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LASTING IMPRESSIONS

LASTING IMPRESSIONS. Leave your mark on the world through charitable planning. To meet immediate needs:. Why Give?. Superstorm Sandy, 2012 American donations: $301 million ¹. Oklahoma Tornadoes, 2013 American donations: $52.4 million ¹.

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LASTING IMPRESSIONS

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  1. LASTING IMPRESSIONS Leaveyour mark on the world through charitable planning

  2. To meet immediate needs: Why Give? Superstorm Sandy, 2012American donations: $301 million¹ Oklahoma Tornadoes, 2013American donations: $52.4 million¹ Japan Earthquake & TsunamiAmerican donations: $312 billion¹ ¹American Red Cross, redcross.org, 5/14

  3. Why Give? To meet ongoing needs – donations made to many causes: Health Organizations Total revenue: $28.12 billion • Educational Organizations • Total revenue: $41.33 billion Faith-Based Organizations Total revenue: $101.54 billion Data source: Giving USA, 2013

  4. Why Give? Common considerations when giving: • Passion for cause/personal connection to charity • Share values with family • Leave legacy for children and grandchildren • Financial aspects: tax advantages, wealth transfer, estate planning Did you know? • 2012 individual donations to charity: $228.93 billion1 • Total giving grew by 3.5% in 20122 1 AAFRC Trust for Philanthropy/Giving USA, 20132 American Association of Fundraising Counsel Trust for Philanthropy/Giving USA, 2013

  5. Why Give? Charitable giving may offer tax advantages: • Income tax deductions* • Estate tax reductions • Gift tax exemptions Know the rules and consult the experts. • *The amount of the income tax deduction depends on: the type of charity, type and portion of asset, whether donor will receive income, and the timing of the gift

  6. What to Think About • Need for income? • Immediate or long-term need? • One charity or many? • Cost concerns? What matters most to you?

  7. Know Your Options Charitable Giving Options • Outright Gifts • Donor-Advised Funds • Charitable Remainder Trusts • Wealth Replacement Trusts • Private Foundations • Charitable Gift Annuities • Charitable Lead Trusts • Pooled Income Funds

  8. Outright Gift Something (cash or property) voluntarily transferred from one party to another party without compensation What is it? Outright Gifts to Charity: Advantages Disadvantages • Easy • Immediate recognition • Immediate income tax deduction • Opportunity to maximize the deduction • No income potential • Limited flexibility

  9. Outright Gift: Case Study • 70 years old, single • No need for income • Donates $250,000 to public charity • Income tax deduction amount based on: • Adjusted Gross Income (AGI) • Type of gift • Type of charity Janet McCallister This hypothetical example is for illustrative purposes only.

  10. Donor-Advised Fund What is it? A charitable giving vehicle administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, family, or individual. Gifts to Donor-Advised Funds: Advantages Disadvantages • No income potential • Can only make recommendations • Irrevocable • Build a lasting legacy • Flexible contributions • Donations can be given to multiple charities today or in the future • Relatively inexpensive & easy to establish • May use own financial advisor • New funds may be added at any time • Donors may remain anonymous • Potential Income tax deduction

  11. Donor-Advised Fund: Case Study • 63 years old & retired • Married • No need for income now or in the future • $200,000 of appreciated stock • Two grandchildren, 10 and 14 • Can deduct the full $200,000 as a charitable donation • No capital gains tax if stock donated intact Andrew & Susan Ackerman Andrew & Susan Ackerman (donors) $200,000 Donor Advised Fund Charity C Charity A Charity B This hypothetical example is for illustrative purposes only.

  12. Charitable Remainder Trust What is it? • Income stream • Present-value income tax deduction • Can fund one or more charities • Income can be used to replace donated assets An irrevocable gift (typically a highly appreciated asset) to a charitable trust that may provide income to the donor with remaining assets passing to a charity upon the donor’s death Gifts to Charitable Remainder Trusts: Advantages Disadvantages • Limited income tax deduction • Income is taxable, put back into estate • Expense & complexity of trust

  13. Charitable Remainder Trust: Case Study • 65 years old & retired • Married • No need for income now, but would like option for income in the future • $1 million of highly appreciated stock Henry & Sharon Miller Henry & Sharon Miller (Donors) $1,000,000 Income Stream Charitable Remainder Trust Remaining Assets at Trust Termination Qualified Charity This hypothetical example is for illustrative purposes only.

  14. Charitable Remainder Trust (CRT): Income Option Wealth Replacement Trust:typically an Irrevocable Life Insurance Trust (ILIT) used in conjunction with a CRT. Income received from the CRT is taxable and can be gifted to pay the premiums for the life insurance policy held in the ILIT. The life insurance proceeds are paid to the heirs upon death of the donors to “replace” the assets the donors gave to the CRT. Wealth Replacement Trust (ILIT) Heirs Henry & Sharon Miller (Donors) Life Insurance Proceeds Premiums Income Stream $1,000,000 Charitable Remainder Trust Remaining Assets at Trust Termination Qualified Charity This hypothetical example is for illustrative purposes only.

  15. Private Foundations What is it? Any tax-exempt entity that the Internal Revenue Code doesn’t define as a public charity, and that meet additional requirements. Creating a Private Foundation: Advantages Disadvantages • Perceived prestige • Flexibility • Continuity • May hire staff and receive nominal salary • Potential tax deduction • Complex • Costly to establish & maintain • Requires annual distribution • Tax deduction may be lower than other giving options

  16. Resources & Products Hartford Funds can help with: • More information about charitable giving and your options • Information to help you determine which type of charitable giving is right for you • Products to help you fund your charitable giving

  17. Resources & Products Products to help you fund your charitable giving: • Mutual funds • Variable annuities • Life insurance

  18. Additional Resources Charity information • www.guidestar.org • www.charitynavigator.org • American Institute of Philanthropy: www.charitywatch.org Other resources • Your religious affiliation • Medical causes • Community foundations • Donor-advised funds • www.aefonline.org

  19. Make Your Mark, Leave an Impression “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.” – Margaret Mead, Anthropologist

  20. This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice. Investors should carefully consider the investment objectives, risks, charges, and expenses of Hartford Funds before investing. This and other information can be found in the prospectus and summary prospectus, which can be obtained by calling 888-843-7824 (retail) or 800-279-1541 (institutional). Investors should read them carefully before they invest. Hartford Funds are underwritten and distributed by Hartford Funds Distributors, LLC. All information and representations herein areas of 7/14, unless otherwise noted. SEM_LI 7/14 116005

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