On October 1st, the Rev. Jon Twitchell officially joined the Nazarene Foundation as Vice President of Gift Planning. Jon recently relocated to Southern California from Maine in order to serve as a regional representative in the Southwest. His role will be to equip individuals to make God-honoring decisions with their assets and estate plans and to partner with churches in resourcing the work they are doing for God's Kingdom.
If you are connected to a church in California, Arizona, New Mexico, or the lower portions of Nevada and Utah, then Jon is your new Foundation representative. Over the next few months, he will be making connections with pastors and district leaders in order to find out how he can best serve those on his region.
Your church will hear from Jon within the next few weeks, but he is also available to be contacted directly at any time. He can be reached via email atjtwitchell@nazarenefoundation.org or by phone at 207-318-3515.
The Foundation is looking forward to the work that this new partnership will make possible!
“We… must tell a future generation the praises of the Lord.”[Psalm 78:4 (HCSB)]
PERSONAL PLANNER
Wills - Perils of Probate
"I am an heir of the decedent and here is his will."
Potential Heir
Business Owner passed away on April 5, 1976, with an estate of $2.5 billion. Many people appeared claiming, "I am Business Owner's heir" and submitted wills with themselves as beneficiaries. The court finally determined seven years later that none of the wills were valid and split the estate among 22 of the decedent's cousins. The costs and fees to lawyers during administration of Business Owner's estate were in the millions of dollars.
Probate Process
When a person passes away, it is important to have an organized process to transfer his or her property. The probate process is an organized method to gather all of the property of the individual, pay all of his or her bills, determine the appropriate beneficiaries to receive the property and make the actual transfer.
The probate process can be quite easy and rapid for small estates or can last for many years with larger or more complicated estates. Most people do not spend much time thinking about probate unless they are potential beneficiaries, then probate is a topic of great interest. To the 22 cousins who received multimillion-dollar inheritances, Business Owner's probate process was very interesting.
Probate Players
There are at least four general categories of probate players. First, an executor or personal representative is the manager of the estate. Second, an estate attorney is involved to advise the executor or personal representative on all probate and legal matters.
Third, a probate judge will rule on the validity of any will, review many of the actions of the executor, and approve the final distributions. Finally, heirs will be the beneficiaries of the estate.
Probate Process
The probate process involves eight separate steps to ensure an orderly transfer of all of the property to the right individuals. Let's assume that Ed Executor and Ellen Attorney are probating the estate of Business Owner.
1. Accept the Will: Ed or Ellen will normally submit the will to the court for probate. Usually, there is one final will that is accepted. However, there are many cases in which individuals wrote their own wills or there was a question about the validity of a given will, resulting in a wills contest. Eventually, the court will determine the validity and meaning of the will. However, for Business Owner's estate, none of the wills were valid and state law determined who received the $2.5 billion.
2. Locate Heirs: Because Business Owner did not have a valid will, Ed Executor needed to locate all of the heirs. But, the 22 cousins still needed to be approved by the court. Under state law, Business Owner's estate was transferred to his relatives. With $2.5 billion at stake, all of them had attorneys to ensure that each cousin received the proper share. Even if Business Owner had signed a valid will, it would have been essential to locate all the heirs. In some cases, the selected recipients had passed away and property was distributed to their children or other relatives.
3. Determine the Estate Assets and Values: Ed Executor is responsible for finding all of Business Owner's estate assets. The assets included real estate, bank accounts, securities accounts and other property. Because Business Owner's estate was taxable, all property was valued so that federal taxes could be paid. Finally, the balance of the estate was distributed to the 22 cousins.
4. Pay Executor and Attorney: Not surprisingly, Ed Executor and Ellen Attorney were paid a large fee from Business Owner's estate. The costs for the probate process may be quite substantial and the executor and attorney are always paid. Costs may be as low as 2% of the estate value or may range up to 7% or 8% of estate value. However, if there is an estate contest, costs can consume a large portion of the entire estate.
5. Make Debt Payments: After determining the nature of the property and the approximate value of Business Owner's estate, Ed Executor will also advertise for any claims by creditors. The state probate law determines the period of time and the type of public notice to be given. If creditors do not file claims against the estate, they risk losing their ability to collect their debts. All debts and taxes are paid before the final distribution.
