Tuesday, October 20, 2015

Giving Now and Later

By: Richard Carnes

Some individuals strongly desire to establish plans to make a legacy gift now, but they are hesitant about giving up the annual income stream from the asset they are considering gifting to a Baptist ministry cause. One effective way to both make a gift and retain a fixed payment for life is through establishing a charitable gift annuity.

A gift annuity enables the donor to make a contribution that might otherwise come through their estate, while also retaining significant benefits today. When a donor establishes a gift annuity through an organization like the Kentucky Baptist Foundation, the property that funds the gift annuity is eventually used for the charitable ministry purpose that the donor designates, just as if the donor had left a bequest by will. But unlike a bequest, a gift annuity will provide the donor with regular payments and other benefits for as long as they live.

Under the terms of a gift annuity the donor can make a charitable gift with cash or other property. The donor or others they designate then receive fixed payments for life. The amount and frequency of the payments are determined at the time the gift annuity is funded. Also, the payments will never change and are designed to continue regardless of how long you live.

Because a portion of the gift annuity will be used for charitable purposes, the donor is entitled to an income tax deduction for the year of gift. Additionally, for a period of time, part of each payment may be received free of income tax, or be taxed at capital gains tax rates that may be significantly lower than rates paid on other income.

To summarize, the benefits for the donor considering this type of legacy gift plan are as follows:

· The satisfaction of making an important contribution to a Baptist ministry in which you believe.

· Fixed payments for life.

· An immediate income tax deduction

· A partial bypass of capital gains tax

· An extended payment of any capital gains tax due

· Partially tax-free payments for a number of years

· Removal of assets from the donor’s taxable estate while continuing to enjoy lifetime payments

To seek assistance in creating a charitable gift annuity that will ultimately provide support for worthy Baptist causes, you may contact the Foundation’s trust counsel, Laurie Valentine, or me at our toll-free number (866) 489-3533.

Richard Carnes is the president of the Kentucky Baptist Foundation, P O Box 436389, Louisville, KY 40253; toll-free (866)489-3533; KYBaptistFoundation.org

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.

Friday, October 9, 2015

12 Creative Giving Ideas for 2015- #10

By Laurie Valentine- COO & Trust Counsel
A charitable lead annuity trust (“CLAT”) is a legacy 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 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 others at 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 interest in the trust, not the full value of what you place in the trust. With careful coordination of the fixed amount being paid to the charitable beneficiaries and the trust term you can reduce the present value of the remainder gift to family significantly. Estate tax savings result from the removal of the asset, any subsequent appreciation and the future income it generates from your estate.

If you church is in a capital campaign or you want to fund your annual giving for missions, childcare ministries or other charitable causes for the next few years in a way that coordinates your charitable giving with a tax-saving way to transfer assets to your family, a CLA may be the legacy giving plan to consider.

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 6, 2015

A Financial Tidal Wave

By: Richard Carnes

The United States is presently in the midst of the largest generational transfer of wealth in history. Most estimates project the amount of this wealth transfer to be upwards of 41 trillion dollars between the years 1998 through 2053. Churches have not capitalized on the opportunity presented by this generational wealth transfer. Also, many churches have not educated their membership about their responsibility to wisely prepare for executing this upcoming wealth transfer in a God honoring way.

In most churches, the stewardship focus has been on tithes and offering giving that comes from members’ income and “liquid assets”, which may represent only a small portion of a member’s net worth. Certainly it is good for the church to instill this discipline of current giving, but the discipline of financial stewardship should also include an attitude of legacy giving.

What is a legacy gift?

· It is a gift over and above tithes and offerings. It is a gift out of assets not out of income.

· It is a gift that can’t be put in the offering plate.

· It is a gift made in light of the giver’s overall estate and financial plans.

· It is a gift that uses tax-advantaged methods to accomplish the giver’s objectives.

· It is a gift that may require professional adviser assistance to complete the contribution.

Developing a coordinated legacy giving effort is how the church can capitalize on the tidal wave of opportunity presented by this generational wealth transfer. The legacy gifts that transpire from the churches’ stewardship education efforts will most certainly provide additional “above and beyond” financial resources that will permit the church to enhance and expand its programs and ministries. Such an effort will also encourage church members to “Honor the Lord with [their] substance” (Proverbs 3:9).

As church leadership prays about its obligation to educate church members about the stewardship of legacy giving, the leadership should determine how legacy gifts will be used to further the church’s mission and what Kingdom impact will result from receiving legacy gifts.

How does a church get started in developing its personalized legacy giving ministry? An excellent first step is to contact the Kentucky Baptist Foundation. We welcome the opportunity to explain our legacy gift program development assistance. You may contact us at our toll-free number (866) 489-3533.

Richard Carnes is the president of the Kentucky Baptist Foundation, P O Box 436389, Louisville, KY 40253; toll-free (866) 489-3533; KYBaptistFoundation.org.

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.