Brothers and sisters in Christ:
Happy New Year! I hope you are enjoyed a blessed first few days of 2016.
Do you have a New Year's Resolution? Even if you don't call it by that name, is there something in your life or your relationship with God that you plan to improve this year? Because we are only a little over one day into the new year, allow me to share with you some tips on how to set and achieve the goals that you've been thinking about:
Start small: Make sure your goals are something that can actually be achieved. Don't make the broad goal of, "I want to manage my finances better." Instead, say, "I want to meet with a financial planner and finalize my retirement plan."
Write it down: It's easy to forget our thoughts from six months--or even three months--ago. So write down your commitment, and why it is important to you, somewhere that you'll see it often.
Forgive yourself: You are not going to get it right the first time. If you don't follow through on your goal the first few times, don't give up. Offer yourself grace, and keep trying.We believe in the importance of always striving to be a better person and a better Christian, and that's what a New Year's Resolution is all about.
If your resolution involves charitable giving to a church or ministry, let us help you. We'd love to talk with you about your financial situation, and we never pressure you to make any decisions. The Foundation is simply here to help you achieve the goals you have for ministry, stewardship, and the legacy you'll leave behind.
Blessings,
Ken Roney
President
WASHINGTON NEWS
Tax Reform in 2016?With the new year, optimism for tax reform again breaks forth in Washington. In January the Senate Finance Committee and the House Ways and Means Committee will embark on a journey toward major tax reform.
But what is the realistic potential in an election year? The 2016 tax reform may reflect changes in international, corporate, personal and estate taxes.
International taxes were the focus of one of the five groups created in early 2015 by the Senate Finance Committee Chair Orrin Hatch (R-UT). He created these five tax working groups to develop specific proposals in each area.
The international group was led by Sen. Rob Portman (R–OH) and Sen. Chuck Schumer (D–NY). They had made substantial progress by the middle of 2015. At that time Schumer began negotiations with then House Ways and Means Chairman Paul Ryan (R–WI).
The two taxwriters attempted to combine international tax reform with the highway bill. When they were unable to bring those negotiations to completion, Congress passed a highway bill in the fall of 2015.
However, international tax reform remains a high priority. The United States has the highest corporate tax rate in the industrialized world. This high rate leads to inversions – a U.S. corporation moves its tax headquarters overseas to reduce corporate taxes.
Corporate tax reform is often paired together with international reform. Senate Finance Committee and House Ways and Means Committee members have discussed reducing the top corporate rate from 35% to 25% by limiting deductions. Current Ways and Means Chairman Kevin Brady (R–TX) prefers a 20% corporate rate. Reducing the top rate to that level would require a very broad–based elimination of corporate tax deductions.
Personal taxes are the third potential area of negotiation. There is general agreement that the tax code should be broadened by reducing deductions and tax rates. The obvious political challenge for lowering rates is that state and local tax deductions would have to be eliminated and there must be substantial limits on deductions for mortgage interest. These changes will be politically challenging.
There is a relatively low level of interest in modification of the estate and gift taxes. The applicable exclusion amount of $5.45 million for 2016 means that only 0.2% of estates are taxable. Very few Americans now pay gift or estate tax.
Editor’s Note: Will there be tax reform in 2016? International reform is possible, but other changes are likely to wait until after the November election.
But what is the realistic potential in an election year? The 2016 tax reform may reflect changes in international, corporate, personal and estate taxes.
International taxes were the focus of one of the five groups created in early 2015 by the Senate Finance Committee Chair Orrin Hatch (R-UT). He created these five tax working groups to develop specific proposals in each area.
The international group was led by Sen. Rob Portman (R–OH) and Sen. Chuck Schumer (D–NY). They had made substantial progress by the middle of 2015. At that time Schumer began negotiations with then House Ways and Means Chairman Paul Ryan (R–WI).
The two taxwriters attempted to combine international tax reform with the highway bill. When they were unable to bring those negotiations to completion, Congress passed a highway bill in the fall of 2015.
However, international tax reform remains a high priority. The United States has the highest corporate tax rate in the industrialized world. This high rate leads to inversions – a U.S. corporation moves its tax headquarters overseas to reduce corporate taxes.
Corporate tax reform is often paired together with international reform. Senate Finance Committee and House Ways and Means Committee members have discussed reducing the top corporate rate from 35% to 25% by limiting deductions. Current Ways and Means Chairman Kevin Brady (R–TX) prefers a 20% corporate rate. Reducing the top rate to that level would require a very broad–based elimination of corporate tax deductions.
