Thursday, December 20, 2012

“Fiscal Cliff” Charitable Giving Idea

By: Laurie Valentine-COO & Trust Counsel 

The federal gift tax and estate tax exemptions are $5.12 million for gifts made or deaths occurring in 2012. If Congress does not act, the federal estate tax and gift tax exemptions will both drop back to $1 million and the top transfer tax rate will increase to 55% on January 1, 2013.

As 2012 draws to a close, many are focused on how to use all, or a significant portion, of the current $5.12 million gift tax exemption, rather than miss the opportunity that could disappear if congress fails to act and we fall off the “fiscal cliff” (or it acts to reduce the current level of exemption).

If you would like to fund your annual giving for missions, childcare ministries or other charitable causes for the next few years in a new and creative way and coordinate your charitable giving with a plan that allows you use as much as possible of the 2012 federal gift tax exemption amount to make gifts to your family, a charitable lead annuity trust may be a good giving plan to consider.

A charitable lead annuity trust (“CLAT”) is a giving plan that provides a fixed income stream to one or more charitable causes for a designated period of years. At the end of the trust term the trust remainder can either be returned to you (this is a “grantor lead trust”) or be distributed to your children and/or other family members (a “non-grantor lead trust”).

While a lifetime gift to a “non-grantor” CLAT does not entitle you to a charitable income tax deduction, it does provide a way to pass assets to your children or family at a reduced gift and estate tax cost.

Gift tax savings come from the fact the tax value of the future gift to your family is the present value of the remainder trust interest, not the full value of what you give to the trust. Estate tax savings result from the removal of the asset, any subsequent appreciation and the future income it generates from your estate.

Ask your legal and tax advisers how you should be planning for the possibility of reduced estate and gift tax exemptions. A CLAT may be the answer.

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, December 18, 2012

Discipleship Deficiency

By: Barry G. Allen- President & CEO

Spiritual discipline or development, that is – discipleship, is crucial to a growing faith, a maturing relationship with the living Lord and a lifestyle of being the salt of the earth and a light to the world. Christian parents and the church have the primary responsibilities of teaching and modeling discipleship. I had the benefit of both during my formative years and sought to bequeath the same to our children.

In the book, Transformational Discipleship, the authors describe a “discipleship deficiency” that is plaguing the church today. I agree with their assessment. The results of a recent survey by LifeWay Research of Protestant churchgoers also confirmed this descriptor. Among the results were: (1) 19 percent read the Bible daily compared to 68 percent of pet owners who exercised their pets daily; (2) 48 percent pray daily compared to 49 percent of Americans who floss daily; and (3) 55 percent had not memorized a Bible verse in the past 6 months.

Included in his new book, A Legacy of Faith, Dr. Eugene Enlow, Pastor Emeritus of Louisville’s Beechmont Baptist Church, is a chapter on “Why the Church Still Matters.” He characterized this discipleship deficiency as an imbalance that stems from a dearth of sound teaching as well as church members’ lack of acknowledgment of the need for spiritual instruction. Enlow reminds us of the old six-point accountability system by which we checked whether or not we were on time and had studied the Sunday School lesson, had brought our bible and an offering, and were attending the worship service. When that system was abandoned, nothing replaced it to instill a sense of obligation, responsibility and commitment, thus, discipleship deficiency.

Henry Blackaby stated his assessment of the discipleship deficiency this way: “The heart of the Great Commission and discipleship is to teach them to practice everything I have commanded you … and if we want to have a resurgence in the Great Commission, there’s got to be a refocusing on the priorities of Christ for discipleship.”

At the heart of discipleship is financial stewardship about which Jesus had more to say than any other discipline. The mission of the KBF is to teach disciples of Jesus Christ how to obey the biblical mandates of financial stewardship, particularly estate stewardship. Please give us the privilege of assisting you in discipleship sufficiency through your estate plan.

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.

Monday, December 3, 2012

Harvest Plentiful, But Workers Few

By: Barry G. Allen- President & CEO
IMB president Tom Elliff has posed the following question to each of us Southern Baptists, “Does anyone in the darkest corners of this broken world have a legitimate reason to believe that because you care, someone will soon be there with the gospel?” Wow! I trust his question gets your attention like it got mine.

In Matthew 9:35-36 we find Jesus going through all the towns and villages teaching, proclaiming the good news and healing; and when he saw the crowds he had compassion because they were like sheep without a shepherd. Then in verses 37-38 Jesus said to his disciples then and to us, his disciples today, “The harvest is plentiful but the workers are few. Ask the Lord of the harvest, therefore, to send out workers into his harvest field.”

