If you're looking for a way to benefit the ministry of your choice both now and in the future, a donor-advised fund might be right for you. With a donor-advised fund (DAF) you can make gifts to charity during your lifetime and, when you pass away, your children can carry on your legacy of giving.
How It Works
You make an initial gift of cash or stock to fund a DAF at the ministry of your choice.
You make annual recommendations on gifts to be made from your DAF.
When you pass away, your children may recommend charitable gifts from your DAF for a number of years.
At the end of the term, the remaining funds become an asset of your chosen ministry, which will help further its mission.
Blessings,
Kenneth R. Roney, J.D.
President
PERSONAL PLANNER
Gifts of Cash
Sara: "We had a pretty good year this year. After all the financial changes last year, we decided it was a good time to be more careful. So we watched our budget, took a less expensive vacation, and we actually have substantial savings at the end of this year."
Jane: "Yes. Joe and I were also careful. We have been talking. After setting aside part of our cash savings, we could maybe make some gifts this year. Next Tuesday, we're planning to meet with our tax advisor to discuss some gifts."
Sara: "Harry and I met with our advisor last week to talk about some end-of-year gifts. We plan to make some gifts to the children and also some gifts to charity."
Gifts to Children and Other Heirs
Sara is wise to consider gifts to children or other heirs. In 2015, she and Harry can make gifts of $14,000 each to their children or other beneficiaries using their annual gift exclusions. Sara and Harry decide to make gifts to their two children. Based upon the $14,000 annual exclusion for two donors and two children, they could give $56,000 with no gift tax and no requirement to file a gift tax return.
One good strategy that many parents use is to make a gift of property and to save the cash themselves. For example, if Sara and Harry have some shares of public stock it makes good sense for them to make gifts of their appreciated stock to their children or other heirs. They can then invest the cash themselves and replace the gifted property.
There are two benefits for Sara and Harry if they make the gift of stock. First, the basis in the stock flows through to the children. If the children later sell the stock, they will pay the capital gains tax. However, Harry and Sara have avoided paying the tax themselves and recognition of the gain may be deferred for many years. Sara and Harry can place the cash in their investment fund and replace the stock given to children or other heirs.
Second, it frequently is desirable for children and other heirs to receive property rather than cash. Children tend to spend cash quickly for consumer items. Harry and Sara would like their children to learn to save and invest. A gift of stock is much more likely to lead the children to follow the example of Harry and Sara.
Gifts to Charity
Both Sara and Jane are considering gifts to charity. It is a very good time for them to consider a cash gift. Because they were careful in budgeting this year, both Sara and Jane have a greater opportunity to make a substantial cash gift this year.
Making a cash gift is quite easy. You can simply write a check to your favorite charity. But it is important to make sure that you follow the requirements of the IRS in order to receive your appropriate tax savings for your gift.
Cash Gifts and the IRS
A cash gift saves tax at your top tax rate. For example, if you are in the 33% tax bracket, then a gift of $100 produces a charitable deduction of that amount. Multiplying the $100 times your 33% tax bracket produces an actual tax savings of $33. Of course, in some states you will also save state income taxes.
Your gift by check may be mailed to the charity. If you place the check in the U.S. mail by December 31 of this year and the check clears, it will be deducted in 2015 even though the charity receives the check next year.
If you make a gift of more than $250 to a charity, you must receive what the IRS calls "contemporaneous written acknowledgment" and what you probably refer to as a receipt. The charity will send you a receipt when the gift is made or at the end of the year when you are preparing to file your tax returns. You should keep the receipt or a copy for your records so that you can prove that the gift qualifies for a charitable deduction.
If you make charitable gifts using payroll deductions, you will be permitted to claim the charitable deduction. In that case, you must retain a pay stub or a Form W-2 from your employer that shows the amount given to charity.
You may also spend cash amounts that are deductible as volunteer expenses. In this case, you should make records of each expenditure that shows the services that were rendered to the charity. It also is important to note whether any goods or services have been transferred by the charity back to you.
Charities sometimes make transfers back to donors. A common type of transfer back is a charity dinner. For example, if the charity charges $100 for a dinner event and the value of the dinner is $18, then the charity will send you a receipt that shows a charitable gift of $82. The IRS has a special name for this gift. They call it a "quid pro quo" gift. If the charity is giving something substantial back to you, such as a dinner, the amount of your deduction is just the charitable part of the payment.
Another possible option is for a charity to give you a token gift. If the charity gives a donor a "low value" item that has the logo, colors or identification of the charity on it, it will be disregarded.
For 2015, donors who make gifts of $52.50 or more may receive items with the name or logo of the charity that are valued at less than $10.50. For donors who make fairly large gifts, the token item may generally have a value up to 2% of the amount of the gift with a limit on the token item value at $105. In the future, those numbers will increase slightly.