Personal taxes are the third potential area of negotiation. There is general agreement that the tax code should be broadened by reducing deductions and tax rates. The obvious political challenge for lowering rates is that state and local tax deductions would have to be eliminated and there must be substantial limits on deductions for mortgage interest. These changes will be politically challenging.
There is a relatively low level of interest in modification of the estate and gift taxes. The applicable exclusion amount of $5.45 million for 2016 means that only 0.2% of estates are taxable. Very few Americans now pay gift or estate tax.
Editor’s Note: Will there be tax reform in 2016? International reform is possible, but other changes are likely to wait until after the November election.
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PERSONAL PLANNER
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PERSONAL PLANNER
Trusts for Surviving SpouseThere are three different basic types of trusts for a surviving spouse: a qualified terminable interest property trust (QTIP), a qualified domestic trust (QDOT) or a charitable remainder trust (CRT). All three of these trusts may qualify for the marital deduction. However, there are many specific reasons for choosing one of these three trust types.
QTIP Trust
The QTIP trust is the most common marital deduction trust. There are four basic rules for the QTIP trust:
All income must be paid to the surviving spouse.
The surviving spouse may require the trustee to invest in assets that produce income.
The principal may be invaded only for the benefit of the surviving spouse.
The trust remainder will be distributed to the beneficiaries designated under the will of the first to pass away.A QTIP trust is excellent for protecting the children of a first marriage. The trust can benefit the surviving spouse and then will be transferred to those children.
Example—Jane Lost Everything But Betty Was Protected
Joe and Jane were married and had two children. On Saturday evenings, they often went to dinner with their friends Bill and Betty.
Joe passed away first and had a simple will. He left his estate outright to Jane. It qualified for the estate marital deduction so there was no estate tax.
Subsequently, Jane married John Speculator. John was involved in a Brazilian gold mining adventure. The entire estate of Jane was soon invested far south of the border, never to return. Jane and her children lost everything.
Bill and Betty decided to protect their estate. Bill created a QTIP trust for his half of the estate. When Bill passed away, Betty was the beneficiary of the QTIP trust. After a few years, she married Sam Speculator. While Sam was involved in the Brazilian gold mining adventure, the QTIP created by Bill provided income and protection for Betty for her lifetime. In addition, the QTIP principal was protected.
QTIP Powers and Election
There are several powers that are permitted for a QTIP. First, the required provisions are that the income be paid to the surviving spouse and principal can be invaded only for the surviving spouse. However, the trustee may choose to transfer the greater of 5% of trust assets or $5,000 each year to the surviving spouse. In addition, it is permitted to allow the surviving spouse to appoint the remainder. If the surviving spouse holds the power to appoint, he or she can direct the trust to children from the first marriage, but also could give trust assets to other persons.
A QTIP must be elected on the Form 706 Federal Estate Tax Return. It is also possible to make a partial QTIP election and to create a transfer of the balance that is taxable in the first estate. The benefit of this plan is that this amount will be tax free to family in the second estate.
QDOT Trusts
If a spouse is not a U.S. citizen, then a transfer will not qualify for the federal marital deduction. In this case it is possible to create a qualified domestic trust (QDOT).
With a QDOT, the surviving spouse will receive all income. There must be at least one trustee that is a U.S. citizen or corporation. If the surviving spouse receives distributions of principal, those will be subject to estate tax, with one exception. There is a "hardship" exception that may allow tax-free principal distributions for emergency medical care or other extraordinary circumstances.
If the surviving spouse desires to qualify for the regular marital deduction, he or she may become a U.S. citizen prior to the date for filing the federal Form 706 Estate Tax Return.
Charitable Remainder Trust (CRT)
The third option for a qualified marital deduction trust is a charitable remainder trust. The trust may be created as a two-life agreement during the joint lifetimes of the spouses or it could be created in a will or living trust to benefit the surviving spouse.
There are two different payout options for this CRT. A standard CRT pays 5% or more each year to the surviving spouse. This payout is made from income and, if necessary, from trust principal. An attractive benefit of a CRT is that it may grow tax free during the life of the surviving spouse.
Part of the CRT payments may be distributed at the lower capital gain rates. Finally, because the assets are stepped up to fair market value in the estate, the potential exists to invest in municipal bonds and pay out tax-free income to the spouse.
