Tuesday, April 29, 2014

An Income For Life, a Legacy Beyond Life

By: Barry G. Allen- President & CEO

I recently received a letter from a 96 year old donor who had set up a charitable gift annuity 16 years ago when she was in her 80’s. She stated “I am 96 years young and want to give a gift to my church that will live on in my memory.” And she wanted to set up another charitable gift annuity and for the benefit of the church of which she has been a member for 83 years. What an inspiration! And what insight she has exhibited in using this unique form of giving to leave a legacy of her love for Christ and His mission in the world through her church while receiving income for the remainder of her life.

Like her, you may depend upon income from certificates of deposit. If so, you wish interest rates were a lot higher than they are. You also may have been thinking about how to provide some kind of financial benefit to your church and/or other charitable causes, but do not feel you can give-up that income-producing CD.

I am happy to inform you the Kentucky Baptist Foundation offers you the same solution this woman has used. That solution is a charitable gift annuity (CGA). A CGA is an agreement between you and the Foundation under which, in exchange for your gift to the Foundation of cash or appreciated assets with a value of at least $5,000, the Foundation agrees to pay you a fixed amount each year for the rest of your life. The payout rate depends upon your age. The older you are, the higher the rate. Also, a CGA can be on one or two lives. It can be on the lives of a husband and wife, or a parent and a child. Not only is the payout partially tax-free, but also the gift is tax deducible. If you give appreciated assets, instead of cash, there likely will be capital gains tax savings. The portion of your gift not needed to make the lifetime annuity payments to you will be available at death for the cause(s) you designate in advance. You can specify for that remaining portion to be available to the charitable causes(s) outright or to be held by the Foundation in a permanent endowment fund with only the earnings, not the principal, being paid to the cause(s) in perpetuity. Anyone age 50 or older is eligible. The one-life rates range from 3.7% at age 50 to 9.0% at age 90+. Other rates are: 4.7% at 65; 5.8% at 75; 7.8% at 85.
As you anticipate the maturity of your CD, consider using it for a CGA, which will provide an income for life and a legacy beyond life. Laurie Valentine and I are awaiting your toll-free call.

For more information, please call us at (502) 489-3533 or toll free in KY at 1(866) 489-3533.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

Thursday, April 24, 2014

Stewardship Truths #4

A 12 part series discussing stewardship.

By: Barry G. Allen


Give generously, thoughtfully, thankfully and cheerfully, and let the tithe be the floor, not the ceiling of your giving.

2 Corinthians 9:6 – 15 “Remember this: whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each person should give what he/she has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver….”

Malachi 3:8 – 10 talks about robbing God and urging the people of God to “bring the whole tithe into the storehouse, that there may be food in my house. Test me in this, says the Lord Almighty, and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it.

Tuesday, April 15, 2014

Give to God and Caesar

By: Barry G. Allen- President & CEO 

Legacy giving by us Christians is unique and distinct because it is a spiritually motivated, not a tax motivated decision.

However, much of the legacy giving in the USA is driven by tax avoidance, not biblical stewardship principles. As Americans we still enjoy the most favorable tax system in the world in terms of encouraging and facilitating charitable giving. So without question we should seek to maximize the available tax benefits in our giving. But, at the end of the day we christians must recognize we shall be held accountable by God for how we steward what He has entrusted to us. And, a legacy gift is a gift you can’t put in the offering plate; it is a gift out of your assets, not your income, and it is made in light of your overall estate and financial plans.

It is important to remember charitable giving in America preceded all of our current tax systems. Many charitable organizations were created and continuously funded through generous outright gifts, bequests in wills and life income gifts before the establishment of the modern federal income tax in 1913, the federal estate tax in 1917 and the federal gift tax in 1935.

I am pleased to acknowledge those whom the KBF has had the privilege of assisting have demonstrated their primary motivation to give was not the tax savings opportunities, but the opportunities to make an impact, to make a lasting difference, to leave a legacy of their love for Christ and His mission in this world through their churches and other christian ministries near and dear to their hearts.

Having said that, taxes can play an important role in the size and the timing of legacy gifts. Inherent in the mission of the KBF is to facilitate the making of legacy gifts by simplifying the process and ensuring each giver is maximizing the tax savings opportunities available. To that end the KBF makes available to all Kentucky Baptists confidential estate and charitable gift planning consultation.

Please call toll free Laurie Valentine, our trust counsel, for assistance in fulfilling the teaching of Jesus to “give to Caesar what is Caesar’s and to God what is God’s” (Matthew 22:21).

For more information, please call us at (502) 489-3533 or toll free in KY at 1(866) 489-3533.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

Thursday, April 10, 2014

Twelve Steps For Christian Estate Planning- Step 4

By: Laurie Valentine- COO & Trust Counsel

A Christian estate plan is one you develop by determining how God wants you to: (1) provide for your family and other “dependents” at your death and (2) have your finances managed and decisions made for you if you became incapacitated and no longer able to do those things for yourself.

