Happy Thanksgiving! We hope you are enjoying your holiday weekend with friends and family, taking time to remember the goodness and faithfulness of the Lord.
Everyone at the Foundation is enjoying Thanksgiving as well, and we will return on Monday to answer all phone calls and emails.
God bless you!
What are you thankful for? Hit "Reply" to send us your answers, and we'll feature them on our Facebook and Twitter pages for the rest of this month!
PERSONAL PLANNER
Bequests to Your Favorite Charity
Bequests to charity are the most popular type of planned gift. A donor may retain assets during life and then leave a bequest to a charity.
A bequest to a charity should include the full legal name, city and state of the charity—particularly if there are chapters of a national organization or religious organizations with similar names. An attorney who drafts the will should be certain that he or she has correctly identified the intended charity by legal name, city and state.
Specific Bequests
As a donor, you may choose to leave a specific item or amount to a charity. For example, some friends of charities have left a bequest of land or property adjacent to the campus of the charity. The usual purpose is for the charity to be able to use that property for future additions or expansion.
If you own art or a specific item that may be used by a charity for its exempt purpose, that asset may be a good choice for a specific bequest. Once again, it is important to identify the exact item and the charity by legal name, city and state. Some donors may also choose to list an alternative gift if they leave a specific bequest. If for any reason your estate no longer owns the specific bequest property at your death, you may wish to designate another item or an amount of cash to the charity.
Another option is a specific bequest of an amount of cash. This allows you to know the exact amount that will be transferred from your estate to charity. There is one planning issue to consider with a bequest of a specific amount of cash. If you transfer a specific amount of cash to a charity and your estate is much larger or much smaller than the present value, this bequest to charity may be a larger or smaller part of the estate than you intend. If this is a reasonable prospect, you may wish to leave a percentage of the estate to your favorite charity.
Gift of Part of the Residue of the Estate
After all of the specific bequests have been made and your estate costs and taxes have been paid, the balance of the estate is called the residue. You probably will choose to distribute the residue on a percentage basis. Many donors decide to leave a percentage of the residue to charity.
Some donors give charity a specific percentage, such as 5%, 10% or more. Another option is to give to all of your charities a share that is equal to the share of your children, nephews, nieces or other beneficiaries.
For example, one donor had two children and divided her estate into three shares. Each child received one share and the charities collectively divided the third share. Another parent with three children divided the estate into four shares and did the same. Treating your charities as one child and simply dividing the estate with one share for each child and one share for favorite charities is a very convenient way to benefit your favorite charities.
IRA or 401(k)
If your estate includes an IRA or 401(k) in addition to your home, CDs and other securities, you might consider a beneficiary designation to charity.
From your perspective, your IRA is a very good asset. For most IRAs, other than a Roth IRA, the plan is funded with pretax dollars. It also grows tax free. However, you or your beneficiary will pay income tax when you withdraw the funds.
For you, the IRA is an excellent plan. Everyone should have a qualified plan such as an IRA, 401(k), or other retirement plan. Your IRA is funded with pre-tax dollars and grows tax free. This is an excellent plan for your future security.
If you pass away with a fairly substantial balance in your regular IRA or 401(k), that could be an excellent opportunity to make a charitable bequest. For the vast majority of Americans who have an estate that is not subject to estate tax, the only tax paid by the family will be income tax. Your home, CDs, stocks and bonds can be transferred to children without tax.
However, if you give family members your IRA, it comes with a large "you-owe-the-IRS" tax bill attached. When children or other heirs receive your IRA, they pay tax at their highest rate on their IRA distributions. This can be a sum of many tens of thousands of dollars.
Therefore, if you are planning to leave assets to charity, the transfer of an IRA may be a good plan.
Joe is an IRA owner and was speaking with his tax advisor Harry about the options for leaving a bequest to his favorite charity.
Joe: "Harry, I've been thinking about leaving a bequest to charity. You know, I've always thought that I would leave most of my estate to my two nephews and three nieces. But as I've thought about it, I have supported my favorite charity for many years and would like to do something for them."