6. Resolve Controversies: Seven years of controversies in Business Owner's estate required continuous attention from Ed Executor and Ellen Attorney. Most of the controversies centered around the submitted wills. If there are any controversies, such as a claim that the final will is invalid due to undue influence of a party who obtained the will, then the court must determine the rights of all parties under the will and applicable state law. After seven years, the court decided that none of the wills in Business Owner's estate were valid.
7. File Income and Estate tax Returns: Because Business Owner's estate was $2.5 billion and produced income each year, Ed Executor had to file the final income tax return for Business Owner and annual returns for the estate. After the final valuation by the court, Ed and Ellen also filed the estate tax return and paid the estate tax to the IRS.
8. Distribute Assets to Heirs: After seven years of court proceedings, payment of estate taxes, court costs, executor fees, and attorney fees, the probate judge approved the final distribution order and the 22 cousins of Business Owner received their inheritance.
Probate problems
There are several negative results for which probate has a deservedly bad reputation. First, the process is public. Anyone can obtain the will of Jacqueline Kennedy Onassis and read her provisions for children John Jr. and Caroline.
As was true for Business Owner's estate, the probate process may be both lengthy and expensive. Both time and money can be easily wasted in the bureaucracy of the process.
Probate is also as good and as bad as the judge who is involved. Judges are people, with the good and bad characteristics of humanity. Some are very dedicated and capable and some are primarily interested in an early exit to the golf course in the afternoon. Depending upon the quality of the judge, the probate process can be easy or quite challenging for the executor and estate attorney.
Finally, the existence of a substantial estate (such as that of Business Owner) invites relatives to submit claims and is fertile ground for developing probate controversies. If there is any question about the validity of the will, or there are conflicting methods of transfer of the same property (joint tenancy with one person and attempting to transfer the same property through a will to a second person), a will contest and probate battle may occur.
Avoiding probate
There are multiple methods that are used to avoid probate. These can be quite successful, but all methods must be coordinated carefully to be certain that the overall plan works correctly.
1. Joint Tenancy with Right of Survivorship: Under property law, the surviving joint tenant owns the real estate.
2. Designated Beneficiary: An insurance policy, an IRA, a 401(k) or other qualified plan is transferred to the designated beneficiary. There is a contract with the insurance company or the retirement plan custodian and that person agrees to make the transfer to the individual or organization selected by the owner. Typical forms permit the selection of a primary beneficiary and also a contingent beneficiary.
3. Pay-on-Death (POD) Accounts: Most states that follow the Uniform Probate Code may allow a "POD" account. Most savings accounts, checking accounts and certificates of deposit are under state law permitted to be transferred to the "payable-on-death" recipient.
4. Revocable Living Trust: Perhaps the most popular method for avoiding probate is a revocable living trust. The grantor is taxable on the assets of the trust, but frequently will transfer a personal residence, securities accounts and other major assets into the trust. The assets in the trust avoid the probate process.Read More
SAVVY LIVING
Social Security's Benefit for Kids
I've been told that my children, who are 13 and 16 years old, may be eligible for Social Security when I file for my retirement benefits. What can you tell me about this?
It's true. If you're retired and are still raising young children, there's a little-known Social Security benefit that can put some extra money in your family coffers.
Here's how it works. When you file for Social Security retirement benefits, each of your minor children can get money on your work record equaling half of what you would receive at full retirement age, which is currently 66. Even if you were to take a smaller benefit by claiming earlier, your kids will still get half of your full-retirement age amount.
To qualify, your kids - whether they're biological, adopted or step children - must be unmarried and under age 18. Kids that are over 18 but still in high school, can collect too until they graduate or turn 19, whichever comes first. (Other rules apply to kids that are disabled.)
But that's not all.
Because you have one child who is only 13, your wife (if you're married) can collect Social Security benefits on your work record too. And it doesn't matter if she's just 40 years old. The minimum age requirements to collect retirement benefits (62) or survivor benefits (60) do not apply when it comes to collecting benefits as the caregiver of a young child. The spouse's benefit, which is also worth up to half of your benefit, will stop when your child turns 16.
But be aware that there are limits to the amount of money that can be paid to a family. The Social Security "family maximum payment" is determined by a complex formula (see ssa.gov/oact/cola/familymax.html) and can range from 150 to 180% of your full retirement benefit amount. If the total exceeds that, each person's benefit, except yours, is cut proportionately until it equals the maximum.
Here's an example of how that is determined. Let's say, for example, that your full retirement age benefit is $2,000. After doing the Social Security math computations your family maximum benefit would be $3,500.