Summary
If you have been careful in budgeting this year like Sara and Jane, it may also be a very good time to make an end-of-year cash gift. By following the guidelines that are set forth, you can make sure that you have provided a very nice benefit for a favorite charity and also receive your full charitable deduction on your income taxes.
SAVVY LIVINGWho Should Buy Long-Term Care Insurance?
Is there a good rule of thumb on who should buy a long-term care insurance policy? My wife and I have a few assets we'd like to protect, but we hate the idea of paying expensive monthly premiums for a policy we may never use.
There are two key factors - your financial situation and health history - to consider when deciding whether to buy long-term care (LTC) insurance. Currently, only around 8 million Americans own a policy. Here's what you should know.
LTC Insurance?
The cost of LTC (which includes nursing home, assisted living and in-home care) continues to skyrocket and it is important to know that most people pay for LTC from personal savings, Medicaid when their savings is depleted or through an LTC insurance policy. The national median average cost for nursing home care today is over $87,000 per year, while assisted living averages $42,000 per year.
While national statistics show that about 70% of Americans 65 and older will need some kind of LTC, many people may not need to purchase an LTC insurance policy.
In fact, according to a recent study at the Boston College Center for Retirement Research, about 19% of men and 31% of women should get one.
The reasons stem from a range of factors, including the fact that relatively few people have enough wealth to protect to make purchasing a policy worthwhile. Seniors with limited financial resources who need LTC turn to Medicaid to pick up the tab after they run out of money.
Another important factor is that most seniors who need LTC only need it for a short period of time - for example, when they're recovering from surgery. For those people, Medicare covers in-home health care and nursing home stays of 100 days or less following a hospital stay of more than 3 consecutive days.
So who should consider buying a policy?
LTC insurance policies make the most sense for people who can afford the monthly premiums and who have assets of at least $150,000 or more that they want to protect - not counting their home and vehicles.
Another factor to weigh is your personal health and family health history. The two most common reasons seniors need extended long-term care is because of dementia and/or disability. Almost half of all people who live in nursing homes are 85 years or older. So, what's your family history for Alzheimer's, stroke or some other disabling health condition, and do you have a family history of longevity? The U.S. Surgeon General offers a free tool at familyhistory.hhs.gov to help you collect, organize and evaluate your genetic risks.
You also need to factor in gender, too. Because women live an average of 5 years longer than men, they are at greater risk of needing extended LTC.
LTC Policy Shopping
After evaluating your situation, if you're leaning towards buying an LTC policy, be sure to do your homework. The cost of premiums can vary greatly (ranging anywhere between $1,200 and $8,000 per year for a couple) depending on your age, the insurer, and the policy's provisions. To help you find a policy, get a long-term care insurance specialist who works with a variety of companies. See aaltci.org to locate one.
If you want to save money, find out if your state offers an LTC partnership program (see aaltci.org/partnership). Under these programs, if you buy a long-term care policy approved by your state Medicaid agency, you can protect an amount of assets from Medicaid equal to the benefits that your policy pays out.
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.
YOUR PLANBequestsJoe and Anna have been faithful supporters of our organization. They believe it is important to supportand encourage our mission.
Joe: Several years ago, Anna and I decided to become part of the organization's mission. We believe that they are truly helping others. We think that it is important to partner with them to make a difference. For that reason, Anna and I have made gifts over the years to help others.Anna: We wanted to do more than to just make gifts. Joe and I have been careful over the years and have accumulated some resources. We plan to be generous with family, but we also have the ability to be generous with charity.
After talking it over, we decided to leave a bequest in our will. Our attorney took the simple languageavailable from the organization and included a nice bequest. We are delighted that we will be helping others through them.
You also may want to make it easy and convenient to have a bequest included in your will. The language link below shows how a bequest can very easily be included in your will.
You might find it helpful to print this page and the bequest language. Please feel free to give this information to your attorney. If he or she has any questions, please contact us.
Click Here to review sample bequest language.
*Please note: The name and image above is representative of a typical donor and may or may not be an actual donor to our organization. Since your benefits may be different, you may want to click here to view a color example of your benefits.
WASHINGTON NEWS
“Phishing” Warning for Tax Preparers
In IR-2015-31, the IRS warned tax preparers to be on guard for “bogus emails.”
IRS Commissioner John Koskinen stated, “I urge taxpayers to be wary of clicking on strange emails and websites. They may be scams to steal your personal information.”
The bogus emails are sent by potential identity thieves to tax preparers. Each tax preparer has an Electronic Filing Identification Number (EFIN).
A potential identity thief will send an email to a tax preparer that links to a computer controlled by the thief. If the tax preparer clicks on a link and tries to log in, the identity thief will capture the username and password. The identity thief may then attempt to use that login to obtain the tax preparer’s information and file for improper tax refunds.
