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Charitable Giving:Leave A Legacy To PrepBesides the immense satisfaction that comes from helpingothers, charitable giving can provide tax benefits for thedonor and his or her estate.Charitable Remainder Trusts (CRTs)Looking for a way to generate income, reduce estate andincome taxes, defer taxes on gains and make a significantcharitable contribution without reducing the family inheritance?A charitable remainder trust and a wealth replacement trust canallow an individual to make a gift to Fairfield Prep while retainingan interest in the gifted asset during his or her lifetime.CRT Mechanics and Tax AspectsIt is best to fund a CRT with an asset that, if sold outside thetrust, would produce substantial long-term capital gains tax.After the trust is executed, the donor transfers this appreciated,low or non-income producing asset to the CRT. The CRT sellsthe asset and gives the donor an income stream for life, for aterm of years, or for joint lives. At the death of the donor (orthe donor’s named non-charitable income beneficiary if otherthan the donor) the remaining trust assets pass to Fairfield Prep.Here’s how it works:• Upon creation of the trust, the donor gets a current incometax deduction based on the present value of the futureamount passing to the charity.• No tax on the gain is paid by the trust when it sells the asset,since the trust is exempt from such tax when it sells the asset.• The donor receives an income stream and pays income taxeson the income as received• At the end of the trust term the remainder passes to thedesignated charity and estate taxes may be reduced, since theasset placed in the trust has been removed from the estate.“Wealth Replacement” TrustAs indicated, the remaining assets in the trust eventuallypass to Prep and not to the donor’s heirs. The income taxsavings produced by the charitable donation combinedwith the income generated by the trust can be used to paypremiums on a life insurance policy owned by a properlyformed irrevocable life insurance trust sometimes known asa “wealth replacement” trust. The life insurance policy in thistrust replaces the value of the assets that pass to Prep in theCRT. Since the life insurance is purchased and owned by theirrevocable trust, the proceeds should be income and estatetax free. The donor’s family is, therefore, made whole. Pleaseconsult your tax advisor for details.Submitted by Joe Bogardus ’05, Financial Planner,Barnum Financial Group at jbogardus@metlife.comEsn. Ryan T. Nelson ’06, USN with his parents, Marcia and Dick Nelson, andhis brother Lt. Jonathan R. Nelson ’03, USN.Ryan Nelson ’06 earns Navy Wings of GoldEns. Ryan T. Nelson (Prep Class of 2006) was awarded his “Wings ofGold” and designated a Naval Aviator at Naval Air Station Whiting Fieldin Milton, Fla., on April 13. This marks Ens. Nelson’s successful completion offlight training and designates him a helicopter pilot.Ens. Nelson has been assigned to the Navy’s newest addition to thefleet, the MH-60R Multi-Mission Helicopter (AKA “Romeo”) Seahawk. Hewill report to his Fleet Replacement Squadron HSM-40 “Airwolves,” theHelicopter Maritime Strike Wing, U.S. Atlantic Fleet, based at Naval StationMayport, Jacksonville, FL.Ens. Nelson is a 2010 graduate of the College of the Holy Cross and theHoly Cross NROTC Unit.Source: The Ridgefield PressTimothy Tilghman ’00 Assembly speakerOur Dr. Martin Luther King Jr. Assembly speaker in 2011 was the dynamicLT Timothy S. Tilghman ’00, USCG. He has been stationed in Iraqand working with the Government of Iraq and the Department of Defenseassisting the Iraqis with governmental oversight of some of their strategicmaritime infrastructure.Kevin Dewey ’05 served in AfghanistanLT Kevin C. Dewey ’05, USN, (wearing sunglasses) just completed a tour inAfghanistan as an EOD specialist.Prep Today 47