While you're considering your charitable giving in the year 2015, I'd like to tell you more about endowments--a type of planned gift that creates ongoing income for your chosen ministry. Endowments are easy to establish and can be started with a relatively small initial deposit. They:
- can be funded with cash, stock, real estate, livestock, crops, or any marketable item of value
- can be named after anyone you wish to honor
- produce resources to benefit ministries far into the future
I'd like to share a story with you that illustrates how endowments can provide for ministry. An elderly widow, passionate for her local church, was concerned that when she passed away, her local church would no longer receive her tithe. She made a single contribution to an endowment that assures her church an amount equivalent to her tithe for at least 20 years beyond her passing.
If you've been inspired by this story as I have, I invite you to contact us to learn more about endowments. You can reach us at 913.577.2983 or info@nazarenefoundation.org. To read more about our services, visit www.NazareneFoundation.org.
Blessings,
Kenneth R. Roney, J.D.
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PERSONAL PLANNER
Trusts for Surviving Spouse
 There are three different basic types of trusts for a surviving spouse: a qualified terminable interest property trust (QTIP), a qualified domestic trust (QDOT) or a charitable remainder trust (CRT). All three of these trusts may qualify for the marital deduction. However, there are many specific reasons for choosing one of these three trust types.
QTIP Trust
The QTIP trust is the most common marital deduction trust. There are four basic rules for the QTIP trust:
- All income must be paid to the surviving spouse.
- The surviving spouse may require the trustee to invest in assets that produce income.
- The principal may be invaded only for the benefit of the surviving spouse.
- The trust remainder will be distributed to the beneficiaries designated under the will of the first to pass away.
A QTIP trust is excellent for protecting the children of a first marriage. The trust can benefit the surviving spouse and then will be transferred to those children.
Example—Jane Lost Everything But Betty Was Protected
Joe and Jane were married and had two children. On Saturday evenings, they often went to dinner with their friends Bill and Betty.
Joe passed away first and had a simple will. He left his estate outright to Jane. It qualified for the estate marital deduction so there was no estate tax.
Subsequently, Jane married John Speculator. John was involved in a Brazilian gold mining adventure. The entire estate of Jane was soon invested far south of the border, never to return. Jane and her children lost everything.
Bill and Betty decided to protect their estate. Bill created a QTIP trust for his half of the estate. When Bill passed away, Betty was the beneficiary of the QTIP trust. After a few years, she married Sam Speculator. While Sam was involved in the Brazilian gold mining adventure, the QTIP created by Bill provided income and protection for Betty for her lifetime. In addition, the QTIP principal was protected.
QTIP Powers and Election
There are several powers that are permitted for a QTIP. First, the required provisions are that the income be paid to the surviving spouse and principal can be invaded only for the surviving spouse. However, the trustee may choose to transfer the greater of 5% of trust assets or $5,000 each year to the surviving spouse. In addition, it is permitted to allow the surviving spouse to appoint the remainder. If the surviving spouse holds the power to appoint, he or she can direct the trust to children from the first marriage, but also could give trust assets to other persons.
A QTIP must be elected on the Form 706 Federal Estate Tax Return. It is also possible to make a partial QTIP election and to create a transfer of the balance that is taxable in the first estate. The benefit of this plan is that this amount will be tax free to family in the second estate.
QDOT Trusts
If a spouse is not a U.S. citizen, then a transfer will not qualify for the federal marital deduction. In this case it is possible to create a qualified domestic trust (QDOT).
With a QDOT, the surviving spouse will receive all income. There must be at least one trustee that is a U.S. citizen or corporation. If the surviving spouse receives distributions of principal, those will be subject to estate tax, with one exception. There is a "hardship" exception that may allow tax-free principal distributions for emergency medical care or other extraordinary circumstances.
If the surviving spouse desires to qualify for the regular marital deduction, he or she may become a U.S. citizen prior to the date for filing the federal Form 706 Estate Tax Return.
Charitable Remainder Trust (CRT)
The third option for a qualified marital deduction trust is a charitable remainder trust. The trust may be created as a two-life agreement during the joint lifetimes of the spouses or it could be created in a will or living trust to benefit the surviving spouse.
There are two different payout options for this CRT. A standard CRT pays 5% or more each year to the surviving spouse. This payout is made from income and, if necessary, from trust principal. An attractive benefit of a CRT is that it may grow tax free during the life of the surviving spouse.
Part of the CRT payments may be distributed at the lower capital gain rates. Finally, because the assets are stepped up to fair market value in the estate, the potential exists to invest in municipal bonds and pay out tax-free income to the spouse.
A second payout method is a net-income-plus-makeup unitrust. This trust method can enable the principal to be invested for growth rather than income. Because the growth inside the trust is tax free, the surviving spouse may dramatically lower income taxes if he or she does not need the income. Rather than taking the full CRT payout and paying income tax, the spouse permits the trustee to invest for growth for his or her lifetime. If income is needed at a higher level later in life, the trustee may reinvest for income and pay the regular income plus make up the prior shortfall.