Phishing is one of the “Dirty Dozen” IRS scams. Identity thieves typically will send unsolicited emails claiming to be from the IRS or an IRS-related organization such as the Electronic Federal Tax Payment System (EFTPS). Anyone receiving a bogus email should forward it to phishing@irs.gov.
Commissioner Koskinen reminded taxpayers that the IRS generally does not initiate contact by email in order to request personal information.
House Passes Permanent Small Business Tax Extenders
On a bipartisan vote of 272-142, the House passed America’s Small Business Tax Relief Act of 2015 (H.R. 636).
House Ways and Means Chair Paul Ryan (R-WI) was pleased with the bipartisan vote. He noted, “Let’s stop this crazy notion of injecting all this uncertainty into small businesses and make this provision that is bipartisan, this provision that we know creates jobs, let’s make it permanent so that the small business men and women of America can plan.”
The bill has three major sections. First, under Sec. 179 small businesses would be able to expense up to $500,000 each year for investments in new equipment. This deduction is phased out if the investments exceed $2 million per year.
A second provision makes permanent a five-year recognition period for built-in gains of Subchapter S corporations. This permits a C corporation to elect Subchapter S status and facilitates an asset sale of that business after five years.
The third provision encourages charitable gifts of appreciated property by Subchapter S corporations. The reduction in shareholder basis under that provision is not the fair market value, but the internal Subchapter S corporation basis in the gifted property.
Ranking Member Sander Levin (D-MI) opposed the bill. He stated, “The bill before us on Sec. 179 addresses an important subject. It will likely be part of any tax reform. And until then, it will be renewed. That is certain. But it deserves not to be left out of a tax reform process that should give careful and comprehensive consideration to all of the tax provisions in our code.”
Editor’s Note: The America’s Small Business Tax Relief Act (H.R. 636) now joins the America Gives More Act (H.R. 644). Both bills passed the House with strong bipartisan majorities. The Senate moves more slowly, but is likely to consider both bills this spring. The Senate may follow the strategy from December of 2014 to combine these bills with other provisions that are likely to produce bipartisan support. The White House continues to threaten to veto the permanent extender bills. It also has requested permanent status for the Earned Income Tax Credit (EITC) and the American Opportunity Tax Credit (AOTC). If the Senate does move forward this spring, it is possible that the House, Senate and White House may enter into a compromise by mid-year.
FINANCES
Stocks - Intuit Grows Steadily
Intuit, Inc. (INTU), announced its latest quarterly earnings on Thursday, February 19. The company reported strong earnings and growth in QuickBooks Online subscribers.
The company reported quarterly revenue of $808 million. This represents an increase of 3.3% over the comparable period last year when the company reported revenue of $782 million.
"We delivered a strong quarter, exceeding our company financial targets across the board," said Brad Smith, Intuit's President and CEO. "Our Small Business online ecosystem momentum continues to build, with steady subscriber growth again this quarter. While we faced some initial challenges as a result of a change to our desktop product lineup, we took swift action in response to our customers' feedback. Beyond these challenges, we are inspired by the opportunities in front of us and we remain deeply committed to accelerating both customer and revenue growth across the company."
Intuit reported a net loss of $66 million for the quarter. This is a larger net loss than was reported during the same quarter last year when the company reported a net loss of $37 million.
Last month, Intuit stopped the filing of state tax returns through its TurboTax software after a number of fraudulent returns were filed using the software with stolen personal data. Despite this, Inuit reported a smaller loss and larger revenue than analysts expected this past quarter. As a result, the company's share price increased significantly after the earnings release.
Intuit, Inc. (INTU) shares ended the week at $96.72, up 7.4% for the week.
Wal-Mart Reports Strong Earnings
Wal-Mart Stores, Inc. (WMT) reported its latest quarterly earnings on Thursday, February 19. The company reported strong revenue and net income.
Wal-Mart reported revenue of $131.6 billion for the quarter. This represents an increase over the same period last year when the company reported revenue of $129.7 billion.
"Our investments started to enhance our customer experience during the fourth quarter across digital and physical, and we saw good sales in markets around the world," said David Cheesewright, Wal-Mart International President and CEO. "We have significant opportunities to grow, as our core capabilities continue rolling out to customers around the world, and we further expand mobile offerings and our fulfillment centers. Fiscal year 2016 will continue to be a building year, and we can expect sales to grow globally in the mid 20s."
The company reported quarterly net income of $5 billion. This represents an increase over the comparable period last year when the company reported net income of $4.4 billion.
Wal-Mart announced on February 19 that it will raise its minimum pay from $8.25 to $9, rising to $10 per hour for existing staff by next February. This wage hike will increase competition between retailers who want to hire new workers and put pressure on those retailers to follow suit.