The harvest Jesus is calling us to lift up our eyes and see consists of 7 billion people, 330 million in the USA and 6.67 billion outside the USA. The IMB estimates more than half the world’s population only has a slight chance to hear the gospel, and 1.7 billion are likely to die without ever hearing the name of Jesus. Two people die every second. The equivalent of a city of 150,600 people disappears into eternity every 24 hours. Without Christ, they will be separated from God, forever lost. This is why “the fields are still white unto harvest.”

The IMB provides the best screening, training, sending and supporting of missionaries available anywhere in the evangelical world. And, people who are compassionate for the lost and passionate about taking the gospel to the ends of the earth are responding to the call to missions. But a reason “the workers are few” is the lack of financial resources to train, send and support those whom God is calling.

As you prayerfully ponder what you will give through the Lottie Moon Christmas Offering this year, also consider including a missions component in your estate plan that will perpetuate your passion to reach the lost beyond your lifetime. Call Laurie Valentine or me to show how stewarding a portion of estate could support a missionary(s) for a day, a week, a month or a year.

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, November 20, 2012

Best Practices: Annual Audit

By: Barry G. Allen- President & CEO

The value proposition statement of the Kentucky Baptist Foundation is : “The KBF brings the highest business and Christian ethical standards and methods as a fiduciary of funds and a facilitator of life-changing legacies for Kingdom advancement.”

The KBF’s tagline is this: “steadfast and solid for Kingdom advancement since 1945.”

In keeping with the value proposition and tagline, and consistent with best practices for a not-for-profit corporation, the KBF engages annually an external accounting firm to conduct an audit in accordance with auditing standards generally accepted in the USA. Those standards require the auditors to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles used and significant estimates made by the KBF, as well as evaluating the overall financial statement presentation.

On October 24 the audit committee of the KBF board of directors met with the auditors to receive their “independent auditors’ report.” I am pleased to inform you the KBF received “an unqualified opinion” that the financial statements for the period ended August 31, 2012 presented fairly in all material respects the true financial position of the KBF, and that the changes in its net assets and cash flows were in conformity with accounting principles generally accepted in the USA.

The board of directors will receive a report from the audit committee at the board’s next quarterly meeting in December.

Furthermore, in accordance with the covenant agreement with the Kentucky Baptist Convention, we have provided the KBC’s audit work group with the KBF audit as part of the KBF’s accountability to the constituency it serves.

Oliver Wendell Holmes advised, “Put not your trust in money, but your money in trust.” There is no finer instrument of sacred trust than your Kentucky Baptist Foundation.

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.

Monday, November 19, 2012

E-Devotional- Week 30

Creative Giving Ideas- Week 4

Life Income Gifts


The churches, associations, institutions and agencies of the Kentucky Baptist Convention and Southern Baptist Convention are making a difference for the Kingdom of God in our state, nation and around the world.  They are worthy of significant and sacrificial support that will enhance and undergird their missions and ministries.

Perhaps you would like to make gifts above what you give out of income as tithes and offerings to provide on-going support to one or more of these causes, but you may be concerned that such gifts could affect your financial security and that of your family.  This lesson provides ideas on how you can make a gift that will ultimately benefit causes that are important to you, while retaining the right to receive an income for life for yourself and/or others.

Scripture Reference:  2 Corinthians 9: 6-15; 1 Timothy 6:17-19.
Please read these passages in your Bible now.

Does Giving Have to Be  “All or Nothing”?
Making gifts for the benefit of your church or other Baptist causes does not have to be an “all or nothing” proposition.  There are a number of giving options that allow you to make a charitable gift either during your lifetime or at death, while retaining the right for you and/or others to receive income for life or a term of years.  Charitable gift annuities and charitable remainder trusts are “life income gift” options.

What is a Charitable Gift Annuity?
A charitable gift annuity is a simple contract between you and the Kentucky Baptist Foundation under which we agree to pay you (or you and one other person) a fixed amount (the “annuity”) each year for your lifetime(s), in exchange for your gift of cash or appreciated stocks, bonds or mutual fund shares.  The payments are backed by the assets of the benefiting organization; they’ll be paid no matter what happens to the investment of your gift.  At death, the remaining balance can be distributed to whatever Baptist causes you specify or used to establish (or add to) a permanent endowment fund in your name the income from which will be divided among the causes you designate.