With a CRT, after the surviving spouse passes away the remainder is distributed to qualified exempt charities. The charities may be designated by the first spouse to pass away, or a power can be given to the surviving spouse to designate the charities.
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SAVVY LIVING
Personal Tech Products Designed For Older Adults
 Can you recommend any tablets, smartphones or computers that are specifically designed for older adults? I would like to buy a device for my technology-challenged grandmother so she can get online and keep up with her grandkids better, but it needs to be simplified so she can use it.
There are several new tech products on the market today that are designed specifically for older boomers and seniors that are unfamiliar or uncomfortable with technology.
These devices come equipped with simplified software, big, vivid features, less clutter and better customer support packages, which makes them more appealing and much easier to use than mainstream devices. Here are several top senior-friendly options.
Smartphone
If you’re thinking about a smartphone for your grandmother, check out the new GreatCall Touch3. Made by Samsung, this Android smartphone has a 4-inch touchscreen with an organized large icon menu list on the home screen that provides users simple access to often-used features like the phone, text messages, camera, pictures, email and Internet, along with your contacts and apps.
It also has a 5-megapixel camera, a full-size onscreen keyboard and offers a variety of health and safety features. The safety features include the 5Star app that lets you immediately speak to a certified agent 24/7 who can identify your location and get you the help you need. Also, the GreatCall Touch3 includes Urgent Care, which provides access to registered nurses and doctors for advice and diagnoses. Finally, it includes MedCoach, which sends medication reminders.
Available at greatcall.com or 800-918-8543, the Touch3 sells for $170 with a $20 introductory discount and a one-time activation fee of $35. No contract is required. Monthly service plans that include unlimited 5Star and Urgent Care service start at $25 per month. Data plans start at $2.50 per month for 20MB of data.
Tablet Computer
If you’re considering a tablet, a top senior-friendly option is AARP’s new RealPad, which costs $189 at aarprealpad.org, walmart.com/realpad or Walmart stores.
Produced in partnership with Intel, the RealPad is an Android tablet with a 7.85-inch touchscreen. It provides a clutter-free simplified home page with large text icons to frequently used functions like email, social networks, weather, news, games, camera and pictures, Google, the Web, apps and more.
It also has a 2-megapixel front camera, a 5-megapixel rear camera and comes with 24/7 phone support, a number of tutorial videos and a “Real QuickFix” tool that connects users to technology support agents over the Internet who can access the tablet and fix problems.
Desktop Computer
If you think your grandmother would like a desktop computer, the Telikin (telikin.com, 800-717-7640), which has been around for three years now, is an excellent choice.
Ready to go right out of the box, this all-in-one touch-screen computer displays a big button menu on the screen at all times, providing simple access to most functions like the Internet, email, games, video chat, photo sharing, news, weather and more.
Available in two sizes – the 18.6-inch “Telikin Touch” that costs $699, and the 22-inch “Telikin Elite II” for $1,079 – these computers come with built-in speakers, a Web camera, microphone, wired keyboard and mouse. They also offer a “tech buddy” feature so you can access your grandma’s Telikin computer remotely from your computer to help her when she needs it.
Running on Linux software instead of the standard Windows or Mac OS, the Telikin is also virus-resistant, comes with a 60-day trial period, a one-year warranty and free tech support.
It’s also worth noting that Telikin has a partnership with firstSTREET – a senior product direct marketing company – that is also selling the 22-inch Telikin for $1,079, but have rebranded it as the “WOW! Computer for Seniors.”
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
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YOUR PLAN
The Giving Bone by Mark Lail
 Hum with me please! The toe bone's connected to the foot bone, the foot bone's connected to the ankle bone, the ankle bone's connected... Well, as much as I've enjoyed the chorus, the favored tune misses an important anatomical reality; the giving bone is connected to the heart bone. And everyone has a giving bone, whether they have a balance sheet designed for an armored truck or one that might buy lunch, depending on the restaurant. Jesus taught us more than once that the generosity is in the size of the heart, rather than the size of the gift. His illustration of the widow and her little bitty offering (all that she had) teaches us that the joy of giving is not reserved for those with great wealth. Even the poor can experience the joy of blessing the Lord and his people.
That giving bone, the one connected to the heart, is susceptible to various diseases; selfishness, control or pride to name a few. For good health, one must exercise the giving bone often. Consistent tithing will keep it strong but even more effectively when combined with frequent additional gifts to the Lord and his people. Stewardship is the Lord's way of raising people, not money. Generous giving is a natural outgrowth of a life devoted to God and his son, Jesus Christ. As stewards, we recognize that God is the owner and giver of everything. We give, we exercise the giving bone, and the exercise makes us stronger. As Christians, we grow.