Subtract your $2,000 benefit from the $3,500 family maximum benefit, and that leaves $1,500. That's the monthly amount that can be split between your two children - $750 each. If your wife needs some of the benefit, the individual checks are smaller, at $500 each, but the family amount is the same.
File and Suspend
One other benefit boosting strategy you should know about is "file and suspend." If you're still working and would like to wait—say to age 67 or even 70—to start claiming your own benefits, you can file at full retirement age of 66 and suspend payments up until age 70.
This option gives you the ability to start monthly payments for your minor children and wife, but suspend your own benefit so you can collect a larger amount later. Your benefit will increase by 8% per year for every year you delay collecting your retirement benefit up until age 70. That means your retirement benefit at age 70 will be 132% of what it would have been if he had collected at age 66.
You should also know that minor children can collect Social Security benefits based on the earnings of a parent who is disabled or dead too.
To learn more, see the SSA publication (No. 05-10085) "Benefits For Children" at ssa.gov/pubs/EN-05-10085.pdf.
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.Read More
YOUR PLANA Gift that Lasts More than a Lifetime
When remembering his parents Robert and Mozelle Chason, their son Steve speaks fondly of the godly example they set for him.
"They were very giving, very selfless, spirit-filled people," says Steve.
A talented writer, Mozelle authored the book When Sweat Turns to Tears: The story of one woman's courage during the Great Depression and war years in the Mississippi Delta. Born in Humphreys County, Mississippi in 1933, Mozelle was the third of fifteen children of parents who were sharecroppers. Robert was a pastor in the Church of the Nazarene, and Steve notes, "He was the quintessential dad, pastor, friend. He was a shining example for me as a dad and as a Christian."
Married for fifty-seven years, Robert and Mozelle passed away just a few months apart in April and August of 2014, respectively. Earlier this year, the proceeds of the sale of their house that Steve received went to Nazarene Compassionate Ministries (NCM) to build a well in Haiti and to establish a child sponsorship endowment.
"The donation came directly as a result of talking mom and dad and before they passed," says Steve.
The Chasons' passion for helping people in Haiti developed when Robert went there on a Work and Witness trip. After this trip, Robert and Mozelle gave through NCM to help those in Haiti.
The portion of the donation leftover after the well was built went to a fund an NCM child sponsorship endowment through the Church of the Nazarene Foundation.
"The money will last into perpetuity to help the kids for a long time," commented Steve.
An NCM child sponsorship endowment can be established with a one-time donation of $8,000 or more. This amount will fund a sponsorship throughout the life of the child. After the child ages out of the program those dollars are used to sponsor another child. Donations to the NCM child sponsorship endowment are invested by the Church of the Nazarene Foundation, and the income earned is distributed to fund the sponsorship. The principal is preserved, and therefore, the endowment sponsors child after child, year after year.
Additionally, linked-together ministries through the Church of the Nazarene increase the ministry impact on children in the NCM child sponsorship program. Gifts are supported by:
- Nazarene disaster relief
- Nazarene community development relief
- Nazarene ministry in war-torn nations
And these children may also be:
- Shown the JESUS film by a Nazarene evangelism team
- Discipled in a Nazarene Sunday school
- Strengthened by a Nazarene healthcare volunteer
- Taught to read using Scripture and Nazarene literature
WASHINGTON NEWS
IS and COF Support Permanent Charitable Tax Extenders
A coalition of twenty charities led by Independent Sector (IS) and The Council on Foundations (COF) conducted a Capitol Hill briefing on October 21 to promote passage of permanent charitable tax extenders. The briefing focused on the IRA Charitable Rollover, expanded deduction limits for gifts of conservation property and enhanced deductions for gifts of food inventory.
COF and IS noted that there have been over 1 million acres of property made subject to conservation easements. In addition, approximately 70 billion pounds of nutritious surplus food could potentially be given each year to local food banks. Finally, Americans have donated over $140 million to charities through the IRA Rollover. A permanent IRA rollover could potentially generate billions in charitable gifts.
Geoff Plague, Vice-President of Public Policy at Independent Sector, commented, "This Congress has an opportunity—by making immediately permanent the IRA Charitable Rollover and enhanced deductions for contributions of conservation easements and food inventory—to get charitable organizations and the communities they serve off the roller coaster of uncertainty caused by the repeated lapse of these incentives in recent years."