Harry: "Well, you have a home, some CDs, some stocks and bonds and your IRA. Right now, the other assets are worth about $600,000 in total and your IRA is $200,000. How much were you thinking of leaving to the charity?"
Joe: "I thought I would give them about one-fourth of the estate and transfer the rest to my five nieces and nephews."
Harry: "You know, Joe, if you give them the home, stocks and bonds and CDs they will pay zero estate and income tax. But if you give them the IRA, they would have to pay income tax. A better plan might be to give the IRA to charity. Because a charity is tax exempt, it doesn't pay the income tax. In your case, that's a savings of over $60,000."
Joe: "That sounds like a great idea. How do I make that gift?"
Harry: "Your IRA is transferred by a beneficiary designation. We will obtain the form from your IRA custodian and designate your favorite charity. The nice part about a beneficiary designation is that it avoids probate."
Bequest for a Purpose
A bequest of assets through a will, a revocable living trust, or a beneficiary designation of a retirement plan also enables you to select a purpose. In most cases, donors simply leave a bequest for the general purposes of the charity. Because your bequest may occur many years after you sign your will, it is good to give the board of directors of the charity opportunity to select the best and most effective use of the bequest.
However, if you wish to benefit a specific area within your favorite charity, that is perfectly fine. You may designate the purpose for the use of your funds. In selecting a purpose, it is still best to give a general category for the use of the funds, so that the organization can continue to make the best possible use of your bequest.
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SAVVY LIVING
SAVVY LIVING
Furniture Aids for Those with Mobility Challenges
I am interested in purchasing a recliner that lifts and lowers off the ground, or some other type of furniture that can help my father. He's arthritic and overweight and struggles mightily with getting up from most of the cushioned furniture in the house. What can you recommend?
The task of sitting down and/or getting up from soft cushioned furniture is a problem for many seniors who struggle with excessive weight, arthritis or other mobility issues. Here are some different product solutions that can help.
Lift Recliners
One of the most popular types of cushioned furniture on the market today for mobility challenged seniors is an electric recliner lift chair. While they look just like regular recliners, powerlift recliners come with a built-in motor that raises and lowers the entire chair, which makes sitting down and getting up much easier.
With literally dozens of different types and styles of lift recliners to choose from, here are a few key points that can help you select a good fit for your dad.
Chair Size: The recliner needs to fit the person sitting in it, so your dad's height and weight will determine the size of chair he needs.
Reclining Options: Aside from the lifting system, the degree in which the chair reclines is your choice too. Most lift recliners are sold as either two-position, three-position or infinite-position lift chairs. The two-position chairs recline only to about 45 degrees, which makes them ideal for watching TV or reading. But if your dad wants to nap, he'll probably want a three-position or infinite-position chair that reclines almost completely horizontally.
Style and Features: You'll also need to choose the type of fabric, color and back style you want as well as any extra features you want such as built-in heating or massage elements or a wall hugging chair (great if you're tight on space).
There are many companies that make lift recliners including Med-Lift, NexIdea, Catnapper, Berkline, Franklin and La-z-boy. However, Pride Mobility (pridemobility.com) and Golden Technologies (goldentech.com) have been around the longest and have the best reputation. With prices typically ranging between $600 and $2,000, you can find lift recliners at many medical supply stores and online.
You'll also be happy to know that Medicare provides some help purchasing a lift chair. They cover the lift mechanism portion, which equates to around $300 towards your purchase.
Risedale Chairs
If powerlift recliners don't appeal to your dad, another option to consider is a Risedale chair. These are open-legged, wing back chairs that are different from lift recliners because only the seat cushion lifts instead of the whole chair. Sold by Carex Health Brands (carex.com), the Risedale costs $725.
Furniture Adapters
If you're looking for something less expensive or if your dad doesn't want different furniture, there are a number of assistive products that can be added to his current furniture like the Stander CouchCane or EZ Stand-N-Go (see stander.com).
