Estate Planning Council of Tompkins CountyThursday, October 13, 2011

Tompkins County Transfer of Wealth Opportunities for your Clients

Turning a One-time Opportunity into Long-term Good for Tompkins County

George FerrariExecutive Director

309 N. Aurora Street272-9333

gferrari@cftompkins.orgwww.cftompkins.org

Surprising wealth transfer in next 50 years

$53 trillion in United States

$2.07 trillion in New York State

$38.63 billion total in Tompkins County

Wealth Transfer

A possible timing scenario for the U.S., New York and Tompkins County

2011-2015

2016-2020

2021-2025

2026-2030

2031-2035

2036-2040

2041-2045

2046-2050

2051-2055

02468

10121416

U. S.New YorkTompkins County

Current Household Net Worth Tompkins County, New York as of 2010

$190,200 per household

$7.4 billion total

Population:

101,564

Estimate2,900 High Net Worth

HouseholdsAssets of >$500,000

Opportunity to retain some portion of Tompkins County’s generational transfer of wealth for future generations through planned giving into charitable

endowments

5%

A possibility for the next 10 to 50 years

LOOKING AHEAD

• For generations, people lived entire livesclose to their birthplace

• Tompkins County wealth generally passed from generation to generation, but primarily stayed in Tompkins County

Yesterday

COMMUNITY WEALTH

• Many of the next generation no longerlive in our county

• Once the wealth leaves our community,it will never return

Today

COMMUNITY WEALTH

Tompkins County has a robust community endowment and a secure future; or,

LOOKING AHEAD

Two possible scenarios

Much of Tompkins County wealth has been transferred to communities in California, Arizona, Florida and beyond.

Three beneficiaries

Taxes CommunityHeirs

PASSING WEALTH FROM ONE GENERATION TO THE NEXT

6+ TIMES

One gift, many generations

YEAR 15

$100,000 in cumulative grants and services

$158,000 balance

YEAR 25

$200,000 in cumulative grants and services

$213,000 balance

assumes 5% annual payout and 8.5% rate of return

INITIAL GIFT INVESTED 1 TIME 2 TIMES

YEAR 50

$625,000 in cumulative grants and services

$455,000 balance

YEAR 1

Establish an endowment

$100,000 gift

LOOKING AHEAD

Impact if only 5% of Tompkins County wealth was given as charitable gifts designated for community endowments

$1.93 billion in 50 years

$126.51 million in 10 years

Many gifts, many generations

If people make a charitable gift of 5% of their estate to community endowments

YEAR 10

$126.5 million charitable gifts

Range from $6.33 to $33.5 million in total grants

$145.5 million community endowments

YEAR 50

$1.93 billion charitable gifts

Range from $96.58 million to $3.5 billion in total grants

$3.94 billion community endowments

LOOKING AHEAD

HISTORY & BACKGROUND

o Millionaires in the Millennium (1999)o Boston Collegeo $41 Trillion TOW opportunityo 1998-2052 period

o Transfer of Wealth in Nebraska (2002)o RUPRI Center for Rural Entrepreneurshipo Completed over 38 studies in 1,100 communities

TOW Studies in the United States

U.S. Household Net Worth1945-1990

1945

1947

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

$0

$2,500

$5,000

$7,500

$10,000

$12,500

$15,000

$17,500

$20,000

$22,500

$25,000

$27,500

$30,000

$32,500

$35,000

$37,500

$40,000

Source: Board of Governors of the Federal Reserve Syste, Statistical Releases, Flow of Funds - Z.1

in b

illi

ons

of r

eal 2

010

doll

ars

Events of the Last Decade

Dot Com & 9-11 CrisisThe Post 9-11 RecessionHousing BubbleFinancial CrisisThe Great Recession of 2008

U.S. Household Net Worth1990-2010 Q2

Q1

Q2

Q3

Q4

Q1

Q2

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009 2009 2009 2010 2010

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

$70,000

$75,000

$80,000

Source: Board of Governors of the Federal Reserve System, Statistical Releases, Flow of Funds - Z.1

in b

illi

ons

of r

eal 2

010

doll

ars

Bubble 1

Dot Com & 9-11 Recession

Bubble 2

Great Reces-sion

Historic Trend Line

Participating community foundations:

• Central New York Community Foundation• Community Foundation of Herkimer & Oneida Counties• Community Foundation of the Hudson Valley• Community Foundation of Tompkins County

Methodology

Scenario Forecast NOT a Prediction ForecastBase year 2010, for 50 year period 2010-60Real NOT Constant Dollars

Estimating Net WorthStep I

Survey of Consumer Finance, The Federal Reserve Board TriennialCurrent Release: 2007

Flow of Funds, The Federal Reserve BoardCurrent Release: December 9, 2010Next Release: March 10, 2011