The payment rate is determined by your age at the time you make the gift; the older you are, the higher the payment rate.  For example, the payment rate for a 60-year-old is 4.4%; for a 70-year-old it is 5.1%; for an 80-year-old it is 6.8%; and for someone age 90 or older it is 9.0%.

The amount of the annuity payments is determined by multiplying the payment rate designated for the person(s) who will receive the payments (the “annuitant”) by the value of what you gift.

What are the Benefits of a Charitable Gift Annuity?
}Income that cannot shrink and that you cannot outlive.  The payments are fixed at the time you make the gift and will never vary, no matter what the actual investment performance of what you give.  They will continue to be paid no matter how long you and/or the other annuitant live.

}A portion of the annuity payment amounts you receive each year is not taxable to you.  This may result in an increase in your cash flow, but not your taxable income.  In these days of lower interest rates and smaller stock dividends, increasing the cash in your pocket, but not your income tax bill may be very appealing.

}An immediate income tax deduction is allowable in the year you make the gift equal to the present value of the charity’s interest.

Here’s an example:  Martha Smith, age 70, makes a gift of $5,000 from a matured Certificate of Deposit (CD) to the Kentucky Baptist Foundation in exchange for a 5.1% charitable gift annuity (5.1% is the payment rate for a person age 70).  Martha will receive $255 per year for the rest of her life---a 155% increase over the $100 per year CD interest she has been earning on this money.  Only $50 of the $255 annuity amount she will receive each year will be taxable income, the remaining $205 is received by Martha tax-free---her taxable income has actually decreased, even though her cash flow has increased.  The value of her charitable contribution for tax deduction purposes is $1,735.

Use our planned giving calculator http://www.kybaptist.planyourlegacy.org/GIFTcharitg.php to calculate the benefits to you of creating a charitable gift annuity for the ultimate benefit of your church or other Baptist causes.

What is a Charitable Remainder Trust?
A charitable remainder trust is an arrangement whereby you, as donor, transfer cash, investments or real estate to an irrevocable trust which you set up to pay you (or you and/or others) a designated income stream for life or a term of years.  At your death, or the end of the term of years, whatever remains in the trust is distributed to the charitable causes you have named in the trust agreement.

There are two options for the income stream you can receive.  If you want to receive a fixed payment that is determined at the time the trust is created and never changes, a Charitable Remainder Annuity Trust is the choice for you.  If you would prefer a payment that varies with the investment performance of the trust assets, a Charitable Remainder Unitrust which pays you an amount each year equal to a designated percentage of the value of the trust assets, as revalued each year, is the option that will meet your objectives.

What are the Benefits of a Charitable Remainder Trust?
}Diversification of assets without incurring capital gains taxes.  You may be faced with the fact that one of your holdings has increased in value to the point that it makes up too large a portion of your estate---to many “eggs” are in one basket---or you may have assets that are highly appreciated but are no longer yielding much income or which have become a nuisance to manage.  If you sell a highly appreciated asset, you will be taxed on the capital gain, thereby leaving you with less than the full value of the asset for future investment/use.  Gifting the appreciated asset to a charitable remainder trust is not treated as a sale, so there is no recognition of gain.  When the charitable remainder trust sells the asset, the trust pays no capital gains taxes because it is tax-exempt.  The result---the full value of the gifted asset(s) remains in the trust to produce the income stream you and/or others will receive.

}Potential increase in your cash flow.  The payout rate you select (the law mandates that the rate be at least 5%) may result in payments to you from the trust of larger amounts than the asset(s) you gift were paying.

}An immediate income tax deduction is allowable in the year the gift is made equal to the present value of the charitable remainder interest.

Here’s an example:  Martha Smith, age 70, and her husband, Sam, age 72, own a vacation home in another state which they bought many years ago for $25,000.  Its current market value is $75,000.  Health issues are limiting their ability to continue to use the vacation home; however, they know that if they sell the property they’ll have $50,000 of capital gains on which they’ll owe capital gains taxes.  If they gift the property to a 5% charitable remainder unitrust, their first year’s income from the trust will be $3,750 (5% x $75,000), they will be entitled to a charitable income tax deduction of $31,780 and they will avoid $7,500 of capital gains taxes.  When the trust sells the real estate, the full amount of the sale proceeds will be retained by the trust, it will not owe any capital gains taxes, because it is tax-exempt.  If the sale proceeds are invested to earn an average annual return of 5.5%, Martha and Sam will receive approximately $68,500 over their 19-year joint life expectancy and there will be approximately $69,000 left to be distributed to the designated Baptist causes at the survivor’s death, if at least one of them lives for the full 19 years.