These products provide support handles that make sitting down and standing up a little easier, and they both work on couches and recliners. Available online at Amazon.com, the CouchCanes sell for around $110, and the EZ Stand-N-Go costs $129.
Another way to make your dad's furniture more accessible is by increasing its height with furniture risers. These typically range from 2 to 5 inches in height, are made of heavy-duty plastic or wood and are inserted under the base of the legs or supports of his furniture. Costs typically range from a few dollars up to $50 or more and can be purchased at retail stores like Walmart and Target or online at Amazon.com.
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
Current Gifts
YOUR PLAN
Current Gifts
As is the case with many families, there are times each year when Jim and Sharon focus their attention on gift giving. For years, they have created a gift list that includes family members, friends and loved ones. Last year Jim and Sharon made an addition to their list and began including their favorite charity in their giving plan.
Sharon: Years ago, I inherited stock from my grandmother. We held the stock for several years, but decided to sell a portion of it this year. The stock had gone way up in value, and our CPA informed us that we had a capital gain of nearly $120,000. We had always planned on making a charitable gift and the CPA reminded us that if we were to make a gift of this stock before the end of the calendar year, we would receive a charitable deduction on the gifted shares. This deduction will help offset the capital gains tax on the stock we sold.
Jim: We contacted our favorite charity to discuss the best way to make a gift. The gift planner noted some of the most common gifts - a gift by check or by transfer of bonds or real estate, to name a few. However, he also mentioned that it might be especially beneficial for us to think about giving some of our remaining appreciated stock.
Sharon: We were still holding $80,000 in the same highly appreciated stock and did not intend to sell, primarily because of the substantial capital gains tax we already faced. To sell any more would only increase our tax. The gift planner recommended that we consider an end-of-year gift that would help lower our taxes. He called this a Gift and Sale plan. It meant that part of our stock would be sold and the proceeds would come to us, and part would be gifted to our favorite charity.
Jim: That is what we decided to do. By giving the $80,000 in stock, we received two benefits. First, we avoided a large capital gains tax on that stock. And then, we received a charitable deduction. The deduction even offset the capital gains for our prior stock sale of $120,000. We are very pleased with the double benefits of our gift. And, we're delighted that we've been able to make a nice charitable contribution.
*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.
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WASHINGTON NEWS
WASHINGTON NEWS
Tax Extenders Negotiations Continue
While most Senators and Representatives are back in their home states or districts for the Thanksgiving holiday, negotiations continue on a tax extenders bill. Staff from the House, Senate and White House are all working on a potential compromise. The negotiators hope to add an extenders provision to the major appropriations bill set for a vote on December 11, 2015.
There continue to be three major sections of a potential compromise. First, the House has passed permanent business extenders for the research and development credit, Sec. 179 expensing and bonus depreciation. The second section includes three charitable provisions – the IRA Rollover for persons age 70½ or older, enhanced deductions for gifts of food inventory and greater benefits for conservation easement gifts.
In the third section are the personal tax extenders, particularly the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).
In September, there were extensive tax extender negotiations between Rep. Paul Ryan (R-WI) and Sen. Chuck Schumer (D-NY). While these negotiations were not able to resolve all the issues, the current tax extenders negotiation builds upon the efforts of these key House and Senate leaders.
The current discussion is focused on Republican requests for “integrity provisions” on EITC and CTC. The integrity provisions are designed to ensure that those persons who benefit from these credits are appropriately qualified.
Editor’s Note: The time is growing very short. When Congress returns to Washington next week, they will need to move promptly to craft a compromise. It will be very important for the basic framework of the compromise to be in place by Friday, December 4 in order to meet the December 11 deadline. If the compromise does not come together, then it is probable that the tax extenders will pass for a two-year period with provisions retroactive to January 1, 2015.