Step #4 Plan Your Use of Joint Ownership. Many people put everything they own in joint ownership with others so that, at death, no probate court proceedings are required for the other joint owner to have full ownership and control of the assets. “Joint tenancy with rights of survivorship” titling does avoid probate, but should be used carefully.

Your Will does not control jointly-owned assets. That means that even with a carefully thought out “written plan” (a Will) for asset distribution at death, any assets in joint names will not be governed by that plan.

Putting others’ names on your assets as joint owner makes them just that…an owner with rights in those assets. That could result in those assets being subject to the claims of that other joint owner’s creditors, if he or she gets into some kind of legal or financial difficulty.

And, if the other joint owner dies first you could be taxed on receiving your own assets back from the other joint owner at their death.

Next Month-Step #5 Make Provision for Each Intended Beneficiary.

For more information, please call us at (502) 489-3533 or toll free in KY at 1(866) 489-3533.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

Thursday, April 3, 2014

Retirement Planning with a Charitable Twist

By: Laurie Valentine- COO & Trust Counsel


Cutbacks in the potential to make deductible retirement plan and IRA contributions have left many executives and professionals looking for tax relief in their highest earning years. Many are also looking for a supplementary retirement savings vehicle that permits tax-free growth of their nest egg.

A “retirement unitrust” may be the right planning tool for such individuals, if they are motivated to benefit charitable causes, as well as themselves.

A “retirement unitrust” is a charitable remainder trust that pays the lesser of the net income generated by the trust assets or the unitrust amount (designated percentage of trust asset value, as revalued each year) until a triggering event designated in the trust agreement converts (flips) the trust into a standard charitable remainder unitrust. The benefits of this plan are: a current income tax deduction equal to the present value of charity’s future remainder interest; lower income until the donor retires; possibly substantial “supplemental” retirement income; and a significant ultimate gift to one or more charitable causes.

Here’s an example: Dr. John Brown, age 50, transfers assets worth $100,000 to a unitrust that will pay him the lesser of the net income or 5% annually (the “unitrust amount”) until 2032 when he will turn 68 (the “triggering event”), at which time the unitrust will “flip” (convert) to a standard unitrust paying him 5% each year. The value of his charitable gift is $26,400. If his $100,000 gift is invested to produce an average annual return of 2.5% yield (income) and 5% capital appreciation until the triggering event, the trust will grow to $244,500 by 2032. His unitrust income will also take a big jump from $3,685 in 2031 to $12,030 in 2032, with potential for that to increase as the value of the trust assets increase in later years.

Dr. Brown can also add to the unitrust in future years---think “charitable IRA”, but without the ceiling on contributions an IRA has---entitling him to additional income tax deductions equal to the value of the charity’s remainder interest in the additions.

For more information, please call us at (502) 489-3533 or toll free in KY at 1(866) 489-3533.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.


Tuesday, April 1, 2014

Love is Something You do

By: Barry G. Allen- President & CEO

When I think of this special couple we were able to assist in stewarding their estate, I am reminded of all the ways across the years they have demonstrated their love for Christ, their children and grandchildren, their church and their local community. They will be among the sheep to which the King will say, “Come, you who are blessed of my Father; take your inheritance, the kingdom prepared for you since the creation of the world. For I was hungry and you gave me something to eat …Then the righteous will answer Him, when did we see you hungry and feed you … The King will reply, I tell you the truth, whatever you did for one of the least of these brothers of mine, you did for me.” (Matthew 25:34-40).

This couple is the epitome of Kingdom-minded stewards who love Christ and show it with their time, talents and treasurers. For them, love is not something about which they talk, it is something they do.

When they decided to move from the farm to town, they sought the assistance of Laurie Valentine, our trust counsel, to work with their own legal and financial advisers in exploring ways of making a legacy gift as part of the sale of the farmland on which they lived. The ultimate plan was a win for them, a win for their family and a win for their church.

They donated, prior to the sale, a portion of the appreciated farmland on which they lived to a charitable trust for which the KBF is the trustee. The trust received that portion of the sales proceeds, and they received the balance. From the trust they will receive income for the rest of their lives. At the death of the second to die, the remainder in the trust will establish an endowment that will provide a perpetual stream of income to their church. In addition to the joy they experienced in knowing they were making a lasting difference in the world for the cause of Christ, they also received the following tangible benefits: an income tax deduction which can be used over a total of six years, reduced the capital gains tax on the real estate sale and converted the real estate into income for both of their lifetimes.

Remember, “love is something you do.” Please give us the privilege of assisting you. 

For more information, please call us at (502) 489-3533 or toll free in KY at 1(866) 489-3533.

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.