Use our planned giving calculator http://www.kybaptist.planyourlegacy.org/GIFTcharituni.php to calculate the benefits to you of creating a charitable remainder trust for the ultimate benefit of your church or other Baptist causes.

Prayer Focus: Take time now to pray for God’s guidance as you consider whether a life income gift is the way that you can make a lasting difference in this world for the cause of Jesus Christ.

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.

Monday, November 12, 2012

E-Devotional- Week 29


 Creative Giving Ideas- Week 3

Appreciated Asset Gifts 

The churches, associations, institutions and agencies of the Kentucky Baptist Convention and Southern Baptist Convention are making a difference for the Kingdom of God in our state, nation and around the world.  They are worthy of significant and sacrificial support that will enhance and undergird their missions and ministries.

Perhaps you would like to make gifts above what you give out of income as tithes and offerings to provide on-going support to one or more of these causes, but you may be concerned that such gifts could affect your financial security and that of your family.  This lesson focuses on using assets that have appreciated in value for making “above and beyond” gifts to support the ministries that are important to you.

Scripture References:  Luke 16:10-12; 1 Timothy 6:9.
Please read these passages in your Bible now.

What are the Benefits of Using Appreciated Assets to Make Charitable Gifts?
Using appreciated assets such as stocks, bonds, mutual fund shares, or real estate to make gifts to charity during your lifetime provides multiple advantages---a charitable income tax deduction based on the current market value of the asset (assuming you have owned it for at least a year) and avoidance of all or a portion of the capital gains tax that would be incurred if you sold the asset.

How Does Giving An Appreciated Asset Compare to Using Cash for My Gift?
Using an appreciated asset to make your gift to charity can result in a lower after-tax cost to make your gift than if you use the same amount of cash to make your gift.  In essence, the amount coming out of your pocket may be less if you use an appreciated asset.

Example:  Martha wants to make a gift of $10,000 to her church’s building program.  She is trying to decide if she should use some stock that she purchased several years ago for $5,000, which has a current market value of $10,000 or her $10,000 certificate of deposit, which matures soon.  The value of her charitable gift, whether she uses the stock or the cash, is $10,000 that will save $1,500 in income taxes (IF she is in the 15% income tax bracket).  If Martha uses the stock to make her gift, she also saves $750 in capital gains taxes that she would incur if she sells the stock (15% of the $5,000 of capital gains that would be incurred if she sold the sold).  Therefore, the after-tax (out of pocket) cost of making the stock gift is only $7,750 vs. $8,500 if she uses the cash.  See the example below.

                                    Gift of Stock               vs.                   Gift of Cash
Value of Gift               $10,000                                               $10,000
Income Tax Savings    ($1,500)                                             ($1,500)
Capital Gains Savings ($  750)                                                   ---

After-Tax Cost           $  7,750                                               $  8,500


Prayer Focus: Take time now to ask God if you should consider making an appreciated asset gift to your church or other Baptist cause.

Next Week:  Life Income Gifts

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, November 6, 2012

Estates and Premarital Counseling

By: Barry G. Allen- President & CEO

Jane Bryant Quinn said it well, “You own stuff, you will die, someone will get your stuff.” The Apostle Paul advised, “Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever” (1 Timothy 5:8).

Regardless of how much or how little “stuff” a person owns, inherent in the Christian marriage covenant is the duty to God, to each other and to the families of a couple about to be married to have in place a written plan of (1) asset distribution at death and (2) asset management and healthcare decision making should one or both become incapacitated due to an accident or a health condition.

Regretfully, most couples enter into the sacred bond of matrimony without having given any consideration to these vitally important planning issues; this lack of planning at this important point in their lives could result in unintended and devastating consequences.

To help alleviate this, Laurie Valentine, our trust counsel, and I have developed a tool for ministers to use in their premarital counseling ministries. In the development phase, we sought and received the benefit of the wisdom of four experienced Kentucky Baptist pastors each of whom engaged in a premarital counseling ministry in their churches. We incorporated their ideas and suggestions into the tool to keep it as simple but as effective as possible.

