1ALLEY THEATRE

Spring 2011

Remembering Tarrant HancockThis year marks the 10th anniversary of

the passing of Tarrant Hancock, a formerAlley Theatre board member, who diedfollowing a long and courageous battlewith cancer. A strategic thinker whoadvised and assisted emerging technologycompanies, she used her talent and herenthusiasm for the arts to the Alley’s greatadvantage.

After spending her early career in NewYork, Tarrant returned to Houston in1984 to become director of investorrelations for Compaq ComputerCorporation. Institutional Investor namedthe investor relations program shedesigned during her decade-long tenure atCompaq the “best . . . in the industry byfar.” Tarrant went on to start her ownsuccessful consulting company in 1994.

Tarrant joined the Alley’s Board ofDirectors during its 40th anniversaryseason, 1986-87. She was an activemember of the CenterStage patronprogram, hosting opening night eventsand encouraging friends to support theTheatre. An avid traveler, Tarrantparticipated in theatre trips to New Yorkand London led by Alley staff members.

Although her declining health forcedher to curtail attendance at Alleyperformances and events, Tarrantremained supportive of the Alley until her

death in January 2002. In addition,she created a trust through her estate thatproduced a $250,000 gift to the AlleyTheatre. This extraordinary gift wasdirected to the Staging the Future capitalcampaign, which helped fund theconstruction of the Center for TheatreProduction and secured TarrantHancock’s lasting legacy at the Alley.

A gift from a charitable remainder trustis one of the many vehicles that canprovide meaningful support for the AlleyTheatre – along with lasting recognitionfor the donor. Gifts of all sizesare welcomed and deeply appreciatedbecause of the time and considerationinvolved in making a planned gift.For more information, please contactour office or visit our website atalleytheatre.org/plannedgiving. Allinquiries are kept confidential.

WHAT’S INSIDE

• Make a Gift, Keep

Lifetime Income

• Are You Ready for

Social Security?

• Personal Planning

Before Year’s End

• A Legacy That Can

Last for Decades

Tarrant Hancock1941-2002

NINA VANCE LEGACY SOCIETY

Alley Theatre’s Financial, Estate and Gift Planning Newsletter Fall 2012

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Tarrant Hancock chose to leave a legacy gift via acharitable remainder trust. This type of planned giftis a remarkable tool for blending the personal goalsand aspirations donors have for themselves, theirfamilies and charities such as the Alley Theatre.Rather than make a bequest to benefit the Alley’sfuture, you may find it extremely advantageous tocreate a lifetime trust under which you (or othersselected by you) will be paid annual benefits for life.The trust property will benefit the Alley Theatre onlywhen the trust comes to an end. Consider thebenefits:

n An immediate tax deduction is available. Theamount of the deduction will depend on the ages ofthe income recipients and the amount of thepayments you want to receive each year.

n You can transfer stocks or other appreciatedproperty to the trust without losing anything tocapital gains taxes on your paper profit.

n You can choose between fixed payments (anannuity trust) or a variable income plan (unitrust)and decide the amount of income you will receive

each year. In many cases, your income will befavorably taxed.

n The cost of settling your estate will be minimizedand there may be valuable estate tax advantages.

ALLEY THEATRE2

Make a Gift, Keep Lifetime Income

Are You Ready for Social Security?

Don’t expect to walk into the Social Security office onyour 66th birthday and find a check waiting for you. You’llneed to start paperwork several months before that firstpayment is ready. Before that, you should verify that yourearnings have been properly reported. Social Securityformerly mailed annual statements to all wage earners, butthose notifications have been halted for many workers.Instead, the information is available at socialsecurity.gov.The website also contains calculators, charts and answers to frequently asked questions.

(Left to Right) Hallie Foote as Mary Jo and ElizabethAshley as Stella Gordon in the Alley Theatre’sproduction of Dividing the Estate in 2011.

Phot

o by

Jan

n W

haley

Personal Planning Before Year’s End

3APPLAUSE

On January 1, 2013, manyfavorable income tax provisions arescheduled to expire, leavingtaxpayers with higher tax rates,fewer tax breaks and the return ofvarious penalties. Taxes on capitalgains and dividends would go up, as well.

Will our lawmakers allow all thisto happen? The answer to thatquestion probably won’t be knownuntil a “lame duck” session ofCongress convenes toward the endof the year. To help with yourplanning amid this uncertainty, we are pleased tooffer our comprehensive new publication, PersonalPlanning Before Year’s End. We encourage you torequest your free copy.

