Shalom to you, our partners in ministry. It is an honor to share with you the latest news from Washington, Savvy Living, Personal Planning, gift stories, finance news, and timely articles.
There are no "asks" in this eNewsletter as it is designed totally to be a helpful service to you. Feel free to share it with others in your family or your friends. If you would like me to send it directly to them please send me their email address.
This information is put together in a way to be a help in understanding what is happening in our economy so you can use it to your best advantage. I hope this information is useful to you.
If you have any questions or I can be of assistance to you please contact me.
David Stone
Director of Donor Relations
PERSONAL PLANNER
Your Living Trust Choices
The living trust is becoming quite a popular estate planning strategy. It costs more than a will, but includes many features that are helpful during life and in your estate. Let's review some of the basic principles of the living trust.
Living Trust Basics
A trust is created by transferring property to a trustee. The trustee is required to follow the provisions of a written trust document. That document identifies the individuals who will receive the income. In most cases, there are reasons or grounds for invading the principal for the benefit of named income recipients. After a period of time, such as the life of the income recipients, the trust remainder is then distributed or held in trust for the benefit of other persons.
Living Trust Example—Bill and Clara
Assume that Bill and Clara are married with three children. They create a living trust with themselves as the initial trustees. Bill and Clara transfer their home, mutual fund accounts and other assets into the trust. They will receive the income from the assets for their lifetime and have the ability to invade the trust or distribute assets back to themselves at any time. When they pass away, their selected successor trustee will manage the property and use it for the benefit of their three children.
Trust Creation
There are several steps in the process for Bill and Clara to create their trust. They will need to visit with their attorney and discuss the basic provisions for payment of income, invasion of principal, and distribution of their remainder. The remainder is the term to describe the value of the trust after both Bill and Clara pass away.
After they have discussed the living trust provisions and their attorney has drafted the trust agreement, they will then sign the trust both as the grantors and as the initial trustees. In order to have property to manage, the next step is to actually fund the trust or transfer assets to it.
The trust document will explain that Bill and Clara have the right to receive income for life from the trust. They can revoke the trust in whole or in part and transfer assets back to themselves as individuals. The trust will name one or more successor trustees. The successor will manage the trust if they are ill and are unable to manage or if they simply are no longer willing to undertake that responsibility. Finally, the trust document will explain who receives trust property after they pass away.
Living Trust Income Taxes
Because Bill and Clara have the right to receive the income from the trust and also can revoke the trust, they will report all of the income on their personal IRS Form 1040. The IRS does not regard the living trust as a separate taxpayer. For tax purposes, living trust income, capital gains and deductions flow through to their personal tax return.
For example, they may transfer their residence into the trust. If the residence has a mortgage, they will still be permitted to pay the mortgage and deduct the home mortgage interest on their tax return. In addition, if the trust transfers the property to a qualified exempt charity, Bill and Clara will be permitted to report the charitable deduction on their personal tax return.
Funding the Trust
Each type of asset will need to be transferred into the trust. Legal title to real estate is transferred through a deed (typically a warranty or grant deed depending upon your state). Bill and Clara signed deeds that transferred their personal residence from themselves to the trust with them as trustees. The deeds were filed with the local county registrar of deeds.
Stocks, bonds and mutual funds can be transferred into new accounts created by the trustee. In some cases, the financial services firm will require proof that you have the ability to transfer these items into the trust. Your attorney can create an "affidavit of trust" that you will sign. It will authorize the financial services company to create a new account for the trust and transfer the securities or mutual funds into that account.
Your cars, furniture and other tangible personal property are frequently retained in your personal name rather than being transferred to the trust account. If you do transfer vehicles through your appropriate state title into the trust, then it will be necessary to be certain that any purchases or sales of vehicles in the future are correctly titled in the name of the trust.
Estate Taxes
Because Bill and Clara have the right to receive trust income and the ability to invade the trust, it will be included in their estate. You may have heard that a living trust avoids probate. This is true. But, it is most important to realize that the federal government includes both your probate estate and other assets of which you have ownership in your taxable estate.
The taxable estate includes your assets probated under your will, your IRA, most insurance policies and your living trust assets. Therefore, if you have a large estate your attorney will ensure that your planning avoids probate to save probate costs, but is also designed to reduce estate taxes on the total assets in your probate estate and living trust.
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SAVVY LIVING
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SAVVY LIVING
How to Make Your Kitchen Safer and Easier to Use
What can you recommend that will make a kitchen safer and easier to use? My wife, who loves to cook, has had several kitchen-related accidents over the past year. We would like to modify the space to make it safer and more practical.