Council on Foundations President and CEO Vikki Spruill continued, "For that reason, we are asking Congress to act swiftly and continue the long-standing tradition of supporting charitable giving incentives in our tax code. We need Congress to act now."
The Council on Foundations website notes that prompt action is important. If Congress does not act soon, some donations may be lost as the December 31 deadline approaches.
Editor's Note: Independent Sector and Council on Foundations are maintaining the visibility of these charitable provisions on Capitol Hill. With the potential election of Rep. Paul Ryan (R-WI) to the position of Speaker of the House, advocates of permanent charitable extenders will benefit. He has strongly supported permanent status for all three charitable provisions.
2016 IRA, 401(k) and Pension Limits
In IR-2015-118, the IRS published the 2016 rules for contributions to IRAs, 401Ks and pension plans. Each year the limits are adjusted for inflation. Because there was less than 1% increase in the price index, most of the limits remain the same or slightly changed from 2015 numbers.
The 2016 traditional IRA contribution will be $5,500. For employees covered by a workplace retirement plan, the IRA deduction is phased out for single taxpayers with modified adjusted gross income (MAGI) of $61,000 to $71,000. Couples filing jointly who have a workplace plan will have the benefit phased out between MAGI of $98,000 to $118,000. If an IRA contributor is married to a covered person, the phaseout is from $184,000 to $194,000.
A worker with earned income may also consider funding a Roth IRA with after-tax funds. The Roth IRA grows tax-free and the distributions will generally also be tax-free. Married couples filing jointly are permitted to fund a Roth with a phaseout from $184,000 to $194,000 of AGI. Single persons have a phaseout from $117,000 to $132,000 of AGI.
The 401K or 403(b) limits for employee contributions are $18,000. If the employee is age 50 or older, there is a "catch-up" provision. The catch-up provision of $6,000 allows senior employees to contribute up to $24,000 during 2016.Read More
FINANCES
Stocks - Alphabet Reports Robust Earnings Alphabet, Inc. (GOOGL), the new parent company of Google, announced its third quarter results on Thursday, October 23. The company reported a better-than-expected profit during the quarter.
Alphabet reported that revenue rose 13% during the quarter to $18.68 billion. This was better than expectations for revenue of $18.53 billion.
"Our Q3 results show the strength of Google's business, particularly in mobile search," said Alphabet and Google CFO Ruth Porat. "With six products now having more than 1 billion users globally, we're excited about the opportunities ahead of Google, and across Alphabet."
The company's net income during the quarter was $3.98 billion. Excluding some one-time items, earnings per share was $7.35, higher than expectations for $7.21 per share.
Google formed Alphabet on October 2 as a holding company in an effort to reorganize its operating structure. The company's better-than-expected profit was the result of cost controls that new CFO Ruth Porat has implemented. Expenses rose only 9.1% during the quarter, which was lower than anticipated. Advertising revenue that rose 13% during the quarter also added to the bottom line. Overall, investors were pleased with the results and Alphabet's shares rose 8% following the earnings release.
Alphabet, Inc. (GOOGL) shares ended the week at $719.33, up 3.6% for the week.
Amazon Reports Unexpected Profit
Amazon.com, Inc. (AMZN) announced its third quarter results on Thursday, October 22. Investors were pleased to see the e-commerce giant report a surprise profit during the quarter.
The company reported that net sales rose 23% during the quarter to $25.4 billion. Analyst estimates were for lower revenue of $24.9 billion.
"For the first time, we're recommending you bring home a six-pack for the whole family" said Amazon Founder and CEO Jeff Bezos. "At a price of $50 for one [Fire tablet] or $250 for a six-pack, Fire sets a new bar for what customers should expect from a low-cost tablet. This is one more step in our mission to bring customers premium products at non-premium prices."
To the surprise of investors and analysts, Amazon reported that it generated a profit during the quarter of $79 million or $0.17 per share. This was an unexpected improvement from a net loss of $437 million during the same period last year.
The big story for Amazon this quarter was the surprise profit. Prior to the earnings release, analysts expected a net loss of $0.13 per share from the e-commerce company. Amazon also reported that revenue from its Amazon Web Services (AWS) cloud computing unit nearly doubled from the same period last year to $2.09 billion. Amazon is expecting big things from AWS going forward, believing that it has the potential to exceed its retail business in size. So far this year Amazon's share price has risen close to 80%.
