Gift Expectancies/Term End calculations explained
The Projected Remainder Amounts function produces a report that predicts how much longer each gift will last beyond the Valuation Date you enter.
GiftWrap predicts how long a gift will last based on how the gift term is determined. Most planned gifts make payments for the lifetime of one or more beneficiaries and then terminate. A few make payments for a fixed term of years or for a combination of lives and a fixed term.
A gift with an Account Closed Date prior to the Valuation Date will not be included in the report. Likewise, only beneficiaries alive on the Valuation Date are used to compute the projected year of termination. A gift whose beneficiaries have all died prior to the Valuation Date will not be included in the projection.
Terms based on one or more lives
The predicted remaining duration of a gift that will last for the lifetime of one or more beneficiaries is computed using your choice of mortality tables: Table 2000CM, Table 90CM , Table 80CNSMT , Annuity 2000 table , and 1983 A Table.
The lives used in the computation for each type of gift are as follows:
Gift Type Lives Used In Computation
CGA all Donor/Bene-A, Donor/Bene-I, Bene-A, and Bene-I associations
CRAT all Donor/Bene-A, Donor/Bene-I, Bene-A, and Bene-I associations
CRU all Donor/Bene-A, Donor/Bene-I, Bene-A, and Bene-I associations
PIF all Donor/Bene-A, Donor/Bene-I, Bene-A, and Bene-I associations
RLE all Donor/Bene-N and Bene-N associations
BEQ all Donor associations
Methodology
GiftWrap uses the mortality table you choose and the ages on the Valuation Date of all lives (see list above) to compute the years remaining for a gift. A person's age on the Valuation Date is her age on the birthday nearest the Valuation Date.
The computation can be split into two steps:
1. For each year beyond the current year, GiftWrap uses the mortality table to determine the likelihood that at least one relevant person will still be living in that year.
2. GiftWrap computes the total of all the probabilities calculated in step 1. The result equals the gift years remaining.
Computing the probabilities in step 1: The likelihood that at least one person will be alive equals one minus the likelihood that they will all be dead. Referring to the mortality table you choose, the likelihood a person will be dead equals the number of survivors at her age on the Valuation Date minus the number of survivors at her age in the year in question divided by the number of survivors at her age on the Valuation Date.
For example, if a person is 60 on the Valuation Date and you want to know the probability she will be dead at 70, you can use the survivors at 60 and 70 to compute the answer. If survivors at 60 is 50,000 and survivors at 70 is 40,000, the probability of death by 70 is (50,000 - 40,000) / 50,000 = 0.2. Put another way, the 60 year-old has a 0.8 or 80% chance of living to 70 (1.0 - 0.2 = 0.8).
To compute the likelihood that two 60 year-olds will both be dead at 70, simply multiply their respective probabilities of death together: 0.2 x 0.2 = .04. In other words, there is a 0.96 or 96% chance at least one of the 60 year-olds will live to age 70 (1.0 - .04 = 0.96).
Terms based on a fixed term
The predicted remaining duration of a gift that will last for a fixed number of years is simply the number of years from the Valuation Date you enter to the term end date entered in the giftTerm End Date field. The Term End Date field is in the Details tab of the Gift Information screen.
Terms based on shorter of fixed term and lives
The predicted remaining duration of a gift that will last for the lifetime of one or more beneficiaries or a fixed number of years, whichever is shorter, is computed similarly to a gift whose term is based on lives alone. However, the predicted remaining duration is adjusted downward for the possibility that at least one beneficiary will live longer than the fixed term.
Terms based on longer of fixed term and lives
The predicted remaining duration of a gift that will last for the lifetime of one or more beneficiaries or a fixed number of years, whichever is longer, is computed similarly to a gift whose term is based on lives alone. Since the gift term is guaranteed to last at least until the end of the fixed term, however, the joint life expectancy is adjusted upward for the possibility that all beneficiaries might die prior to the end of the fixed term. As a result, the number of gift years remaining is higher than if the fixed term were not taken into account.
Terms based on lives, then the shorter of lives and a fixed term
The predicted remaining duration of a gift that will last for the lifetime of one or more beneficiaries (group 1), then for the additional lifetimes of one more beneficiaries (group 2) or a fixed term of years, whichever is shorter, is computed by combining the results of other simpler computations. In brief, the predicted remaining duration is adjusted downward for the possibility that at least one beneficiary in group 2 will outlive the fixed term. As a result, the number of gift years remaining is lower than if the fixed term were not taken into account.