A second payout method is a net-income-plus-makeup unitrust. This trust method can enable the principal to be invested for growth rather than income. Because the growth inside the trust is tax free, the surviving spouse may dramatically lower income taxes if he or she does not need the income. Rather than taking the full CRT payout and paying income tax, the spouse permits the trustee to invest for growth for his or her lifetime. If income is needed at a higher level later in life, the trustee may reinvest for income and pay the regular income plus make up the prior shortfall.
With a CRT, after the surviving spouse passes away the remainder is distributed to qualified exempt charities. The charities may be designated by the first spouse to pass away, or a power can be given to the surviving spouse to designate the charities.
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SAVVY LIVING
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SAVVY LIVING
How To Write Your Own ObituaryCan you provide any tips on how to write your own obituary? At age 80, I am in the process of preplanning my funeral and would also like to take a crack at writing my own newspaper obit too.
For many people, writing their own obituary can be a nice way to sum up their life, not to mention avoid mistakes that sometimes occur when obituaries are hurriedly written at the time of death. Here's what you should know, along with some tips and tools to help you write one.
Obit Tips
Before you start writing your obit, your first step is to check with the newspaper you want it to run in. Some newspapers have specific style guidelines or restrictions on length, some only accept obituaries directly from funeral homes, and some only publish obituaries written by newspaper staff members.
If your newspaper accepts self-written obits, find out if they have a template to guide you, or check with your funeral provider. Most funeral homes provide forms for basic information, and will write the full obituary for you as part of the services they provide.
Also, most newspapers charge by the word, line or column inch, so the cost to publish your obituary will depend on your newspaper's rate and the length of your obit. Most obituaries range between 200 and 500 words.
What to Include
The most basic information in an obituary usually includes your full name (and nickname if desired), age, date of birth, date of death, where you were living when you died, the name of a significant other (and whether he or she is alive or dead) and details of the funeral service (including whether the service will be open to the public or private). If you will have a funeral service open to the public, include the date, time, and location of service.
Other relevant information you may also want to include is: the cause of your death; your place of birth and parents' names; your other survivors including your children, other relatives, friends and pets and where they live; family members who preceded your death; high school and colleges you attended and degrees earned; your work history and military service; your hobbies, accomplishments and any awards you received; your church or religious affiliations; any clubs, civic and fraternal organizations you were members of; and any charities you feel strongly about that you would like people to donate to either in addition to or in lieu of flowers or other gifts.
Also, include a photograph of yourself. Finally, make sure to leave copies of your obit with your funeral director and immediate family members.
Need Help?
If you need some help writing your obituary there are free online resources you can turn to like legacy.com, obituaryguide.com or caring.com/obituary that offer tips, templates and sample obits.
If you want your obit to be more memorable, purchase the ObitKit (obitkit.com). This is a $20 workbook that helps you gather the details of your life so you can write an obituary that will reflect your personality and story.
Legacy Letter or Ethical Will
If you're interested in writing your own obituary, you may also be interested in writing a legacy letter or ethical will.
A legacy letter is a heartfelt letter that you write to your loved ones sharing with them your feelings, wishes, regrets, gratitude and advice. An ethical will is not a legal document, but an extension of a legacy letter that many people use to express their feelings as well as explain the elements in their legal will, give information about the money and possessions they're passing on and anything else they want to communicate.
For help in creating these, there are lots of resources available like celebrationsoflife.netand personallegacyadvisors.com that offer practical information, examples and materials you can purchase to help you put them together.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
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YOUR PLAN
The Dairy Farm Produced More Than Milk
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YOUR PLAN
The Dairy Farm Produced More Than Milk
"For every animal of the forest is mine, and the cattle on a thousands hills."[Psalm 50:10]
Late in October, as the leaves were in their amber and crimson prime, I made my way deep into the heart of Maine. I would soon set foot on the Cold Brook Farm. Herman and Clarice Dunlop, faithful members of the Skowhegan, Maine First Church of the Nazarene welcomed me to their home.
I had met Herman and Clarice at a Prime Time retreat and was now having the opportunity to once again spend time with them. What a blessing! Though diagnosed with terminal pancreatic cancer, Herman retains his humor and uncompromising reliance on our Lord and Savior. He has numbered our days and Herman is at total peace with whatever God's plan is for his life, be it measured in days or in years. He has a peace that the world cannot give, but only envy.
As I sat at their dining room table the story of the Cold Brook Farm began to unfold. Herman's grandfather in the early years of the twentieth century moved his family and cattle from Canada, south into Maine and established the Cold Brook Farm, a dairy farm situated about two miles north of the town center of Skowhegan. Within a short time, his grandfather began meeting with other Christians in a tent. These tent meetings gave birth to the First Church of the Nazarene in Skowhegan. Herman's parents and then Herman and Clarice continued to operate the dairy farm and help build the Skowhegan church. In the words of Herman, "this farm has produced a lot more than milk". Truer words have never been spoken.