Caregiving Tax Benefit
This week, presidential candidate Hillary Clinton proposed a new benefit for caregivers. The new benefit is a 20% tax credit for expenditures up to $6,000 per year. The maximum potential tax credit each year would be $1,200.
The Clinton campaign published a press release and stated, “Providing informal caregiving can strain family finances, with caregivers suffering lost wages, health insurance or Social Security benefits. Informal caregiving has a real effect on our economy, as well; in 2013 alone, the full economic value of unpaid informal caregiving was estimated at $470 billion.”
Editor’s Note: Former Secretary of State Clinton did not specify how she proposes to pay for this benefit. Previously, Clinton has recommended raising income tax rates for upper-income persons. There is no indication how much tax increase will be needed to pay for the caregiver benefit. As a service to our readers, your editor will continue to cover tax proposals by candidates from both parties.
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FINANCES
FINANCES
Stocks - Stronger Dollar Hurting Tiffany's
Tiffany & Co. (TIF) announced its third quarter results on Tuesday, November 24. The company reported that U.S. sales fell significantly during the quarter.
The company reported sales during the quarter of $938.2 million, less than the $959.6 million during the same period last year. Comparable store sales in the U.S. fell 6%.
"As expected, the strong U.S. dollar continued to put pressure on our financial results, specifically from the translation of non-U.S. sales into dollars and on foreign tourist spending in the U.S.," said Tiffany & Co. CEO Frederic Cumenal. "However, focusing on what we can control, we're pleased with our progress this year in expanding our store base and introducing and communicating compelling new product designs."
Tiffany & Co. reported a profit during the quarter of $91 million or $0.70 per share. This was lower than $99 million or $0.76 per share reported during the same period last year.
As Tiffany CEO Frederic Cumenal mentioned, a stronger U.S. dollar hurt the company's bottom line. The stronger U.S. dollar had no greater effect than on Tiffany's flagship Fifth Avenue store in Manhattan, which generates 8% of the company's sales. Foreign tourists make up 40% of the Fifth Avenue store's sales and are less likely to purchase jewelry when the dollar is strong. Fortunately, the company's weak performance in the U.S. was offset by strong sales in Europe and Asia.
Tiffany & Co. (TIF) shares closed on Wednesday, November 25 at $80.77.
Cracker Barrel Cooks Up Strong Quarter
Cracker Barrel Old Country Store, Inc. (CBRL) announced its first quarter results on Tuesday, November 24. The Southern-style restaurant and gift shop chain reported strong revenue and income gains during the quarter.
The company reported that revenue increased 2.8% to $702.6 million. Comparable store restaurant sales increased 2.5% during the quarter.
"Thanks to the continued success of our cost reduction initiatives, we were able to deliver strong EPS growth for our shareholders in the first quarter," said Cracker Barrel President and CEO Sandra B. Cochran. "Nevertheless, we believe consumer spending was challenged during the quarter, particularly in October, and that this was reflected in our comparable store traffic and sales. Even in this challenging environment, we believe we have the right menu, marketing, and margin-driving initiatives in place to achieve continued success in fiscal 2016."
Cracker Barrel reported net income of $40.9 million or $1.70 per share. Analysts were expecting earnings per share of $1.59.
Overall, Cracker Barrel's first quarter results surpassed expectations. A better-than-expected profit was an encouraging sign to investors. However, some analysts were concerned by the company's fiscal guidance for the rest of the year, which came in below expectations. It will be up to Cracker Barrel to exceed its released guidance and dispel any doubts that investors and analysts may have going into the rest of the company's fiscal year.
Cracker Barrel Old Country Store, Inc. (CBRL) shares closed on Wednesday, November 25 at $131.00.
Campbell Soup Reports Earnings
Campbell Soup Company (CPB) announced its first quarter results on Tuesday, November 24. The company reported earnings that beat expectations and drove the company's share price to a 16-year high.
The company reported revenue during the quarter of $2.2 billion. Though this was lower than the same period last year, it was in line with forecasts.