There are a number of simple modifications and inexpensive add-ons that can transform your kitchen into a safer environment. Depending on your wife's needs, here are some suggestions for each aspect of the kitchen.
Floors: Replace kitchen throw rugs with non-skid floor mats or gel mats to reduce tripping or slipping. Gel mats provide cushion and are comfortable to stand on for long periods. GelPro.com and WellnessMats.com offer a nice selection.
Lights: Replace dim overhead lighting with bright new ceiling lights and add under-cabinet task lighting to brighten up kitchen countertops.
Cabinets and Drawers: Reduce bending or reaching by organizing your kitchen cabinets and drawers so that the items you most frequently use are within comfortable reach. In addition, you can make your cabinets and pantry easier to access by installing pullout shelves or lazy susans. Finally, install D-shaped pull-handles on the cabinets and drawers. They are more comfortable for arthritic hands than knobs.
Faucet: If you have a twist-handle kitchen faucet, replace it with an ADA compliant single handle faucet. They are easier to use, especially for seniors with arthritis or limited hand strength. There are also kitchen faucets on the market today (like the Delta Touch20 faucet and Moen MotionSense) that will turn themselves on and off by simply touching the base or moving your hand over a motion sensor. For safety purposes, set your hot water tank at 120 degrees to prevent possible water burns.
Microwave and Stove: If your microwave is mounted above the stove, consider moving it to a countertop. This makes it safer and easier to reach. If you are concerned about your wife remembering to turn the stove off, there are automatic stove shut-off devices you can purchase and install to prevent a fire. See cookstop.com, stoveguardintl.com and pioneeringtech.com for some different options.
If you are looking to upgrade some of your appliances, here are some different features you should look for when shopping.
Refrigerator and Freezer: Side-by-side doors work well for seniors because the frequently used items (refrigerated and frozen) can be placed at mid-shelf range for easy access. Pullout adjustable height shelves and a water/ice dispenser on the outside of the door are also very convenient.
Stove or Cooktop: Look for one with controls in the front so you won't have to reach over hot burners to turn it off and make sure the controls are easy to see. Flat surface electric or induction burners, or continuous grates on gas stoves are also great for sliding heavy pots and pans from one burner to the next. Also, ask about automatic shut-off burners.
Oven: Self-cleaning ovens are a plus and you should consider a side-swing door model. They're easier to get into because you don't have to lean over a hot swing-down door. Also consider a wall-mounted oven, installed at your wife's preferred height to eliminate bending.
Dishwasher: Consider a dishwasher drawer that slides in and out and is installed on a 6 to 10-inch raised platform. These require less bending to load and unload.
Washer and Dryer: Front-load washers and dryers with pedestals that raise the height 10 to 15 inches are also back-savers and easy to access.
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
YOUR PLAN
Sale and Unitrust
Gene and Carol purchased stock in a small medical service company several years ago. The company has done well. A larger company is now discussing the possibility of buying the smaller company. Gene and Carol are looking for a way to save taxes.
Gene: We were fortunate to invest in the medical services company. Over the years, medical services have become more and more important, especially for senior Americans. We thought this stock would grow and, indeed, it has increased in value.
We paid about $50,000 for the stock and it is now worth $400,000. If we were to sell the stock, we would pay a large tax.
It looks like the company may be sold to a larger company. There is no sale agreement yet, but it could happen in the future.
Carol: We have always talked about taking part of that stock and buying a vacation home. I have found a very nice summer cottage on a nearby lake. The price is approximately $120,000.
Gene: We checked with our CPA and he suggested that we talk to a gift planner at our favorite charity. We were happy to discover that we could transfer $280,000 worth of the stock into a special trust called a charitable remainder unitrust. The unitrust could then sell the stock tax free.
Carol: Best of all, we were able to sell the other $120,000 of the stock for cash. The deduction on the charitable trust saved enough in tax so that we did not have to pay tax on the $120,000. The full $120,000 was available to purchase our lake home.
Gene: This was a wonderful arrangement. I am pleased that we were able to set up the unitrust. We now have income and are enjoying our lake home.
*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 unitrust benefits may be different, you may want to click here to view a color example of your benefits.
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WASHINGTON NEWS
WASHINGTON NEWS
Tax Extenders - Permanent or 2 Years?
There were three developments this week that affect the pending tax extenders bill. First, negotiations continue by House and Senate members of both parties. House Ways and Means Chairman Kevin Brady (R-TX) stated, “All parties are negotiating in good faith.”