We shall be introducing this new tool at the annual meeting of the Kentucky Baptist Convention on November 13 at Immanuel Baptist Church, Lexington. We encourage all ministers who will be at the annual meeting to stop by the Kentucky Baptist Foundation exhibit to view a sample and to place an order for this innovative ministry tool. Kentucky Baptist ministers who will not be attending the KBC annual meeting can call our office toll free and request the tool.

The KBF is making this tool available free of charge to Kentucky Baptist ministers whose ministry includes premarital counseling. We pray with confidence the Lord will bless its use. 

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.

Monday, November 5, 2012

E-Devotional- Week 28

Creative Giving Ideas-Week 2


Giving Out Of Assets Vs. Income 

The churches, associations, institutions and agencies of the Kentucky Baptist Convention and Southern Baptist Convention are making a difference for the Kingdom of God in our state, nation and around the world. They are worthy of significant and sacrificial support that will enhance and undergird their missions and ministries.

Perhaps you would like to make gifts above what you give out of income as tithes and offerings to provide on-going support to one or more of these causes, but you may be concerned that such gifts could affect your financial security and that of your family. This lesson will provide ideas about how you may give out of your assets.

Scripture References: Proverbs 3:9; Luke 16:10-12; 1 Timothy 6:7.

Please read these passages in your Bible now.

How Can I Honor God With My Wealth?

“Wealth” refers to your assets, your estate. Tithes and offering giving is, generally, giving out of your income. Honoring God with your wealth means giving out of your assets, whether it’s to a church building program, Baptist college’s capital campaign, or to establish an endowment fund to benefit state, national and/or international missions. This is giving out of your principal cash, stocks, bonds, mutual fund shares, real estate, life insurance and/or retirement assets.

When Should I Honor God With My Wealth?

Giving out of assets can be done during your lifetime through outright gifts, endowment gifts and life income gifts. Consideration should also be given to giving out of your estate at your death through a bequest in your Will or Trust or a life insurance or retirement account beneficiary designation that sets up a gift of a designated amount or share of your estate to pass to one or more charitable causes at your death.

Is There A Way to Make A Gift That Keeps On Giving?

Many people would like to make a gift that provides on-going support to the cause or causes they want to benefit. This can be accomplished through the creation of an endowment fund. An endowment fund is a permanent, perpetual fund created during your lifetime and/or at your death for the support of one or more charitable causes. Only the earnings of the endowment fund are paid to the causes you designate; the original value of what you place in the endowment fund is never distributed. Endowment fund giving provides the opportunity to make gifts that keep on giving.

Prayer Focus: Take some time now to ask for God’s guidance in how you can honor God with your wealth and extend your Christian witness.

Next Week: Appreciated Asset Gifts 

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, October 30, 2012

Somebody To Turn To

By: Barry G. Allen, President & CEO 

One of the discoveries I’ve made in my 16+ years as KBF president is a large number of Kentucky Baptist church members do not know to whom to turn for information about simple, basic but important estate stewardship issues, and about Christian estate stewardship in particular.

Among the reasons the Kentucky Baptist Foundation was established sixty seven years ago in 1945 as the “trust agency” for Kentucky Baptists was to provide Kentucky Baptist church members a reliable resource to which to turn for information about their basic estate stewardship and charitable gift planning questions. The information we provide is not legal or tax advice. Church members will still need their own advisors.

KBF staff members are available to provide information by telephone, by email and by an in person visit in our office or at the church member’s home.

We can be contacted in any of the following ways: (1) call toll free (KY only) telephone number 866.489.3533 or 502.489.3533; (2) write us at P.O. Box 436389, Louisville, KY 40253-6389; or (3) browse our website www.kybaptistfoundation.org for email contacts.

If you prefer to browse the website, before contacting us or in lieu of contacting us, you may find the information you need, because the website was designed to be a user friendly 24/7 source of information about estate planning, charitable gift planning and legacy gift planning as well as information about the services of the KBF to church members and to churches.

Let me also encourage you (1) to follow us and “like” us on Facebook at www.facebook.com/KentuckyBaptistFoundation; we post articles regularly about estate stewardship and others giving ideas; (2) subscribe to the Western Recorder print or on line version to which Laurie Valentine and I contribute articles on a regular basis; (3) follow me on Twitter @KBFBarry; and (4) call us to subscribe to our quarterly newsletter, Living Legacy.

Please know your Kentucky Baptist Foundation has stood “steadfast and solid since 1945” and continues to be that “somebody you can turn to” for information by the communication method most convenient and desirable to you to answer your simple, basic but important estate stewardship and charitable and legacy gift planning questions.