"We began fiscal 2016 after successfully implementing a number of changes to align our enterprise structure with our strategy," said Campbell Soup Company's President and CEO Denise Morrison. "Most significant among those changes were the formation of three new divisions with clear portfolio roles and the roll-out of a major cost savings initiative that included streamlining our organization, the launch of an Integrated Global Services organization and initiating zero-based budgeting."
Campbell reported earnings during the quarter of $194 million, less than $240 million during the same period last year. On a per share basis and adjusted for one-time costs, earnings per share were $0.95, better than expectations.
In addition to earnings that beat expectations, Campbell's also released full-year adjusted earnings guidance better than it has previously stated. The company now expects earnings per share to rise between 4% and 7%. The previous guidance was for earnings per share to rise between 3% and 5%.
Campbell Soup Company (CPB) shares closed Wednesday, November 25 at $52.52.
The Dow started the week of 11/23 at 17,824 and closed at 17,813 on Wednesday, 11/25. The S&P 500 started the week at 2,089 and closed at 2,089. The NASDAQ started the week at 5,107 and closed at 5,116.
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Bonds - Two-Year Treasury Yield on the Rise
Bonds - Two-Year Treasury Yield on the Rise
Yields on the two-year Treasury note reached a five-year high during the week of November 23, shrinking the yield gap with the benchmark 10-year note to the lowest level in nine months. Economic data released this week bolstered chances the Federal Reserve will raise short-term interest rates during its December policy meeting.
During early trading on Wednesday, November 25, the two-year yield was 0.940%. It closed at 0.934% on Tuesday, its highest closing since May 2010. As bond yields rise, prices fall. In contrast, the benchmark 10-year note yield fell to 2.240% during early Wednesday trading. The 10-year yield closed at a three-week low of 2.243% the day before.
Many experts believe the rise in two-year yields, which are sensitive to interest rate policy, reflects widespread expectation that the Federal Reserve will raise rates at its December policy meeting. "A rate hike in December is a go and it looks [like] the bond market has this priced in,'' said Jim Caron, Global Fixed-Income Portfolio Manager at Morgan Stanley Investment Management.
Fed funds futures Wednesday showed that investors and traders believe there is a 78% likelihood that the Federal Reserve will move to raise the benchmark interest rate in December. Nearly a month ago investors and traders saw only a 38% chance the Federal Reserve would raise rates.
Rising 10-year bond prices this week reflected increased investor confidence in the health of the U.S. economy. On Wednesday a report showed durable goods rose by 3% last month, better than expected. Weekly jobless claims also fell last week, a further sign of an improving U.S. economy.
The 10-year Treasury note had a closing yield on Wednesday, 11/25 of 2.23% while the 30-year Treasury note yield was 3.00%.
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CDs and Mortgages - Little Movement in Interest Rates
CDs and Mortgages - Little Movement in Interest Rates
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Wednesday, November 25. The report showed interest rates staying relatively unchanged leading up to the Thanksgiving holiday.
The 30-year fixed rate mortgage averaged 3.95% this week. This represents a decrease from last week when it averaged 3.98%. Last year at this time, the 30-year fixed rate mortgage averaged 3.97%.
This week, the 15-year fixed rate mortgage averaged 3.18%, unchanged from last week. The 15-year fixed rate mortgage averaged 3.20% one year ago.
"In a quiet week leading up to the Thanksgiving holiday, the 30-year mortgage rate dipped 2 basis points to 3.95%," said Sean Becketti, Chief Economist at Freddie Mac. "Economic releases over the last week contained no major surprises, and none are expected in the next few days. The year is winding down, and the only remaining market dates of note are December 4—the last employment report of the year—and December 15-16, the long-awaited FOMC meeting."
The money market fund finished Wednesday, 11/25 at 0.3%. The 1-year CD finished at 0.6%.
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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
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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
17001 Prairie Star Parkway, Suite 200
Lenexa, Kansas 66220, United States
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