Our new guide book reviews conventional year-endtax planning strategies and how anticipated taxchanges might impact today’s tax and investmentdecisions. Estate plans also should be reviewed, andperhaps revised, depending on what Congress doesabout tax exemptions. Finally, the remainder of 2012may represent a “window of opportunity” to assistcharities that are important to you. The June 9thedition of the Wall Street Journal contained a longarticle suggesting that, in view of various “sunset”provisions contained in current tax laws, the tax

rewards for charitable giving maynever be better than they are nowin 2012. Furthermore, theincentives for giving could declineconsiderably after this year underlegislative proposals that could:

n Limit the tax savings of donorsin high tax brackets;

n Permit deductions only abovea certain floor (similar to medicalexpense deductions);

n Replace the charitable deductionwith a less generous tax credit;

n Calculate donors’ tax savings under a lower “flattax” rate.

With all that in mind, 2012 may be the best timeto follow through with important contributions youmay have been considering to organizations such asthe Alley Theatre, including gifts of stock that havegrown in value (and that you have owned more thanone year). Charitable remainder trusts may alsoappeal to individuals who wish to “custom design”gifts that provide them with lifetime income.

For your free copy of Personal Planning BeforeYear’s End, simply return the enclosed card in theenvelope provided or call our office. We would behappy to mail or e-mail you a copy of our valuableand timely new publication.

“Theatre is simply what cannot be expressed by any other means; a complexity of words,movements, gestures that convey a vision of the world inexpressible in any other way.”

– Eugene Ionesco

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A Legacy That Can Last for Decades

The typical scenario: A husband designates his wifeas the beneficiary of his IRA. At his death, his wiferolls the IRA over into her own account and takesdistributions over her lifetime.

A better strategy: The husband designates his wifeas the beneficiary of his IRA, names the couple’schildren as secondary beneficiaries and any livinggrandchildren as the beneficiaries in the event hiswife and children die first.

By naming children and grandchildren, the wifenow has the option to “disclaim” her interest in theIRA. The children would become the namedbeneficiaries of the IRA and could take distributionsover their much-longer life expectancies. And if thechildren don’t need the funds, they too can disclaim,in which case the grandchildren could withdrawfunds over their life expectancies.

In many cases, the amount that is withdrawn willbe less than the account is earning tax-sheltered eachyear. As a result, the IRA will continue to grow. Takethe example of a $250,000 IRA with the wife, age 72,as the beneficiary. She has a 15.5-year life expectancyaccording to IRS tables, so she would withdraw$250,000/15.5 or $16,129 (6.45%). However, if her16-year-old grandson were the beneficiary, he has a66.9-year life expectancy and would have to withdraw

only $3,737 or about 1.5%, allowing the additional$12,392 to continue growing.

Your financial advisor can help determine whetherthis strategy will work for you and also help draft thenecessary beneficiary designation documents orperhaps a trust for young beneficiaries. Keep in mindthat any withdrawals from a traditional IRA, whethermade by the surviving spouse, children orgrandchildren, are subject to income tax. You can alsoname a charity such as the Alley Theatre as partial orfull beneficiary of your retirement accounts. Yourestate will be entitled to a charitable deduction, andthe income tax will be avoided on our portion.

If you would like to make a bequest for the future of the Alley Theatre, our legal name is Alley Theatre and our Tax ID number is 74-1143076.

Did You Know?The Alley Theatre is the only

producing arts organization inHouston’s Theatre District that ownsand operates its own performancebuilding and production center.And, the Alley owns these facilitiesdebt free.

Masthead photos: Jeffrey Bean in Cyrano de Bergerac (photo by Michal Daniel). Jennifer Laporte and John Feltch in To Kill a Mockingbird (photo by T. Charles Erickson).

615 Texas AvenueHouston, Texas 77002

713.315.3378marykayw@alleytheatre.org

www.alleytheatre.org

This publication is prepared exclusively for the information of our friends and donors. Its purpose is to point out current tax developments which may be helpful in your tax and financial planning. This materialis based on recent court decisions and current laws and regulations. You should, of course, consult your own legal, tax or financial planner as to the applicability of any item to your own situation.

Mary Kay WittrockDirector of Planned Giving