Perhaps as many as a dozen preachers have come off that dairy farm, including Herman's brother, Roland, who served as the District Superintendent in Maine, and Herman and Clarice's daughter. Countless unsuspecting young men have worked at the dairy farm only to have a personal encounter with Jesus prompted by the faithful witness of the Dunlop family.
Today, a brand new First Church of the Nazarene sits on six acres of land that once was the site of the old farmhouse on the Cold Brook Farm. Only an apple tree stands at the drive to the Church to conjure up the memories of the farm of long ago for Herman.
The farm no longer exists. Much of the property has been sold. There are no dairy cows; no more milk production; only the countless lives that have been transformed by the faithfulness of those who lived and worked on the farm. For nearly one hundred years the farm has been a tool for ministry. Now, Herman and Clarice have written the last chapter of Cold Brook Farm. They have placed the remaining parcels of the farm in two Charitable Remainder Unitrusts to perpetuate its legacy. Herman and Clarice will receive lifetime income from the trusts based on the sale of the farm property. At some point in the future, in God's timing, the trusts will be used to establish two endowments to fund ministries of the Church of the Nazarene.
Until that day, when time shall be no more, Cold Brook Farm will continue to produce "more than milk".
If you would like more information about leaving a legacy of faith through planned giving please give us a call. We would be thrilled to visit with you and help you write the final chapter of your own story.
Thank you for your interest in the Church of the Nazarene Foundation. Our hope is to serve you and your family with helpful information. We have an increasing number of friends at CNF who now are benefiting from life income gifts, gift annuities and other plans. Thank you for taking the time to explore the benefits of gift planning.
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FINANCES
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FINANCES
Stocks - General Mills Reports Earnings
General Mills, Inc. (GIS) announced its second quarter results on Thursday, December 17. The company reported mixed results.General Mills reported total revenue of $4.42 billion for the quarter. This represents a decrease of 6.1% compared to the same quarter last year when the company reported revenue of $4.71 billion. Analysts had expected $4.58 billion in sales.
"Our first-half results keep us on track to deliver the targets we outlined at the beginning of the year, adjusting for the Green Giant sale," said General Mills Chairman and CEO Ken Powell. "Our emphasis on Consumer First drove positive results in a number of categories and markets, and we plan to expand the impact more broadly in the second half in order to strengthen our retail sales performance. At the same time, we are committed to driving efficiency in our businesses and expanding our margins. The incremental actions we took in the first half of the year have enabled us to increase our overall cost savings target to $500 million by 2018."
The company reported quarterly net income of $529.5 million. This represents an increase of 53% compared to the comparable period last year when General Mills reported net income of $346.1 million. Earnings per share came in at $0.87, above analyst estimates for $0.82 per share.
General Mills has made a number of moves during the past two years to make its offerings more fresh and healthy. Sales of Green Giant products have declined significantly over the past several years as consumer demand has shifted away from canned and frozen foods to fresh and wholesome options. As a result, General Mills decided to sell its Green Giant and Le Sueur brands of canned and frozen foods to B&G Foods for $765 million. The transaction is currently being reviewed by regulators and is expected to close by the end of the calendar year or early in 2016.
General Mills, Inc. (GIS) shares ended the week at $57.66, down 1.50% for the week.
Carmax Disappoints Investors
Carmax, Inc. (KMX) announced its third quarter results on Friday, December 18. The company disappointed investors with a decline in year-over-year net income.
Carmax reported total revenue of $3.54 billion for the quarter. This represents an increase of 4.1% compared to the same quarter last year when the company reported revenue of $3.41 billion. Analysts had expected revenue of $3.62 billion.
"We had a challenging sales quarter, which together with higher advertising expenses, contributed to the year-over-year decline in third quarter net earnings," said Carmax President and CEO Tom Folliard. "However, we continue to grow both total revenues and EPS, reflecting the contributions from new stores and continued share repurchase activity."
The company reported quarterly net income of $128.20 million. This represents a decrease of 1.4% compared to the same quarter last year when Carmax reported net income of $130.05 million. Earnings per share came in at $0.63.