Estimating Net WorthStep II

Age CharacteristicsMarket Valuation of Property by ClassConcentration of Creative Class Employment &

IncomeDividends, Interest & Rent (DIR) IncomeProprietors’ Employment & IncomeResidential Real Estate, Owned Businesses,

Investments

Scenario Building

Step IPopulation projectionsEconomic growth scenarioStep IIWealth ReleaseStep IIIReview & Verification

Estimating Net WorthStep III

Discounting assetsMotor vehicles, art, jewelry

ImmigrantsGroup quarters populationHigh amenities, vacation homes, retireesEconomic development projectsOther special cases

Tompkins County Technical Advisory Committee

• Suzanne Aigen, Aigen Agency• Martha Armstrong, Tompkins

County Area Development • Fred Ballantyne, TIAA-CREF and

former Community Foundation Board

• Mary Berens, Cornell (ret.) and Community Foundation Board

• Phyllisa DeSarno, Economic Planning, City of Ithaca

• David Kay, CARDI, Cornell University• Paula Peter, The Solstice Group• Ed Marx, Tompkins County

• Jean McPheeters, Tompkins County Chamber of Commerce

• Ed Morton, Chemung Canal Trust Company and Community Foundation Board

• Karen Sharkey, Audrey Edelman USA Realty

• David Squires, Tompkins County, Director of Finance, and Community Foundation Board

• Frost Travis, Travis & Travis Development and Ithaca Rentals and Renovations

• Bryan Warren, Warren Realty

26

Average U.S. Net Worth by Age

Less than 35 35-44 45-54 55-64 65-74 75 or more$0

$200

$400

$600

$800

$1,000

$1,200

$106

$326

$661

$936

$1,015

$638

Age Cohort

Mea

n ne

t wor

th in

thou

sand

s of

rea

l 200

7 do

llar

s

27

Average U.S. Net Worth by Work Status

Working for someone else Self-employed Retired Other not working$0

$500

$1,000

$1,500

$2,000

$2,500

$350

$1,961

$543

$124

Work Status

Mea

n ne

t wor

th in

thou

sand

s of

rea

l 200

7 do

llar

s

28

Average U.S. Net Worth by Education Level

No high school diploma High school diploma Some college College degree$0

$200

$400

$600

$800

$1,000

$1,200

$143

$252

$366

$1,098

Education Level

Mea

n ne

t wor

th in

thou

sand

s of

rea

l 200

7 do

llar

s

Median Age, 2010

20

25

30

35

40

45

Herkimer41.8 Ulster

40.8Putnam

40.7Oneida

40.7 Cayuga40

Madison38.6

Onondaga38.5

Dutchess38.4 New York

37.7 Oswego37.2

U.S.37

Cortland35.3

Tompkins31.5Y

ears

Percent of Group Quarters Population, 2010

0%

2%

4%

6%

8%

10%

12%

14%Tompkins

12.9%

Madison7.5% Cortland

7.2%Oneida6.4%

Ulster6.3%

Dutchess6.3% Cayuga

5.7%

Oswego4.1%

New York3.1%

Onondaga3.0% U.S.

2.7% Putnam2.2% Herkimer

1.7%

Percent of Dividends, Interest and Rent Income, 2009

0%

5%

10%

15%

20%

25%

Tompkins20.08%

U.S.18.02%

Ulster17.99%

New York17.81% Dutchess

16.92% Madison16.18%

Putnam16.17%

Onondaga15.93%

Oneida15.88%

Cortland14.37%

Cayuga14.03%

Herkimer13.66%

Oswego12.05%

Population Growth2000-2010 (Annual)

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%U.S.1.1%

Tompkins0.6% Dutchess

0.6%

Putnam0.5% Ulster

0.4%New York

0.3%

Madison0.1%

Onondaga0.0%

Cortland-0.1%

Oswego-0.1% Oneida

-0.1%

Herkimer-0.3%

Cayuga-0.3%

Per Capita Income Growth2000-2010 (Annual)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Putnam3.4% Tompkins

3.3%

Dutchess3.0%

Ulster2.8%

Onondaga2.7%

Madison2.7% New York

2.6% Cortland2.5%

Herkimer2.5%

Oneida2.4%

U.S.2.4%

Oswego2.4%

Cayuga2.4%

Many gifts, many generations

If people make a charitable gift of 5% of their estate to community endowments

YEAR 10

$126.5 million charitable gifts

Range from $6.33 to $33.5 million in total grants

$145.5 million community endowments

YEAR 50

$1.93 billion charitable gifts

Range from $96.58 million to $3.5 billion in total grants

$3.94 billion community endowments

LOOKING AHEAD

Everyone can be a philanthropist, with the help of professional estate planners