Retirement Account Gifts

By: Laurie Valentine-COO & Trust Counsel 

For many, one of the largest assets they may own is their IRA or other retirement account. And, unlike almost any other assets you own, there is potential for a double tax “hit” on the transfer of retirement account assets at your death.

The value of your retirement accounts are part of what is counted in determining if your estate owes any federal estate tax (first tax “hit”) and, if your family is named as the beneficiary/new owner of the retirement account, when family member beneficiaries take funds out of the retirement account after your death they will have to pay income taxes on what they take out (second tax “hit”) just like you did.

To avoid, or reduce, the double tax hit, consider using all or a portion of a retirement account to fund the gifts you want to make at your death to your church and other charitable causes important to you. The portion of the retirement account passing to charitable organizations provides your estate an estate tax charitable deduction and, since your church and other charitable beneficiaries are tax exempt, they do not have to pay income taxes on what they receive from your retirement account.

IRAs and retirements accounts….a great resource to use for giving you want to do at your death.

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.

Giving Appreciation

By: Richard Carnes 

Many individuals are reviewing their charitable contributions at the year end and considering how they could provide additional gifts to their church and ministry causes. Perhaps you would like to make gifts above what you give out of income as tithes and offerings to provide on-going support to additional Baptist causes.

One such way to achieve this giving is to use assets that have appreciated in value for making “above and beyond” gifts to support the Christian ministries that are important to you. If you have investment securities you have owned for more than a year that are worth more than the security cost, consider using this asset to make gifts.

Your deduction will actually be based on the full value of the security. In addition, you will not owe capital gains tax that would normally be due on a sale of the security.

Using an appreciated asset to make a gift to your church or other Baptist cause can result in a lower after-tax cost to make your gift than if you use the same amount of cash to make the donation. Savings from the charitable deduction and the bypass of capital gains can be considerable. How much you save depends on your actual income and capital gains tax rates.

If you own investment securities that are now worth less than they cost, consider selling the security and give the cash proceeds. When you are able to deduct the amount of the loss as well as the gift amount, your deductions may well total more than the current value of the investment.

The process of making gifts of appreciated securities need not be complicated. If your financial advisor holds the securities for your account, instruct that the security be electronically transferred to the financial account of the designated charity. This is often the most convenient way of making your gift.

When giving securities, including mutual funds, bonds, notes or mortgages, specific advice and instructions should be obtained from your financial advisor. Additional time should be allowed for completion of such gift transactions.

The Kentucky Baptist Foundation staff is honored to work with individuals seeking how best to make gifts of appreciated assets to their church and other Baptist causes. To learn more, you may contact the Foundation’s trust counsel, Laurie Valentine, or me at our toll-free number (866) 489-3533.

Richard Carnes is president of the Kentucky Baptist Foundation, PO 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.

12 Creative Giving Ideas for 2015- #12

By: Laurie Valentine- COO & Trust Counsel

A Donor Advised Fund (“DAF”) is a legacy giving plan that provides the giver immediate tax benefits and the input on future distributions.

A DAF is established through gifts to a public charity under an agreement in which the giver retains for himself/herself, and possibly others, the right to make recommendations for future distributions out of their DAF to other charitable organizations. Those recommendations can be for distributions of the DAF’s income and/or principal.

Gifts to a DAF are deductible in the year they are made, whether or not there is any charitable distribution out of the DAF during that year.

A DAF is a good charitable giving plan for people who want flexibility in timing their charitable support. A gift can be made to your DAF at a time when it may be most advantageous for tax-planning purposes without having to immediately decide what charitable causes/projects the gift will ultimate support.

A DAF can also be an excellent tool for teaching philanthropy to children. Including children as “advisors” of the family’s DAF gives them the opportunity to learn first-hand, as the family makes decisions about charitable distribution recommendations together, how their parents approach philanthropy, which organizations they value most and why, and what their parents expect from charitable organizations they support.

Donor advised funds provide flexibility in timing your philanthropic support to charitable causes important to you and a method for “growing” giving children.

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.

Spiritual Shade Trees

By: Richard Carnes

What are your favorite memories of shade trees? I vividly recall the shade tree planted by my grandparents at their home in Rock Springs, Alabama. My memories include making countless freezers of homemade ice cream under this shade tree; family reunion meals spread out beneath the canopy of this tree and lessons taught by two godly grandparents to 15 grandchildren. Looking back, while we grandchildren didn’t plant this tree, we enjoyed all the benefits it provided.

My grandparents’ life example and legacy were built on both spiritual investment and financial investment. As a farmer and an educator, they lived a modest life, but one committed to supporting their church with gifts of time, talent and property. They realized and instilled in their children and grandchildren that they were working to touch lives across the world from their pew in Rock Springs Baptist Church. You might say that my grandparents were planting spiritual shade trees under which they would never sit, but rather for others to enjoy the lasting spiritual blessing they would provide.

You may be asking, what do shade trees and the Kentucky Baptist Foundation have to do with each other? The ministry of the Foundation is focused on encouraging and facilitating legacy actions on the part of Kentucky Baptist church members. Our team fulfills this mission through educating individuals on how to make gifts through their estate plans. These gift decisions will have the effect of planting spiritual shade trees under which the donor may never sit, but under which many others will sit and enjoy the benefit for generations to come.

That is what legacy planning and giving is all about: committing all the talents and resources God has entrusted to you for the benefit of your family, your church family, and all persons that need the hope of Jesus Christ.

Many donors have entrusted the planting of their spiritual shade trees through the Kentucky Baptist Foundation during the past 70 years. The Foundation is pleased that this past year, through the earnings produced on the gifts and investments placed with the Foundation, it was able to distribute $6,102,144 supporting the ministries of Kentucky Baptists across the state and the world.

Let me encourage you to call on the Foundation to assist you in learning how you can plant your own spiritual shade trees. To learn more, contact the Foundation’s trust counsel, Laurie Valentine, or me at our toll-free number (866) 489-3533.

Richard Carnes is 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.