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.

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.

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.

Securing Your Church’s Financial Future

By: Richard Carnes

In past columns we have discussed how churches are the most overlooked charities in estate stewardship and legacy giving. It is not that church members are opposed to supporting the ministries and mission efforts of their local church in this fashion. Rather, it is primarily due to the fact that most church members are never encouraged by their church leadership to consider giving a part of their estate to their church.

It is imperative that churches provide education and encouragement to its members in seeing their available financial resources much more broadly than just the cash that is placed into the offering plate. These resources can also be a person’s non-cash assets (which on average represent 91% of a person’s net worth).

Church leaders can make great strides in impacting the church’s financial future by seizing the opportunity to teach their church members to become “Kingdom-minded” stewards through the following ways:

· Teach members what the Bible reveals about an authentic stewardship lifestyle.

· Help members realize that how they plan their estate likely will be the most significant act of financial stewardship they will ever make.

· Encourage members to have and up-to-date Christian estate plan.

· Educate members on how to accomplish their charitable giving objectives through their estate planning.

The great news for church leaders is that they are not alone in preparing this type of Christian estate stewardship education and training for its members. The Kentucky Baptist Foundation stands ready to help facilitate this training of church members to become “Kingdom-minded” stewards. An active part of the Foundation’s service is the conducting of no cost seminars and teaching series on financial and estate planning at churches and associations. Also the Foundation staff is available to individuals for free, private estate stewardship consultation as they consider their estate planning, incapacity planning, and charitable gift planning.

To get started with this action step of securing your church’s financial future, 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; www.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.

Flexible Family Philanthropy

By: Laurie Valentine-COO & Trust Counsel 

A Donor Advised Fund (“DAF”) is a 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 you make them, 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.

A Super Saturday

By: Richard Carnes 

Recently, I had the privilege to participate in the first of four Super Saturday training conferences for all the local church ministry segments, including: discipleship, preschool & children, Sunday small groups, Woman’s Missionary Union, worship and music, youth ministry, and the list goes on. This tremendous conference is coordinated by the Kentucky Baptist Convention Mission Board staff.

I enjoyed the great opportunity to meet with the church treasurers that attended the session on Conducting the Financial Business of the Church. This session was facilitated by Don Spencer, the KBC’s Director of the Church Financial Benefits department and Tom Adkisson, the principal partner of a local CPA firm. The informative session provided valuable subject matter for the local church treasurers on the topics of Charitable Contributions, Handling Money in the Church, Basics of Financial Support for Ministers, and Federal Reporting Issues.

It was also my pleasure, as a part of the session, to speak with the treasurers on how the Kentucky Baptist Foundation can assist local churches to bridge the gap to secure the financial future of their ministries. Many people are surprised to learn that churches are the most overlooked charities in estate stewardship and legacy giving support. Actually, this reality should not be a surprise when we recognize the average person’s net worth consists of 9% in cash and 91% in non-cash assets (home equity, life insurance, retirement assets, business assets, and savings.) Most churches’ appeals and education on financial support focus on the 9% cash of the person’s net worth and ignore the remaining 91% of the person’s assets.

The Kentucky Baptist Foundation helps bridge this gap for churches by educating church members on the value of having an up-to-date Christian estate plan to address the 91% of a person’s assets. We provide this educational support to church members through a variety of estate stewardship seminars on how to accomplish their Christian estate planning objectives.

The Kentucky Baptist Foundation staff is also available to assist you by providing private estate stewardship consultation. 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, 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.

12 Creative Giving Ideas for 2015- #9

By Laurie Valentine- COO & Trust Counsel

Legacy giving not only offers a variety of ways to provide valuable support to charitable causes important to you, it can also help you solve personal financial challenges.

One such giving plan is a charitable remainder annuity trust (“CRAT”). A CRAT is an irrevocable trust that pays a fixed, never-changing income stream to the giver and/or others for life or a term of years and the remainder to one or more charities.

Your lifetime gift of cash, securities or real estate to a CRAT entitles you to a current charitable income tax deduction equal to the present value of the charity’s remainder interest. And, a CRAT can provide beneficial ways to solve a variety of financial challenges.

Help a grandchild with college expenses by creating a “term of years” CRAT. A gift of $50,000 to a 10% five-year CRAT will provide a grandchild $5,000 per year for 5 years (a total of $25,000) and the value of the charitable gift for income tax purposes is $25,900. If the trust assets earn an average annual total return of 7.0% over the five year trust term there will be almost $42,000 left to distribute to the charitable causes you name in the trust agreement.

A CRAT may be the right legacy giving plan to provide support to a family member. A gift of $50,000 to a two-life 5.0% CRAT allows you to set up a plan that would pay your family member $2,500 per year for the rest of their life and then that same amount would be paid to you for the rest of your life, if you survive the family member. The value of your deductible charitable gift depends on the age of the family member and you at the time you set up the gift.

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.