from buying imported automobiles, which fell 9.3 percent in March, and oil, which dropped 8.9 percent. It was the second consecutive month that crude oil imports had declined. Declines were reported in a variety of other consumer goods ranging from clothing to toys and furniture. At the same time, exports decreased for the first time in 12 months, a troubling sign for American businesses struggling with a pullback among domestic consumers. Foreign purchases have helped prop up the American economy amid the current slowdown. For the month, the Commerce Department reported, the trade deficit narrowed to $58.2 billion from a downwardly revised $61.7 billion in February. The 5.7 percent decrease was more than economists had expected.

U.S. weekly initial jobless claims fall 18,000 to 365,000 - 5/8/08 MarketWatch
The number of people filing for the first time for unemployment benefits fell by 18,000 to 365,000 on a seasonally adjusted basis in the week ending May 3, the Labor Department reported Thursday. The four-week average of initial claims, which smoothes out one-time factors such as bad weather or holidays, moved up by 2,500 to 367,500. The number of people collecting benefits fell by 10,000 in the week ending April 26 to 3.02 million. The four-week average of continuing claims nudged higher by 16,750 to 3 million, the most in four years. Compared with the same time last year, initial claims are up about 17%, while continuing claims are up about 19%.

Jobless Claims Post Sharp Decline - 5/8/08 AP in the NY Times
The number of newly laid off workers seeking unemployment benefits dropped much more than expected last week. The Labor Department reported Thursday that applications for unemployment benefits fell to 365,000, a decline of 18,000 from the previous week. Economists had been looking for a much smaller decrease of around 5,000. Weekly jobless claims have been exceptionally volatile in recent weeks because of strike-related layoffs in the auto industry and an unusually early Easter, which has played havoc with the government's seasonal adjustment measurements.

Retailers Report Mixed Results for April - 5/8/08 AP in the NY Times
Consumers gave some of the nation's retailers a little relief in April after months of dismal sales, gravitating toward less expensive discounters and wholesale clubs but generally still shying away from stores selling clothes and other non-necessities. Monthly sales reports issued Thursday were better than expected, but still pointed to a consumer contending with rising gas prices, sagging home values and worries about jobs. Wal-Mart Stores Inc. and Costco Wholesale Corp. were among the top performers last month, while most mall-based apparel stores struggled.

Worker productivity up at 2.2 percent rate in first quarter - 5/7/08 AP in Yahoo Finance
Worker productivity rose by a better-than-expected amount in the first three months of the year while labor cost pressures eased. The Labor Department reported Wednesday that productivity, the amount of output per hour of work, increased at an annual rate of 2.2 percent in the first quarter. That was slightly higher than the 1.5 percent increase that had been expected. In a sign that inflation could be easing, labor cost pressures slowed a bit. Unit labor costs rose at an annual rate of 2.2 percent, down from a 2.8 percent rise in the final three months of last year.

Consumer borrowing unexpectedly surges in March - 5/7/08 AP in Yahoo Finance
Consumer borrowing rose in March at the fastest pace in four months, more than double the increase of the previous month, in what was seen as a sign of rising economic stress. The Federal Reserve reported Wednesday that consumers increased their borrowing at an annual rate of 7.2 percent, compared with a 3.1 percent rate of increase in February. The gain was much larger than economists had been expecting and reflected strong borrowing on credit cards and also in the category that includes auto loans. The increase in consumer debt totaled $15.3 billion at an annual rate in March, much bigger than the $6 billion increase that economists had been expecting.

Service sector shows growth for first time since December - 5/5/08 CNN Money
Encouraging news for the slumping U.S. economy came Monday as a key survey of non-manufacturing business executives showed unexpected growth in the service sector in April. The Institute for Supply Management's (ISM) non-manufacturing index rose to a reading of 52 from 49.6 in March. Economists were expecting a reading of 49.5, according to a consensus compiled by Briefing.com. A reading above 50 indicates growth in the sector. Sector adds jobs: The report also showed encouraging non-manufacturing labor growth. After three consecutive months of contraction, the service sector employment index rose 3.9 points to 50.8.

U.S. factory orders rise 1.4% in March - 5/2/08 MarketWatch
Orders for U.S.-made factory goods jumped 1.4% in March on strong demand for computers and machinery, the Commerce Department reported Friday. Excluding transportation products, orders for U.S. goods rose by 2.2%, the biggest gain in a year. Orders for durable goods rose 0.1% in March, reversing the 0.3% drop estimated by the government a week ago. Economists had been expecting a gain of 0.2% for factory orders in March, according to a survey conducted by MarketWatch. The surprise in the data was a 2.6% growth rate in nondurable goods orders, the strongest since November.

Jobs: 'Not as bad as we thought' - 5/2/08 CNN Money
Employers trimmed jobs in April for the fourth straight month, according to a government report Friday that was not as weak as Wall Street's expectations. There was a net loss of 20,000 jobs in the month, according to the Labor Department report, compared to the revised loss of 81,000 jobs in the March reading. Economists surveyed by Briefing.com had forecast a loss of 75,000 jobs in April. The unemployment rate slipped to 5% from the 5.1% reading in March. Economists had been forecasting unemployment would rise to 5.2% in the latest report.