Minority leader Nancy Pelosi (D-CA) emphasized that Democratic negotiators are very interested in the child tax credit and would like it indexed for inflation.
White House Press Secretary Josh Earnest agreed that it may be possible to pass a permanent extenders package if there is a balance of business and personal tax extenders. He stated, “We believe that if we were looking to extend a tax benefit that is enjoyed by large companies, we need to make sure that there are some tax benefits that are included for middle-class families, too.”
Second, while Chairman Brady continues to negotiate over a larger package that includes 10 to 12 permanent tax extenders, he also introduced the Tax Increase Prevention and Real Estate Investment Act of 2015 (H.R. 34). This bill is a “backup plan” if the permanent extender package does not pass. The backup plan is to extend the current 50 plus provisions for 2015 and 2016. His bill includes extension of the IRA Charitable Rollover, increased deduction benefits for conservation easements, enhanced deductions for gifts of food inventory and favorable basis rules for appreciated property gifts by Subchapter S corporations.
The third factor is the need to pass a federal appropriations bill. The current expenditure limits were scheduled to expire on December 11. While President Obama had stated that he would not sign an extension, the White House, House and Senate all agreed to a 5-day extension. The appropriations bill deadline is now December 16, 2015.
Editor’s Note: If agreement is reached by Tuesday or Wednesday on the provisions for the permanent tax extenders, it may be possible to combine that bill with the appropriations bill scheduled for passage on December 16th. If there is not an agreement on the permanent extenders package by that time, then the plan by Chairman Brady to pass extenders for 2 years is likely to pass. The last scheduled day for the House continues to be December 18th. Members of Congress will attempt to complete all of these major legislative actions by that date.
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FINANCES
FINANCES
Stocks - Costco's Earnings Disappoint Investors
Costco Wholesale Corporation (COST) reported its latest quarterly earnings on Wednesday, December 9. The company reported a drop in net income due to the strong dollar and a drop in the price of oil.
Costco reported total sales of $26.63 billion for the quarter. This represents an increase from the same quarter last year when the company reported total sales of $26.28 billion.
"[W]e opened 13 new locations in Q1, including two relos for a net of 11 new warehouses during the quarter, which ended November 22," said Richard Galanti, Costco's CFO. "That included seven in the US, one in Canada; one in Australia, our eighth in that country; one in Japan, our 24th in Japan; and our second in Spain, just outside of Madrid in Getafe. That's our second unit in Spain. Two relocated locations were in Woodland Hills, California and Teterboro, New Jersey."
The company reported quarterly net income of $480 million. This represents a decrease from the comparable quarter last year when Costco reported net income of $496 million. Earnings per share came in at $1.09 per share compared to $1.12 last year.
Ultimately the drop in net income and comparable store sales caused Costco's stock price to fall 4% after the earnings release. One big question facing Costco's future is whether the big-box store model will be a relevant one moving forward. Increased competition from Wal-Mart may cause Costco to focus even more on its core competencies - customer service and employee satisfaction - in order to maintain a competitive advantage.
Costco Wholesale Corporation (COST) shares ended the week at $160.02, down 4.37% for the week.
RH Reports Record Earnings
Restoration Hardware Holdings, Inc. (RH) reported its latest quarterly earnings on Thursday, December 10. The company reported record earnings, but has yet to convince investors that solid earnings will lead to future growth.
Restoration Hardware reported revenue of $532.41 million for the quarter. This represents an increase from the same period last year when the company reported revenue of $484.68 million.
"During the third quarter, we grew our adjusted operating margin by 180 basis points and adjusted net income by 37%, both ahead of our expectations, further demonstrating the disruptive nature of the RH brand and the power of our multi-channel platform," said Gary Friedman, Chairman and CEO of Restoration Hardware. "Net revenues increased 10% on top of 22% - representing our 23rd consecutive quarter of double-digit revenue growth."
The company reported quarterly net income of $20.71 million. This represents an increase from the comparable quarter last year when the company reported net income of $19.43 million.
The latest quarterly earnings show that some of Restoration Hardware's latest initiatives are producing results. This fall the company introduced RH Modern and RH Teen to its already full line of products. In addition to its impressive earnings, the company also raised guidance for the year from between $2.16 and $2.18 billion to between $2.17 and $2.18 billion. However, investors are unsure whether the company can build on this impressive quarter. As a result, after an initial spike, Restoration Hardware's stock price declined following the earnings announcement.