Wal-Mart Stores, Inc. (WMT) shares ended the week at $84.30, down 1.3% for the week.
Hyatt Reports Mixed Results
Hyatt Hotels Corporation (H) reported its latest quarterly earnings on Wednesday, February 18. The company reported a decline in revenue but an increase in net income.
Hyatt reported revenue of $1.08 billion for the quarter. This represents a slight decrease from the same period last year when the company reported revenue of $1.09 billion.
"Looking ahead, we expect continued strength in most U.S. markets while international markets will continue to be challenged due to market-specific factors. Transient demand continues to be strong in most markets while our U.S. group pace for 2015 remains robust - up approximately 7%. These factors, along with limited new supply in most U.S. markets, give us the confidence that we are well positioned for strong and sustainable growth."
The company reported quarterly net income of $182 million. This represents a large increase over the same period last year when the company reported net income of $32 million.
Hyatt Hotels announced on February 14 that all of its hotels will now include free Wi-Fi for all guests in rooms and social spaces. The company said that this offer will include access on an unlimited number of mobile devices or laptops. The offer does not include access while in meeting rooms.
Hyatt Hotels Corporation (H) shares ended the week at $59.27, down 0.6% for the week.
The Dow started the week of 2/16 at 18,048 and closed at 18,140 on 2/20. The S&P 500 started the week at 2,096 and closed at 2,110. The NASDAQ started the week at 4,890 and closed at 4,956.
Bonds - The Debt Restructuring Rollercoaster
U.S. Treasury bond prices rose and then fell this week as investors attempted to evaluate the health of the European economy. Greece in particular is under the spotlight as the Euro zone struggles to compromise regarding the best way to restructure Greek debt.
During the past 10 years, Greece borrowed large amounts of money from European banks and governments. When the world-wide financial crisis hit in 2008, the cost to borrow money from banks increased and Greece couldn't afford to repay its debts. So, in 2011, the Euro zone countries came together and lent Greece enough money to meet its obligations with the condition that the country increase taxes and cut spending. However, the austerity measures have not been popular with the Greek population.
Last month, the Greek people displayed their dissatisfaction with the status quo by electing Alexis Tsipras as Prime Minister. He ran on a platform of ending the austerity measures and rebuilding Greece. Euro zone leaders countered by suspending financial aid to Greece until the newly elected government accepted the austerity terms. This stalemate drew both parties to the negotiating table. The newly elected Greek Prime Minister is now in talks with Euro zone leaders to continue much needed financial aid under terms more acceptable to Greece's people.
The stakes are high. If Greece defaults on its debt, then Greece's creditors will lose the money they lent to Greece. Since the economies of the Euro zone are so tightly knit together, this would be disastrous for Greece and would cause widespread financial turmoil throughout the Euro zone. So, both parties have incentive to compromise.
The uncertain future of Greece and the Euro zone caused investors to flock to the safety of U.S. Government bonds. The 10-year Treasury note yield dropped five basis points in early Friday trading from 2.11% to 2.06%. "It is flight to quality," said Tom di Galoma, Head of Rates and Credit Trading at ED&F Man Capital Markets. "The markets are completely held hostage by the drama in restructuring Greek debt."
As of mid-day on Friday, February 20, Euro zone and Greek leaders had agreed to extend financial aid to Greece for four months. This news caused U.S. Treasury bond prices to fall and yields to rise.
The 10-year Treasury note yield finished the week of 2/16 at 2.13% while the 30-year Treasury note yield finished the week at 2.74%.
CDs and Mortgages - Interest Rates Rise
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.
The Global Church of the Nazarene Foundation
Freddie Mac reported the results of its weekly Primary Mortgage Market Survey (PMMS) on Thursday, February 19. The report showed average fixed mortgage rates inching higher this week after a strong employment report.
The 30-year fixed rate mortgage averaged 3.76% this week. This represents an increase from last week when it averaged 3.69%. One year ago at this time, the 30-year fixed rate mortgage averaged 4.33%.
This week, the 15-year fixed rate mortgage averaged 3.05%. This represents an increase from last week when it averaged 2.99%. One year ago at this time, the 15-year fixed rate mortgage averaged 3.35%.
"Mortgage rates rose for the second consecutive week as 10-year Treasury yields surged," said Len Kiefer, Deputy Chief Economist at Freddie Mac. "Housing starts declined 2% to a seasonally adjusted pace of 1.065 million units and housing permits dipped 0.7% in January. However, homebuilders remain confident about new home sales although slightly tempered from last month as the NAHB Housing Market Index slipped 2 points to 55 in February."
The money market fund finished the week of 2/16 at 0.4%. The 1-year CD finished at 0.7%.
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.
The Global Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, Kansas 66220 United States
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