Spring 2009
Generations of Memories
For Barbara Larsen Lincoln, supporting Andover is a family affair. The daughter of George “Swede” Larsen ’24, Barbara remembers being aware of Phillips Academy from a very early age. “Dad’s study on the second floor of our house in Newton was practically a shrine to Andover! Being a curious kid, I’d look over some of the artifacts that he treasured and, with time, couldn’t help but develop a strong affection for PA as well.” Consequently, Barbara was especially pleased when her daughter, Lisa Lincoln Chioffi ’86, chose to attend Andover. “I was aware of its importance to Dad, but being able to observe what Andover did for Lisa was particularly fulfilling.”
Image Left: Barbara Larsen Lincoln with her daughter Lisa Lincoln Chioffi ’86.
Recognizing the Academy’s positive influence on her father’s and daughter’s lives, Barbara decided to support the school while helping herself as well. In speaking with cousin Roger McLean ’48 about Andover, she discovered that Roger had established several Andover gift annuities; upon learning of the tax and income benefits, she contacted the Academy’s gift planning office. “I’ve now created two Andover gift annuities, and the quarterly income they provide has been a welcome addition, along with the deductions I’ve used to lower my taxes. My gifts even qualified for a match from my employer, UBS,” says Barbara.
An enthusiastic advocate for Andover, Barbara encourages others to “step up and do their part in supporting the Andover tradition. People have everything to gain and nothing to lose by taking on more responsibility for Andover’s future—especially when we are recalibrating our lives. And, my Andover gift annuity makes this a wonderful way for me to do well—while doing good for the Academy.”
For information on the ways you can benefit from an Andover planned gift, contact the gift planning office at 978-749-4529 or giftplanning@andover.edu.
Samuel Phillips & Sarah Abbot Society Members Attend One of the First Paresky Commons Events
On Saturday, May 2, more than 100 alumni, spouses, and parents attended a luncheon in the recently opened Paresky Commons. The event included trustees, members of the Samuel Phillips & Sarah Abbot Society, and Alumni Council members.
Image Left: Samuel Phillips & Sarah Abbot Society member Al Blum ’62 is recognized for his term as an Andover trustee.
Becky Sykes, associate head of school, welcomed the group, thanking everyone for their involvement with and support of the Academy. Trustees and Samuel Phillips & Sarah Abbot Society members Peter Hetzler, MD ’72 and Al Blum ’62 were recognized for their three years of leadership on the Alumni Council and Annual Giving Board, respectively, and two students were chosen to speak about the ways in which Andover had an effect on their lives.
Image Left: Hanna Gully ’09
Hanna Gully ’09, a day student from Andover who has been studying Chinese and traveled to Beijing in 2008, recounted her Andover experiences. She emphasized that Andover had transformed her view of the world by providing the opportunity to gain insight into another culture. Also a student of Spanish, Hanna will continue her language and world culture studies next year at Georgetown University’s School of Foreign Service.
Image Left: Menelik Washington ’09
Menelik Washington ’09 of New York City said that living in Andover’s culturally diverse environment was critical to his future studies and professional endeavors. Menelik also credits Andover with helping him to realize there is more to life than his own success and that each person bears some responsibility to others. A student of Japanese, Menelik’s travel to Japan and exposure to an Eastern culture during his time at PA significantly changed his worldview. He plans to continue his study of Japanese at Harvard.
Read Hanna’s and Menelik’s speeches in their entirety.
A Tax-Smart Option for the Current Economic Climate: The Charitable Lead Annuity Trust
Today, the potential benefits of charitable lead annuity trusts (“CLATs”) are greater than ever before. The current combination of low interest rates and depressed asset valuations may allow donors to make significant annual gifts to Andover and still pass significant assets—potentially free of transfer tax—to their heirs.
How It Works:
- Donor creates a trust to which he or she transfers cash and/or marketable securities.*
- Donor chooses Andover as the income or “lead” beneficiary of the trust and designates the residual beneficiaries (donor’s children or other heirs) who will receive the trust principal at the end of the trust term.
- The trust makes annual payments to Andover in specified amounts for a specified term of years.
- The combination of the duration of the trust and the payout rate determines the tax benefit to the donor. If the amount of the annual payment is high enough in relation to the trust term, the eventual gift to the heirs is deemed to be “zeroed out” and carries no tax liability for gift tax purposes.**
- At the end of the term, any residual assets in the trust pass to the donor’s children (or other heirs) without an estate tax.
The monthly IRS discount rate in combination with the trust term determines the tax benefit to the donor. Today, these rates are historically low, permitting a larger tax benefit to the donor. A low required payout rate can result in significant residual value to heirs, especially if the trust assets are transferred at depressed valuations initially that later increase throughout the trust term.
* Phillips Academy will arrange to have the trust drafted at its own expense.
** Trusts not zeroed out by combination of payout rate and term duration still generate a gift tax benefit in the form of reduced transfer tax exposure.
The Right Time for Charitable Lead Annuity Trusts
IRS Discount Rate Trend Line from Date of Inception (March 1989) through May 2009
Example:
Sam Phillips ’78 establishes a charitable lead annuity trust with $1 million to benefit financial aid at Andover. He chooses to have the trust pay 6.36% ($63,600) annually to Andover for 20 years (the “zero-out” rate/term as of 5/30/09). There is no gift or estate tax exposure for the initial transfer to the trust or the ultimate disposition of residual trust assets to his heirs after 20 years. For example, if the trust were to earn an average of 8% over its 20-year term, Sam’s heirs would receive $1,750,496 at the end of the trust period (heirs may receive trust assets that have a cost basis lower than market value).
Provided courtesy of PG Calc
While this example illustrates the potential benefits to children, charitable lead annuity trusts also can be established to be passed along to grandchildren or revert back to the donor him/herself.
For more information on how you and your family can benefit from a charitable lead annuity trust, contact Andover’s director of gift planning, David Flash, at 978-749-4297 or dflash@andover.edu.