Restoration Hardware Holdings, Inc. (RH) shares ended the week at $83.81, down 9.30% for the week.
Lululemon Net Income Declines
Lululemon Athletica, Inc. (LULU) reported its latest quarterly earnings on Wednesday, December 9. The company announced disappointing results, but investors still see room for growth.
Lululemon announced quarterly sales of $479.69 million. This represents an increase from the same period last year when the company reported sales of $419.40 million.
"We had a solid quarter in line with our expectations underscored by the combination of our product, guest and community initiatives along with tremendous guest reception to major store openings around the world," said Laurent Potdevin, Lululemon's CEO. "We've implemented critical organizational changes this quarter and now have in place a complete, world-class management team that is aligned with our strategic global priorities focused on design and dedicated to creating long-term value."
The company reported net income of $53.15 million for the quarter. This represents a decrease from the comparable quarter last year when Lululemon announced net income of $60.45 million.
Investors were disappointed with the decrease in net income and guidance for the year. However, many investors and analysts see cost-saving and growth opportunities for Lululemon long-term. As a result, after an initial drop the company's stock price increased on Thursday and Friday.
Lululemon Athletica, Inc. (LULU) shares ended the week at $46.12, down 5.92% for the week.
The Dow started the week of 12/07 at 17,845 and closed at 17,265 on 12/11. The S&P 500 started the week at 2,090 and closed at 2,012. The NASDAQ started the week at 5,139 and closed at 4,933.
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Bonds - Market Prepares for Rise in Rates
Bonds - Market Prepares for Rise in Rates
Long-term bond prices rose and yields fell this week as the market braces for the first increase in the federal funds rate since 2006. In addition, a tough week for the stock market and oil prices caused a desire for safer assets.
The Federal Open Market Committee (FOMC) is expected to raise the federal funds rate from its current range of 0-0.25% for the first time in nine years at its meeting on December 15 and 16. The increase in the federal funds rate will have the most immediate impact on short-term bond yields. Knowing this, investors have been selling short-term bonds, causing the two-year Treasury note to reach a five-year high of 0.92% in early December.
Even the 10-year Treasury note yield rose to 2.3% in early December. However, this rise in yield stalled this week as a demand for safer assets followed weakness in the stock market and oil prices. In addition, the strong U.S. dollar and increased risk in Europe have caused U.S. government bonds to be very attractive to foreign investors.
As a result, the yield on the 10-year Treasury note dropped to 2.15% in early Friday trading. The yield on the 30-year Treasury bond fell to 2.90%.
No one knows exactly how the markets will respond to an increase in interest rates. As a result, the Federal Reserve is likely to raise rates slowly. "The Fed is likely to be cautionary in its words when it hikes next week so as not to upset markets too much," said David Ader, head of Government Bond Strategy at CRT Capital.
The 10-year Treasury note yield finished the week of 12/07 at 2.14% while the 30-year Treasury note yield was 2.88%.
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CDs and Mortgages - Interest Rates Inch Higher
CDs and Mortgages - Interest Rates Inch Higher
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, December 10. The report showed interest rates inching higher after the Department of Labor released a positive November jobs report last week.
The 30-year fixed rate mortgage averaged 3.95% this week. This represents an increase from last week when it averaged 3.93%. Last year at this time the 30-year fixed rate mortgage averaged 3.93%.
The 15-year fixed rate mortgage averaged 3.19%. This represents a slight increase from last week when it averaged 3.16%. One year ago, the 15-year fixed rate mortgage averaged 3.20%.
"The economy added 211,000 new jobs in November exceeding analysts' expectations, and the prior two months were revised higher was well," said Sean Becketti, Chief Economist at Freddie Mac. "This momentum is likely to cement a decision by the Fed to begin raising interest rates this month. Following the release of the employment report, Treasuries rose 7 basis points and in response the 30-year mortgage rate ticked up two basis points to 3.95%."
The money market fund finished the week of 12/07 at 0.3%. The 1-year CD finished at 0.6%.
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Thank you for your interest in planned giving. To access any of our resources, please go to our website.
Your Brother in Yeshua (Jesus),
David Stone
Jews for Jesus
Our mailing address is:
Jews for Jesus
60 Haight Street
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Thank you for your interest in planned giving. To access any of our resources, please go to our website.
Your Brother in Yeshua (Jesus),
David Stone
Jews for Jesus
Our mailing address is:
Jews for Jesus
60 Haight Street
San Francisco, California 94102, United States
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