One of the privileges of being a Christian is the responsible care of his property. After the Lord gives a few decades of life including the privilege of working, earning, saving and giving, most Christians stand at the threshold of a great opportunity, the opportunity to make a life gift to the Kingdom of God. Of course this can happen through ordinary wills or trusts but the opportunities today are so much more diversified. Charitable Gift Annuities, for example, are like feeding vitamins to the giving bone! They offer the donor a current income stream in addition to the joy of legacy giving. Endowments provide the opportunity to exercise the giving bone even after the Christian's promotion to heavenly reward.
Peter encourages the early church to give generously. ?The end of all things is near. Therefore be alert and of sober mind so that you may pray. Above all, love each other deeply, because love covers over a multitude of sins. Offer hospitality to one another without grumbling. Each of you should use whatever gift you have received to serve others, as faithful stewards of God's grace in its various forms. If anyone speaks, they should do so as one who speaks the very words of God. If anyone serves, they should do so with the strength God provides, so that in all things God may be praised through Jesus Christ. To him be the glory and the power for ever and ever.? (1 Peter 4:7-11) That was a very different culture than ours but I doubt that Peter's message would change much if he were speaking directly to us today. We have been recipients of God's richest blessings so the expectation is that we will give richly from what we have received.
The giving bone really is connected to the heart bone. A healthy heart seeks to share rather than to hoard. A healthy heart trusts. A healthy heart gives!
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WASHINGTON NEWS
IRS Filing Season Opens January 20
 In IR-2014-119, the IRS announced that the 2015 tax filing season will open on January 20. Previously, IRS Commissioner John Koskinen had warned that the late passage of the tax extenders bill could delay 2014 tax returns. It now appears that there will be a reasonably normal tax-filing season.
Koskinen noted, “We have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems. Our employees will continue an aggressive schedule of testing and preparation of our systems during the next month to complete the final stages needed for the 2015 tax season.”
With the New Year, Commissioner Koskinen will need to work with both parties. The IRS is part of the Treasury Department and Treasury Secretary Jacob Lew will represent the interests of the White House on tax issues.
The new Chairman of the Senate Finance Committee is Orrin Hatch (R-UT). He has regularly stated a strong interest in producing a bipartisan tax reform bill in the Senate.
The incoming Chairman of the House Ways and Means Committee is Paul Ryan (R-WI). He also has indicated a strong interest in moving forward with tax reform. Chairman Ryan sent a December memo to House Ways and Means Republicans and asked them to work with the staff so that new proposed bills would represent “a consensus as much as possible.” He expressed the belief that introducing legislation consistent with his tax reform goals would be beneficial.
Commissioner Koskinen also will appear this year before the House Ways and Means Oversight Committee and its new Chairman Peter Roskam (R-IL). The House Oversight Committee bears responsibility for encouraging the IRS to be objective and efficient in its tax administration.
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 FINANCES
Stocks - Pier 1 Reports Solid Results
Pier 1 Imports, Inc. (PIR) announced its third quarter results on Thursday, December 18, 2014. The company’s results were largely in line with expectations.
Sales during the quarter were $484.5 million, a 4.1% increase year-over-year. This figure was slightly below estimates of $488.5 million.
“E-Commerce sales have grown three-fold over last year, reaching 12% of total sales in the third quarter,” said Pier 1 Imports’ President and CEO Alex W. Smith. “We are confident that the value proposition created by our exclusive and unique product remains strong, and our refined promotional strategy—which benefited this period—will contribute to gradual improvement in our gross margin rate over the coming quarters.”
The company reported that net income during the quarter was $17.9 million or $0.20 per share. This was lower than the same quarter last year but in line with expectations.
Pier 1 Imports performance so far this year has not engendered confidence among investors. Until the release of its third quarter results, the company’s share price had fallen 40% on the year, having reached $13.91 on Thursday, December 19. However, following the earnings announcement, the company’s share price began to rise, reaching over $15 on December 31.
Pier 1 Imports, Inc. (PIR) shares ended the week at $15.06.
Winnebago’s Results Disappoint
Winnebago Industries, Inc. (WGO), a recreational vehicle manufacturer, announced its first quarter results on Thursday, December 18, 2014. Having already faced a difficult year, the company’s results were below expectations.
Revenue for the quarter was $224.4 million, which was an 8% increase over the same period last year. However, this was below expectations calling for revenue of $234.5 million.
“We faced significant operational challenges in the first quarter because of variances attributed in large part to labor-related inefficiencies and supply chain disruptions, which impacted our ability to finish and ship all of the units we otherwise would have,” said Winnebago Industries Chairman, CEO and President Randy Potts. “We look forward to improving results as Fiscal 2015 progresses.”
