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October 30, 1998     Jewish News
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October 30, 1998

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l , 7 --7-'. ;. , uutJ,Lvzu ,vAqLulaJleWtSfl,prWS 3 " ................... UJFT .... b d ........ d th Sh I I d h" . oar commen s Be o om ea ers i P; l ,,aewmer Jew,sn endorses plans for assisted living complex, '1 m- -- _ oard of Directors of the  Foundation News United Jewish Federation of Tide- water recently commended the The Impact of Stock Market Volatility On Charitable Gift Planning By Beth A. Berk, CPA Director of Gift Planning ith the roller coaster activity sus- tained by the stock market in the past several months, one might expect some investors, especially those at or near retirement age, to be reconsidering their level of commitment to a market experiencing this kind of volatility. But news reports indi- cate that the ups and downs of the market have yet to shake the confidence level of most investors. Apparently both long-term and Beth A. Berk novice investors recognize that markets will invmiably go up and down. In addition, many investors recognize that short-term downward fluctuations may even provide opportunities to buy additional stocks at a discount. Stocks fuel record giving According to the Giving USA report on charitable giving in America in 1997, gifts of appreciated securities were one of the prime reasons that charitable giving reached an all-time high last year. If me current atmosphere of uncertainty and volatility sur- rounding equity markets continues this fall, what impact might we expect on charitable giving, and what strategies may be beneficial to planned and major gift prospects in the coming months? Cashing out of the market First, those who decide to reduce their exposure in the stock market this fall may well find that they have significant amounts of cash on hand as they take their profits, arid in some cases losses, in the market. Some will reinvest in other securities, but many will place their cash 'ton the sidelines." For these persons, 1998 may be an excellent time to use some of their gains from the long bull market to complete outstanding pledges and otherwise make larger than usual charitable gifts in 1998. , For the higher income donor, selling off a portion of his or her portfolio may also make it possible to give more this year from a tax standpoint. Because percentage limitations (50% for cash and 30% for securities) are based on AGI (adjusted gross income), as securities are sold and more AGI is generated, it becomes,possible to deduct larger amounts that might otherwise have needed to be carried over to future years. There are, however, much more efficient ways to combine charitable giving with the realignment of investment portfolios. Three alternatives We start with the fact that there are really only three possible scenarios tbr the investment markets-they can go up, go down, or trade at current levels. Each of these different scenarios provides planning strategies that can help our donors meet both personal and philanthropic objectives with gifts of appreciated securities. If a donor believes that the market is headed downward, one strategy Would be to make charitable gifts with appreciated securi- ties and to conserve cash. This strategy would allow the donor to fulfill charitable obligations with "paper profits" that the donor thinks could be eroded by a decrease in the market while, at the same time, preserving cash for other purposes. The donor enjoys a federal and state income tax deduction based on the full value of the donated property, and capital gains tax is bypassed entirely. If a donor is uncertain as to whether the market will continue to go up or down, we might suggest that, instead of giving cash, he or she consider making outright gifts using appreciated securities. Then the donor can use the cash that might otherwise have been donated to repurchase additional shares of the same stock at today's value. That way, if investments lose value in a market cor- rection, the donor will have a capital loss to declare for tax purpos- es. On the other hand, if the markets go up, the donor will enjoy a new, higher cost basis in the stock that "replaced" the donated stock. If our donor would simply like to reduce his or her position in the market, the donor may want to consider a combination of giv- ing some shares of a stock and selling the remaining shares. This is called a "balanced sale" of the stock. CONTINUED ON PAGE 18 ' leadership of Beth Sholom Home of Eastern Virginia for its strategic planning efforts for their proposed assisted living complex in Virginia Beach. Assisted living services pro- vide support for the basic activi- ties of daily life for the elderly which includes bathing and grooming, personal hygiene, med- ication reminders, housekeeping, three congregate meals a day and transportation, while allowing the residents to enjoy all the warmth and amenities of independent liv- ing without the worries of mainte- nance and upkeep. Plans for the complex, which will be constructed on land adja: cent to the Home, were presented at the Board Meeting by Brian Mesh, Executive Vice President of BSH, and I. William Berger, Pres- ident of the Home. Brenda Klar. immediate past President of the Home, was also among the pre- senters. The meeting was held at the Hebrew Academy of Tidewa- ter in September. "There is still 'much work ahead in seeing the assisted living facility to fruition, and support from the community in serving on the finance, building, interior design and other committees is crucial to the completion of this project," Berger added. David Brand, President of the UJFT, noted that the presentation. which was also made earlier to the Executive Committee, was very well received and that it was the opinion of the committee that BSHEV leadership had the project well in hand. The assisted living complex was endorsed by the UJFT Board of Directors which will work together with Beth Sholom Home of Eastern Virginia in zoning and bond financing for the 67-bed, pri- vate pay facility. As explained by Mark Goldstein, Executive Vice President of UJFT, "the complex will not create a financial burden on the community; it will be man- aged without community subven- tion." Although still in concept/appli- cation stage, its inception is based on the need for such a facility in Tidewater for the growing number elderly Jewish people who are seeking this service and who would be more comfortable in a Brian Mesh, left, and Bill Berger show UJFT board members plans for the assisted living complex. At far right is Rabbi Elliot Marmon of Temple Emanuel. Jewish facility, as opposed to a generic facility owned by a la,arge- for profit company, Goldstein explained. The assisted living facility on the cmnpus of BSHEV will assure that kosher dietary laws are met and Jewish environ- ment is maintained. The concept of assisted living is dedicated to preserving a sense of personal dignity, choice and self reliance, and as Brenda Klar notes: "The building of an assisted living facility is the culminatmns of the past two years work of the board and community members. Many meetings, focus groups and discussions have taken place to Brenda Klar shares her Insight assure the building of this state of into the assisted living complex the art facility." with board members. iiiiiiiiiiiiiiiiiIiiinl lllllll111111111111111111111111111111111111111nnullllllllllllnlnllll ii i ii I Mortgage Solutions You Can Afford! it I Branch Manager " il Mohon, Allen - Williams Corporation Mortgage Banking _-"1 [ Reflection Ill, Suite 4-5, Virima Beach, \\; A 2.3452 T.,ll Free (888) 463-3321 1 [ Bu,: (757) 403-8100 V/M: t757 552-2050 [ The Best o[ the Imports. I(LINE TOYOTA GREENBRIER (804) 366-5000 '" Ne Best o[ the l00estJcs. IIMN[ llnlOUT/aO (ao4) 400l-1a00 1 MLAT 01E PIKI!