Saturday, February 19, 2011

Estate & Gift Tax Changes--Significant but Temporary

By: Laurie Valentine-Trust Counsel & Chief Operating Officer

The federal tax legislation signed into law on December 17, 2010, includes significant changes to the federal estate and gift tax laws. Unfortunately, those changes are not permanent---they are only effective for estates of persons who die in 2011 and 2012.

The federal estate tax exemption amount (the amount that you can pass to anyone any way at your death) has been increased to $5 million and the federal estate tax rate has been lowered to 35%.

The new law includes a provision allowing “portability” of any unused portion of the deceased spouse’s estate tax exemption to the surviving spouse. Under prior law, each spouse had to use all of their own federal estate tax exemption or lose it. That was usually accomplished by including a bypass trust to hold the deceased spouse’s exemption amount in trust for the surviving spouse. The new portability provision allows the executor of the estate of a spouse who dies in 2011 or 2012 to transfer the unused portion of the federal estate tax exemption to the surviving spouse without the creation of a bypass trust.

The unlimited step-up in federal income tax basis of inherited assets has been reinstated. Heirs who inherit assets or property that have increased in value from what the decedent paid for them get a “step-up” (increase) in the cost basis of those assets to their date of death fair market value.

Federal estate and gift tax rules have been re-unified. The federal gift tax exemption has increased from $1 million to the same amount as the estate tax exemption ($5 million) for gifts made in 2011 and 2012 and the gift tax rate for gifts above the exemption amount is the same as the estate tax rate (35%).

Now is the time to review estate plans created under prior federal estate and gift tax laws. Bypass trusts and other provisions required to save taxes under prior law may no longer be needed as a result in the significant increase in the federal estate tax exemption amount and the new exemption portability provision. Consult your estate planning adviser to ensure you have a plan the accomplishes your estate planning objectives.

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, February 15, 2011

Disaster Relief: Offering Hope

By: Barry Allen, President & CEO

A hot meal prepared for a disaster victim, debris clearing for an elderly widow after a tornado, a hot shower for an emergency responder and a Christian witness shared with a disaster survivor – these are just a few of the many ways the Kentucky Baptist Disaster Relief ministry is offering the hope of Jesus Christ across Kentucky, throughout our nation and around the globe.

This important Great Commission ministry traditionally has relied upon (a) the selfless and self-sacrificing efforts of Kentucky Baptist volunteers, who love the Lord and desire to bring hope to those who find themselves in hopeless circumstances, and (b) the collective giving of churches through the Cooperative Program. However, in looking to the future, it is clear this traditional source of funding will not be sufficient to enhance and secure financially this critical ministry even as the need for it increases. As a result, the KBC Mission Board has authorized the establishment with the Kentucky Baptist Foundation of the KBC Disaster Relief Endowment Fund to receive contributions for the direct benefit of this ministry.

This endowment is a perpetual, irrevocable fund from which only the earnings will be used for disaster relief ministry. The principal will be preserved to provide the ministry with long-term financial strength and stability, until Jesus comes again.

Advancing the Kingdom in the future cannot be funded solely by us Christians placing our cash and checks in the offering plate on Sunday mornings. In the future it will require us to steward not only out of our income but also out of our assets. We call that legacy giving, which includes giving in light of one’s overall estate and financial plans and perhaps using tax-advantaged methods.

I like what Mr. Rogers (TV) once said: “The world tomorrow will belong to those who give it hope.” And, Jesus commissioned us “to go and make disciples.” I urge you prayerfully to consider a legacy gift for the benefit of Kingdom advancement through disaster relief. Call me to discover some giving options.

Thursday, February 10, 2011

Partners In Philanthropy- Norris & Jan Shockley

What a blessing it is to know this wonderful Christian couple and to share with you a part of their stewardship story. They learned early in life that spiritual growth comes through service to Christ and His mission, and service involves time, talents and treasures.
Born in Florida, reared by Christian parents in Tennessee, Jan made her profession of faith and graduated from high school in Nashville. Stewardship of time, talents and treasures came naturally given her mother’s leadership in the church’s woman’s missionary union. Norris was born and reared by Christian parents and graduated from high school in Greenville, SC.

They met as students at Furman University and were married in 1964 at Nashville’s Woodmont Baptist Church by its pastor, G. Allen West, before they departed for Germany to serve Norris’ two years as an ROTC-commissioned officer. During this period in Germany they continued to be involved actively in church and served as Sunday school teachers. Norris is a U.S. Army retired Lt. Colonel. By the way, Dr. West became their family’s perpetual pastor and counselor in the ensuing years and has been an important influence in their stewardship journey.