Consumer spending up mainly because of sharp price increases - 5/1/08 Yahoo Finance
Don't be fooled by a larger-than-expected increase in consumer spending. People aren't buying more -- they're just paying more for what they buy. The Commerce Department reported Thursday that consumer spending was up 0.4 percent, double the increase economists had forecast. However, once inflation was removed, spending edged up a much slower 0.1 percent. Rising food costs, soaring energy prices and falling employment have pushed consumer confidence to its lowest levels in five years. Incomes in March rose a weak 0.3, but after removing inflation, after-tax incomes were flat.

Manufacturing still weak, employment drops - 5/1/08 CNN Money
A key index of manufacturing activity was unchanged at a weak level in April, with employment in the sector falling dramatically to the lowest point in nearly 5 years, according to a survey of purchasing managers released Thursday. The Institute for Supply Management's (ISM) manufacturing index stayed at the March reading of 48.6. Economists were expecting a reading of 48, according to a consensus estimate compiled by Briefing.com. The tipping point for the index is 50, with a reading above that reflecting growth in the sector. A reading below 50 represents a decline in manufacturing.

Fed cuts rates again and hints at pause - 4/30/08 CNN Money
The Federal Reserve cut its key interest rate by a quarter percentage point Wednesday, but the central bank's statement signaled it may be the last rate cut for at least a while. The cut took the federal funds rate, the key overnight rate at which banks loan money to one another, to 2%. It had been at 5.25% as recently as September, when the Fed started slashing rates in an effort to spur the economy and keep the nation out of recession. Fed policymakers are not set to meet again until June 24 and 25, the longest gap in its calendar of meetings this year. There have been growing complaints that the Fed's aggressive rate cuts this year have been a key to why food and oil prices have skyrocketed lately. The fact that the Fed has cut rates while central banks in Europe and Asia have mostly kept rates steady has led to a weakening of the dollar. That, in turn, has driven up commodity prices.

Slight Growth in Economy, but Consumer Spending Weakens - 4/30/08 NY Times
The American economy remained stuck in the slow lane over the first three months of the year, expanding by a modest 0.6 percent annualized rate, the Commerce Department announced. The weak performance reflected the increasingly thrifty inclinations of American consumers in the face of plummeting real estate prices, tightening credit and a deteriorating job market. Economic growth was also hampered by a continued pullback in construction and business investment. The only factors preventing the economy from sliding backward were the growth of American exports - aided by a weakening dollar - and a buildup of inventories by businesses. Exports and inventories set aside, final sales of American goods and services domestically dipped at a 0.4 percent annualized rate in inflation-adjusted terms, the first decline since the end of 1991. Consumer spending grew at an anemic 1 percent annualized rate, down from 2.9 percent in 2007 and 3.1 percent the year before. The 0.6% GDP growth was ahead of the 0.2% growth rate expected by economists surveyed by MarketWatch.

Home prices fall record 12.7% in past year - 4/29/08 MarketWatch
The decline in U.S. home prices quickened in February, with prices down a record 12.7% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. Prices in 19 of the 20 cities have fallen over the past year, with prices in all 20 cities falling month-to-month for six straight months. The biggest declines were in Las Vegas and Miami, with declines of more than 20% in the past year. Prices in Charlotte, N.C., are up 1.5%.

Consumer Confidence Slips as Home Prices Drop - 4/29/08 NY Times
Americans' confidence in the economy continued to plunge this month as their homes lost value at the fastest rate in two decades, according to reports released on Tuesday. The data suggested that the housing slump was far from a recovery and the job market might continue to weaken, ratcheting up pressure on the Federal Reserve, which began a two-day meeting on Tuesday, to take steps to stave off a prolonged slowdown. Much of the damage has stemmed from a slump in the housing market, where prices are nearly 15 percent off their high in July 2006. The private report, which surveys up to 5,000 American households, dropped to its lowest point since March 2003, at the start of the invasion of Iraq. Americans feel worse about the economy's prospects than any time since the mid-1970s, and many are bracing for job losses. The index fell in April to 62.3 from a revised 65.9 in March and 76.4 in February. Economists surveyed by MarketWatch were looking for a final April result of 63.0.

New-home sales plunge 8.5% to 17-year low in March - 4/24/08 MarketWatch
US home builders have slashed their average prices by a record amount, but sales still plunged by 8.5% to a 17-year low in March, the Commerce Department estimated Thursday. The decline in new-home sales to a seasonally adjusted annual rate of 526,000 was much weaker than the 577,000 pace expected by economists surveyed by MarketWatch. The report gives little hope that the housing market is near a bottom. New-home sales are down 36.6% compared with a year ago. The months' supply of homes on the market rose to 11 months, the most in 27 years. Median sales prices have fallen 13.3% in the past year to $227,600.

US jobless claims fall 33,000 to 342,000 - 4/24/08 MarketWatch
First-time claims for state unemployment benefits fell to its lowest level in two months in the latest week, the Labor Department reported Thursday. The number of initial claims in the week ending April 19 fell 33,000 to 342,000. It's the lowest level since the week ended February 16. The consensus forecast of Wall Street economists was for claims to rise 3,000 to 375,000. Claims in the previous week were revised to an increase of 20,000 to 375,000 compared with the initial estimate of a rise of 17,000 to 373,000. The four-week average of initial claims fell 7,250 to 369,500. Meanwhile, the number of Americans receiving state jobless benefits fell 65,000 to 2.93 million in the week ending April 12. The four-week moving average of continuing claims rose 20,500 to 2.96 million.

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