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.


Monday, October 29, 2012

E-Devotional- Week 27

Creative Giving Ideas-Week 1

  
The churches, associations, institutions and agencies of the Kentucky Baptist Convention and Southern Baptist Convention are making a difference for the Kingdom of God in our state, nation and around the world.  They are worthy of significant and sacrificial support that will enhance and undergird their missions and ministries.

Perhaps you would like to make gifts above what you give out of income as tithes and offerings to provide on-going support to one or more of these causes, but you may be concerned that such gifts could affect your financial security and that of your family.  There are a variety of creative giving options that allow you to “make a lasting difference” while also assuring the future financial security of your family.

As you begin these lessons, take a moment to pray for God’s guidance in this month’s study.

Week 1 – Why Should I Give?

Scripture References:  Psalm 24:1a; Matthew 6:19-21; Mark 12:41-44; 1 Timothy 6:7, 9.
Please read these passages in your Bible now.

What Does the Bible Say About Giving?
The scripture references noted above remind us that everything belongs to God and comes from God.  We are to be good stewards of all that God has given us.  We are to use what God has given us in ways that will benefit the Kingdom of God, not just our own comfort on earth.  No matter your financial station in life you can make a gift that counts because the gift that counts is the gift that costs.

Are There Temporal Benefits to Giving?
Both federal and state tax laws encourage charitable giving.  There is an income tax deduction allowed for lifetime gifts to charity (this would include your tithes and offerings) and an estate tax deduction for charitable gifts made at death.  If you use appreciated securities or real estate to make lifetime gifts, you will also save capital gains taxes.  Life income gifts, discussed in Lesson 4, may actually result in an increase in your income.

What is “Social Capital” and How Should It Factor Into My Giving Decisions?
Our federal and state tax laws were enacted to provide an incentive in the form of tax savings for making gifts to support those agencies and institutions that are providing vital services to our communities.  The government’s philosophy is that private giving does many jobs that otherwise the government might be called upon to do out of tax money.  “Social capital” is that portion of your wealth that will either pass involuntarily to the government as taxes or which can be directed voluntarily by you to charitable causes.  If your social capital passes as taxes, you permit the government to choose what institutions and programs will be supported. Charitable giving allows you to direct what would otherwise pass out of your hands as tax dollars to those causes and organizations that will perpetuate your highest personal values.

Directing your social capital is good stewardship.  The tax savings resulting from your charitable gifts may actually leave more for you and your family to enjoy.  Those savings may also permit you to give more than you ever dreamed possible.

Prayer Focus: Take some time now to pray that God will provide understanding about why you should be considering how you can make gifts above and beyond your tithes and offerings.

Next Week:  Giving Out of Your Assets vs. Your Income

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, October 23, 2012

Charitable Gift Annuities

By: Laurie Valentine, COO & Trust Counsel

Would you like to provide support to your church or another favorite Baptist cause while benefiting from lifetime payments, management of assets and tax savings? If your answer is yes, a charitable gift annuity may be just what you are looking for.

A charitable gift annuity is a contract between you and the Kentucky Baptist Foundation under which you agree to make a gift of cash or appreciated stocks, bonds or mutual fund shares and, in exchange for your gift, the Kentucky Baptist Foundation agrees to pay you a fixed amount each year for your lifetime. The lifetime payments to you are backed by the general assets of the cause(s) that will ultimately benefit from your gift.

The annual payment to you depends upon the value of your gift and your age at the time you make the gift. The older you are the higher the payment rate. The payment amount is not dependent on what your gift earns.

Establishing a charitable gift annuity during your lifetime allows you to provide for your financial needs and those of your family, while at the same time assuring vital future support to the causes you designate to ultimately benefit from your gift.

Tax savings may be available from the charitable income tax deduction that is allowable and also from the fact that part of each payment you receive is tax-free. These benefits can make the cost of establishing a charitable gift annuity very reasonable.

Using appreciated stocks, bonds or mutual fund shares to establish a charitable gift annuity can also provide capital gains tax savings.

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, October 16, 2012

A Good Time For Giving

By: Barry G. Allen- President & CEO

Now is a very good time for giving. With Thanksgiving right around the corner it’s a time to express gratitude to the Lord for all the ways He has blessed our lives, and giving financial gifts to advance His Kingdom is a worthy way to express that gratitude. The Advent season, which follows the Thanksgiving season, is another good time for giving. What better reason to give than “the reason for the season.” And, finally, the end of the calendar year is a good time for giving because you may be able to enjoy some tax savings, which could facilitate a larger gift(s) than you anticipated giving.