The company reported that net income during the quarter was $9.9 million or $0.37 per share. This was below expectations for earnings per share to be $0.45.
Overall, Winnebago’s quarterly results disappointed investors. The company cited labor constraints and supply chain disruptions as root causes of the disappointing results. Over the past twelve months the company’s share price has plunged 25%. As such, it is clear the company has its work cut out for it to turn its fortunes around.
Winnebago Industries, Inc. (WGO) shares ended the week at $21.90.
Scholastic Corp. Has Strong Quarter
The Scholastic Corporation (SCHL), a renowned children’s publishing, education and media company, announced its second quarter results on Thursday, December 18, 2014.
The company reported that revenue during the quarter increased 7% to $665.6 million. This was greater than estimates calling for revenue of $636.4 million.
“Scholastic had a solid quarter of revenue growth with significant gains in our Club and Fair school distribution channels, reflecting the success of the new marketing strategies implemented by Clubs in the second half of last year, as well as in classroom books,” said Scholastic Corporation Chairman, President and CEO Richard Robinson. “Despite lower sales of core educational technology products in the quarter in comparison to last year, we are encouraged by an improving pipeline that we believe will lead to increased purchases of reading and math intervention programs, which are effective in raising student achievement.”
Scholastic reported that earnings per share during the quarter, excluding one-time items, was $2.17. This was an increase over the $2.15 reported during the same period last year but below expectations for earnings per share of $2.22.
Scholastic Corporation had a strong quarter overall, though it did miss expectations for earnings per share. The company’s strong revenue growth during the quarter was driven by a 14% increase in children’s books sales. Following the earnings announcement the company saw its share price rise, eventually reaching upwards of $36 per share.
Scholastic Corporation (SCHL) shares ended the week at $35.93.
The Dow started the week of 12/29 at 18,047 and closed at 17,833 on 12/31. The S&P 500 started the week at 2,088 and closed at 2,082. The NASDAQ started the week at 4,801 and closed at 4,791.
Bonds - Treasuries Rise as Yield Gap Widens
Treasury prices rose during the week of December 29 as 2014 ended and 2015 began. The demand for U.S. Treasury bonds is being driven by continued economic weakness in Europe.
As Treasury prices rose on Friday, January 2, the gap between the 10-year Treasury yield and the equivalent German 10-year bund reached a 15-year high. The German 10-year bund dropped to a record low after comments from European Central Bank President Mario Draghi that there is a risk of deflation. The weak situation in Europe also caused the U.S. dollar to rise compared to all of its 16 major peers.
“It’s the same thing we were dealing with last year, the concern about slow growth in Europe,” said Larry Milstein, Managing Director of Government-debt Trading at R.W. Pressprich & Co. “That’s pulling Treasuries lower in yield. In terms of relative value, it’s better in terms of the strong dollar and higher yields.”
As 2014 turned to 2015 this week, the benchmark 10-year Treasury yield ended the year at 2.17%. This was a far cry from predictions that the 10-year yield would rise to 3.44% by the end of 2014. With the increased uncertainty in Europe, many analysts fear the 10-year yield could fall even further in 2015.
Treasury yields could still rise in 2015 if the Federal Reserve decides to raise the benchmark interest rate from its near zero level. Whether the Federal Reserve raises interest rates depends on signs of continued strength in the U.S. economy, which grew 5% in the third quarter of 2014.
The 10-year Treasury note yield finished the week of 12/29 at 2.12% while the 30-year Treasury note yield finished the week at 2.70%.
CDs and Mortgages - Interest Rates Show Slight Increase
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Wednesday, December 31. The results show mortgage rates rising this week on increasing consumer confidence and housing prices.
The 30-year fixed rate mortgage averaged 3.87% this week. This was up from last week when it averaged 3.83%.
This week, the 15-year fixed rate mortgage averaged 3.15%. This number was an increase from last week when it averaged 3.10%.
“While mortgage rates edged up this week, they remain near 2014 lows,” said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. “Looking at full year data, the 30-year fixed-rate average for 2014 was 4.17%, the highest annual average since 2011. Also, the Conference Board reported that confidence among consumers rose in December and the S&P/Case-Shiller Seasonally-Adjusted National house price index rose 4.6% over the 12-months ending in October 2014.”
The money market fund finished the week of 12/29 at 0.4%. The 1-year CD finished at 0.7%. |
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Are you a Nazarene Legacy Partner (NLP)? The answer is “YES” if you have designated any gift to a Nazarene ministry in your will, bequest, or estate plan. This could be a tithe on your estate, an insurance beneficiary designation to your local church, college, global mission, or any other Nazarene ministry you support.
Send us your name and contact information by reply email and indicate “I am a Nazarene Legacy Partner” and we will add your name to our NLP honor roll. To model generosity inspires others to do the same. Thank you for your interest in gift planning. To access any of this updated financial and gift planning information, please select our website. |
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