Following military service, Norris’ entire career was in banking, having begun in Winston-Salem, NC, and served as the CFO of banks in Richmond, Charlottesville, VA and Louisville, KY. He thought he had retired when Fifth Third Bank bought Louisville’s Cumberland Savings Bank, but he was called back into action as president of Louisville’s First Bank from which he retired “for good.”

Jan’s career included being wife and mother, English antiques dealer and real estate. She enhanced her education through classes in business, fine arts and arts education.
Although they have been world travelers and involved in a variety of charitable organizations, their first loyalty has been to Christ and through their service at Louisville’s St. Matthews Baptist Church. Both have served in all the church’s leadership roles. In addition, Jan has served on the boards of the Kentucky Baptist Foundation, KBC, Baptist Healthcare System Foundation and Wayne Oates Institute. Norris also has served on a variety of boards, including the University of the Cumberlands, ElderServe and St. Anthony Hospital.

Their two married children are: Paul, III (Louisville) and Janell Caponecchi (Kansas City). Each has two children.

As Kingdom-minded stewards, Jan and Norris Shockley have and continue to demonstrate their love for Christ and His mission in this world, as well as their love for family, through their financial stewardship. They have taken seriously the biblical truths (a) that God owns all things, and they are His managers and (b) they are to honor Him with their “substance,” which includes both regular tithes and offerings of their income as well as over and above giving out of their assets.

With the assistance of our trust counsel, Laurie Valentine, the Shockley’s established an endowment with the KBF that will continue to provide a growing stream of financial support in perpetuity for the benefit of the mission and ministry of their church. They continue to make contributions to this fund.

Also, some years ago Norris and Jan established a short-term charitable remainder trust whereby the earnings were paid to their two children to assist them in financing their graduate studies. At the end of the term, the remainder of the trust assets was added to the endowment fund they had created for their church. As a way to maximize the timing and the tax advantages of donating appreciated assets, the Shockleys utilize a donor advised fund with the KBF from which distributions are made periodically to the charitable causes that are near and dear to their hearts.

Here’s how Jan and Norris described their involvement with the KBF staff: “We were raised in Christian families that taught the stewardship of time, talents and money was what God expected of us. When God blessed us with a financial benefit, we turned to the KBF because we were aware of its faith-based mission, competent staff and open, honest and proven reputation. They presented us with ways to provide for our children’s education, to help our church in a perpetual way and to benefit other nonprofit agencies. We were able to generate larger gifts because of the tax benefits derived from the gift ideas suggested by the KBF staff, who were knowledgeable professionals and able to explain clearly the different giving options.”

Tuesday, February 1, 2011

Wise Foolishness

By: Barry G. Allen- President & CEO

In 1 Corinthians 1:18-25 the Apostle Paul contrasts human and divine wisdom. To understand his argument one must pay attention to the shifts in the meaning of the word “wisdom.” When he uses it for human reason apart from God it has a negative connotation, which is “wisdom of the world.” When he uses it of God it has a positive force, which is something like “God’s wise plan of salvation.” Since God’s plan of salvation is ultimately revealed in the cross of Christ, the word is personified. In other words, Christ on the cross is the ultimate wisdom of God.

Thus, the contrast is between wisdom as human intellectual striving to attain the ultimate and wisdom as revelation, God’s gift. The cross is the divider which separates those who are on their way toward salvation and those who are perishing. “For the message of the cross is foolishness to those who are perishing, but to us who are being saved it is the power of God” (v 18).

In verses 19 -20 Paul establishes the premise that God has rendered worthless all human-centered attempts at salvation: “Has not God made foolish the wisdom of the world?” Not only did God reject the fruitless striving of human wisdom, but also He chose a means of revelation actually contradictory to that wisdom, namely, the foolish proclamation of a crucified Savior: “but we preach Christ crucified: a stumbling block to Jews and foolishness to Gentiles” (v 23). But those whom God has called are able in faith to understand Christ is the ultimate wisdom and power of God (v24).

“For the foolishness of God is wiser than man’s wisdom, and the weakness of God is stronger than man’s strength” (v 25). Therefore, let us demonstrate in our lives this wise foolishness about which Paul wrote, which is the true wisdom of the cross that reduces to foolishness everything the world values, and let us be faithful in living sacrificial lives as we share the Gospel to a culture to which the Gospel seems foolish.