The most common asset used for charitable giving is cash in the form of cash, a check or an electronic transfer. If you itemize your tax deductions, gifts of cash may be used to eliminate federal income tax on up to half of your adjusted gross income (AGI). You also may have state income tax savings.

Since the financial markets have behaved rather well this year, you may own some stocks, bonds or mutual fund shares that are worth more than they cost you. Now could be a good time to gift those assets instead of cash because such gifts generally are deductible for income tax purposes at the full market value if you’ve owned them more than one year. Such gifts can be used to offset tax on up to 30% of your AGI, and an added benefit is no capital gain tax is owed because the gift is not a sale. On the other hand, if you own securities worth less than they cost, consider selling them and using the proceeds to make your charitable gift(s). You may be able to deduct the loss on the sale as well as the amount of the gift. Unused deductions in the year of the gift can carry forward for five future years.

To the extent you need assistance in what asset to give, 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.

Tuesday, October 2, 2012

Passing On Digital Assets

By: Barry G. Allen- President & CEO

What will happen to your social media, email and other online accounts that might have financial or sentimental value after you are gone? Unlike my parents’ and grandparents’ situations, my children and grandchildren will not find my photo albums in an old chest in the basement or attic; instead they will find my chest of photo albums in my computer – that is – if I have given them instructions about how to find them before I am gone.

Digital assets include digital files which are stored on your computer, cell phone, a separate disc or on the internet. They include online accounts that require one to enter a user name and a password to access them. Digital files can be critical for identifying your assets, debts, heirs and friends. They likely will have either monetary or sentimental value. As you save more and more documents, photographs and other matters in a digital format, the importance of planning for passing on these digital assets to your heirs becomes increasingly more important.

Therefore, we encourage you to contact your estate planning attorney to discuss including provisions regarding your digital assets in your power of attorney, will and revocable living trust. Create a reference guide that includes a list of every site on which you have an online presence, along with your user names and passwords. Update it regularly as you add new sites and make changes in your passwords.

For additional information on this subject, click on this website: www.thedigitalbeyond.com. Other online resources related to the storage of digital assets and information about online accounts are:

Legacy Locker www.legacylocker.com
Entrusted www.entrustet.com
AssetLock www.assetlock.net
MyWonderfulLife www.mywonderfullife.com
SecureSafe www.securesafe.com

Dealing with digital assets after someone dies has become a huge challenge both for families and the legal system in every state. As Christians dealing with digital assets is part of that estate stewardship responsibility about which the apostle Paul advised and warned in 1 Timothy 5:8. Therefore, let us not “deny the faith,” and be “worse than an unbeliever.”

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, September 25, 2012

Endow Your Tithe

By: Laurie Valentine- COO & Trust Counsel 

Tithing is part of our Christian stewardship responsibilities. It is a discipline practiced by many all of their lives and it is vital to the continued viability of the programs and ministries of our churches.

When you die, will there be someone to “step into your shoes” to provide the funds your tithe has been providing to your church?

To assure your church will have the financial resources it needs, until the Lord returns, consider including in your estate plan a provision for the creation, at your death, of an endowment fund for the benefit of your church. Or, establish an endowment fund now to which you can make modest gifts at regular intervals with provision in your estate plan for a final gift to the endowment at your death.

To assure the funds will be used as an endowment fund, you must specify that in the bequest or beneficiary designation.

To create an endowment fund large enough to have sufficient earnings to fund your tithe in perpetuity requires a gift at your death (or a combination of gifts during life and at your death) equal to approximately 28.5 times your current annual tithe. This assumes an annual distribution rate of 3.5%.

For example, if the current amount you tithe each year is $2,000, the endowment would need to have $57,000 in it ($2,000 x 28.5) by the time you die. Assuming the endowment is invested to grow its value over time, the amount it will distribute to your church will also grow over time.

Assure your tithe will last forever by endowing it.

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, September 18, 2012

Identity Theft: Be On Guard!

By: Barry G. Allen- President & CEO

From time to time I am invited by churches to conduct a financial planning seminar. In one of the segments I identify “common financial difficulties to avoid,” which includes excessive debt, irregular savings, etc. Also included is what I characterize as “providing personal information to identity thieves,” which is a growing threat to anyone and everyone.