Amazon.com, Inc. (AMZN) shares ended the week at $599.03, up 5% for the week.
AT&T Reports Strong Earnings
AT&T, Inc. (T) reported its third quarter earnings on Thursday, October 22. While the company reported revenue below expectations, net income came in above pre-release estimates.
The company reported that revenue during the quarter increased 19% to $39.1 billion. This was lower than pre-release estimates for revenue of $40.42 billion.
"We turned in outstanding financial results in the quarter," said AT&T Chairman and CEO Randall Stevenson. "Our early integration efforts with DIRECTV are going very well and we've just begun to scratch the surface on the video, wireless and broadband cross-selling opportunities."
AT&T reported that net income during the quarter was $3.0 billion or $0.50 per share. Adjusted for certain items, earnings per share were $0.74 per share, higher than estimates of $0.69 per share.
On July 24 of this year AT&T completed its $49 billion acquisition of DirecTV. The company eventually plans to merge DirecTV with its U-Verse video service as a way to create a service offering rivals can't match. The company also reported that its wireless business only added 289,000 subscribers during the quarter, which was below the 785,000 added during the same period last year. Still, investors were pleased with the higher-than-expected profit as shares rose 1.7% during after-hours trading.
AT&T, Inc. (T) shares ended the week at $33.74, relatively unchanged for the week.
The Dow started the week of 10/19 at 17,209 and closed at 17,647 on 10/23. The S&P 500 started the week at 2,032 and closed at 2,075. The NASDAQ started the week at 4,874 and closed at 5,032.Read More
Treasury prices fell, driving yields higher during trading on Friday, October 23 in reaction to news that China will be cutting interest rates in an effort to support its slowing economy. China's announcement comes at the same time that the European Central Bank and Bank of Japan are showing a willingness to expand stimulus efforts of their own.
The slowdown in China's economy has been well known for the past few months and has been responsible for increased anxiety and uncertainty in financial markets around the globe. In an effort to boost its economy, China announced on Friday plans to implement its most aggressive interest rate cut since the 2008-2009 global financial crisis, lowering its one-year bank lending rate by 25 basis points to 4.33%.
"This move is consistent with China's policy makers seeking to navigate a soft landing," said Aaron Kohli, Interest-Rate Strategist at BMO Capital Markets. "Of course, this likely means the Fed faces the prospect of additional dollar strength as they consider raising rates in the U.S."
China's move comes on the heels of the European Central Bank's announcement on Thursday that it is willing to expand its monetary stimulus in the next few months. Speculation that the Bank of Japan will pursue more monetary stimulus in addition to the Federal Reserve's expected announcement next week that it will not raise interest rates shows that many financial decision makers around the globe lack confidence in the health of their economies.
The push for more economic stimulus has given investors the confidence they need to move away from safer investments like government bonds to stocks and corporate bonds. This in turn has led to rising Treasury yields with the 10-year Treasury yield rising to 2.083% during early Friday trading. As yields rise, prices fall.
On the domestic front, all eyes are on the Federal Reserve's meeting next week where the expectation is that the Fed will choose to keep interest rates near zero. Still, the Fed has left open the door that it may raise interest rates by the end of the year if the U.S. economy begins to show signs of significant improvement.
The 10-year Treasury note yield finished the week of 10/19 at 2.08% while the 30-year Treasury note yield finished the week at 2.90%.
Read More
The 30-year fixed rate mortgage averaged 3.79% this week. This represents a decrease from last week when it averaged 3.82%. Last year at this time, the 30-year fixed rate mortgage averaged 3.92%.
This week, the 15-year fixed rate mortgage averaged 2.98%. This is down from last week when it averaged 3.03%. The 15-year fixed rate mortgage averaged 3.08% one year ago.
"Following Federal Reserve Governor Daniel Tarullo's remarks last week Treasury yields dipped," said Sean Becketti, Chief Economist at Freddie Mac. "In response, 30-year mortgage rates fell 3 basis points this week to 3.79%. The housing market continues to benefit from low mortgage rates, with housing starts for September beating expectations and the NAHB's Housing Market index registering a ten year high in October."
The money market fund finished the week of 10/19 at 0.3%. The 1-year CD finished at 0.6%.Read More
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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, a college or university, 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 updated financial and gift planning information, please visit our website.
The Global Church of the Nazarene Foundation
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, a college or university, 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 updated financial and gift planning information, please visit our website.
The Global Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, Kansas 66220, United States
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