In 2011, 11.6 million Americans, many of whom were older adults, were victims of some form of identity theft which totaled $18B. Identity theft occurs when someone gets access to your social security number (SSN), bank or credit card account number, or other identifying information and then uses your identity for their purposes to steal from you or from others.

There is no absolute protection against identity theft. However, there are actions you can take to minimize your risk.

At the top of the list is to be on guard to protect your SSN. Experts recommend you never carry your social security card with you, never write the number on checks (except as required by the IRS), never give it or any other number, such as credit cards, bank accounts, to strangers who call, visit, text or send email messages to you, even if they appear to be legitimate. Unless you’re going to the doctor, don’t carry your Medicare card with you because it contains your SSN.

Be on guard for emails that claim to be from your bank, credit card company, the IRS, the Social Security Administration. Internet fraud is one of the most likely avenues for identity thieves to use. For tips on how to avoid internet fraud and a list of common online scams go to this website: www.onguardonline.gov.

Be on guard to empty your mailbox promptly, and don’t leave outgoing mail in your mailbox. Shred all records, receipts, mail solicitations and other papers before putting them in the trash. And, finally, review all account statements promptly and ask your bank if it offers free alerts that will warn you of suspicious activity.

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, September 4, 2012

Be a Thrillionaire

By: Barry G. Allen- President & CEO


There was an organization called More Than Money. Its membership was comprised of people dedicated to the advocacy of philanthropy. They wanted to make certain those who are busy accumulating all the things money can buy do not miss out on the real joy of what money will support. The More Than Money members claimed life was about giving, not accumulating. They assisted the top five percent of the nation’s “net worthers” to take leadership, earn, give and leave a legacy.

The chair of this fascinating organization with its headquarters in Nashville was Ruth Ann Harnisch. In a previous publication of Contributions, she was portrayed as driven, compulsive with the desire to encourage men and women to philanthropy now. She wanted to help them start letting loose of their money, now, not later. She herself had millions. As far as she was concerned, she was committed to giving it all away. She loved calling on people for gifts for various causes, and she made no judgment on who should give and how much. She called herself a donor activist who gave people the opportunity to invest in growth, spirit and a great cause. Her job was not to extract money from people by force. She would tell them if they were not thrilled to make the gift, do not do it. What she wanted was thrillionaires!

In 2 Corinthians 9:7 the apostle Paul reminded us of this, “each should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.” If you are not already a thrillionaire, there is something missing in your spiritual relationship to Christ that needs immediate attention. Let me give you some biblical examples of thrillionaires. Consider the widow on a fixed income in Mark 12:41-44. What about Zacchaeus, a hard-nosed businessman, in Luke 19:1-10? Consider the single woman in Mark 14:1-9 and Barnabas who gave with no strings attached in Acts 4:36-37. How about the Macedonians in 2 Corinthians 8:1-5 who gave out of their extreme poverty? Of course, Jesus stands as the supreme example and motivation for giving in 2 Corinthians 8:9.

Experience God’s love, be a thrillionaire!

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.

Monday, September 3, 2012

E-Devotional-Week 26

Filling The Gaps With Insurance
Week 5- Giving Through Life Insurance

Many of us have one or more life insurance policies we purchased for a specific reason.  It may have been purchased to provide security for a spouse and children, to pay death taxes, to complete payment of a mortgage, to assure money for your children’s education, to protect a business or to save for future contingencies.

In addition to being an excellent financial planning tool, life insurance can also be an economical, convenient, flexible and immediate way to make meaningful charitable gifts.

There are at least seven ways to give using life insurance:

-       Name a charitable recipient(s) as a primary or secondary beneficiary(s)
-       Purchase a policy and name a charitable recipient(s) as the owner(s) and beneficiary(ies).
-       Give a paid-up policy to a charitable recipient(s)
-       Give a policy on which you are still paying premiums
-       Buy a policy to benefit your heirs to replace what you have given to a charitable recipient(s)
-       Buy a policy on the life of another person and name the charitable recipient(s) the owner and beneficiary(ies).
-       Assign policy dividends to charitable interests.

For more information about the tax benefits and how to give through life insurance, call us toll free in Kentucky at 1.866.489.3533.

Prayer Focus:  Pray for guidance in determining whether or not you have a life insurance policy no longer needed and which could be used to make a gift to your church and/or your other favorite Baptist causes.

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.