Carmax reported disappointing net income due to an increase in new vehicle sales and the corresponding increase in the trade-in price of used vehicles. New light-vehicle sales will increase to about 17.5 million vehicles in 2015, up substantially from previous years. Manheim Consulting's used vehicle value index, an index that tracks the sale price of used vehicles, is up 1.5% from one year ago and near record levels.
Carmax, Inc. (KMX) shares ended the week at $53.97, up 1.83% for the week.
Carnival Reports Solid Net Income
Carnival Corp. (CCL) announced its fourth quarter and annual results on Friday, December 18. The company reported solid net income for the year due to reduced costs.
Carnival reported total revenue of $3.71 billion for the quarter and $15.71 billion for the year. This represents a slight decrease compared to the same quarter last year when the company reported quarterly revenue of $3.72 billion and annual revenue of $15.88 billion.
"We nearly doubled our fourth quarter results and ended the year with 40% higher earnings," said Carnival President and CEO Arnold Donald. "This year we achieved a 4.3% improvement in revenue yields compared to the prior year due to higher onboard revenues and increased ticket prices as we have driven demand in excess of capacity growth, while our ongoing efforts to leverage our industry-leading scale helped to contain costs. Our strong performance led to record operating cash flow of well over $4 billion versus $3.4 billion last year."
The company reported quarterly net income of $270 million and annual net income of $1.76 billion. Carnival's annual net income represents an increase compared to last year when the company reported net income of $1.22 billion.
Lower fuel prices and higher ticket prices helped Carnival to improve net earnings for the year even as sales declined slightly. Foreign ticket sales declined due to the strong U.S. dollar. However, fuel prices dropped nearly 50% from the previous year allowing Carnival to improve net income by cutting costs.
Carnival Corp. (CCL) shares ended the week at $54.48, up 1.13% for the week.
The Dow started the week of 12/28 at 17,536 and closed at 17,425 on 12/31. The S&P 500 started the week at 2,058 and closed at 2,044. The NASDAQ started the week at 5,032 and closed at 5,007.
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Bonds - Treasury Yields Decline
Treasury prices rose and yields declined Wednesday, December 30 and Thursday, December 31. Oil prices fell both days causing equities markets to suffer and investors to demand safer assets such as government debt.This week, crude oil futures fell from a high of $38.09 on Monday to a low of $36.22 in early Thursday trading. Equities markets followed suit. The Dow fell from a high of 17,714 on December 30 to a low of 17,451 in early Thursday trading. This decline caused investors to demand safer assets.
As a result, the 10-year Treasury yield fell from 2.32% on Wednesday to a low of 2.27% in early Thursday trading. The 2-year Treasury yield fell from 1.12% on Wednesday to a low of 1.03% in early Thursday trading.
Short term Treasury yields are the most responsive to changes in the Federal funds rate. This is the reason the 2-year Treasury yield reached its highest level in nearly six years before Wednesday's buying tapered those gains.
The bond market closes at 2 P.M. Eastern Standard Time on December 31, two hours earlier than normal, for the New Year's Day holiday. "Anything that's getting done is because it has to. There's not really any reaction to data; it's a typical illiquid holiday," said Lisa Hornby, Portfolio Manager at Schroders.
The 10-year Treasury note yield finished the week of 12/28 at 3.01% while the 30-year Treasury note yield finished the week at 3.04%.
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CDs and Mortgages - Interest Rates Rise
Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, December 31. The report showed interest rates rising as December brought an increase in consumer spending.The 30-year fixed rate mortgage averaged 4.01% this week. This represents an increase from last week when it averaged 3.96%. Last year at this time, the 30-year fixed rate mortgage averaged 3.87%.
This week, the 15-year fixed rate mortgage averaged 3.24%. This is down from last week when it averaged 3.22%. The 15-year fixed rate mortgage averaged 3.15% one year ago.
"In the final week of 2015, Treasury yields jumped reacting in part to strong consumer confidence in December," said Sean Becketti, Chief Economist at Freddie Mac. "In response, the 30-year mortgage rate rose 5 basis points to 4.01%, ending a 5-month span below 4%. After averaging 3.9% in the fourth quarter of 2015, we expect the 30-year mortgage rate to average 4.7% for the fourth quarter of 2016."
The money market fund finished the week of 12/28 at 0.3%. The 1-year CD finished at 0.6%.
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To model generosity inspires others to do the same. Thank you for your interest in the Foundation as we strive to partner with churches, ministries, and Christians around the world to fund the important work of God's Kingdom.
To access updated financial and gift planning information, please visit our website, www.nazarenefoundation.org. If you would like more information about your charitable giving options or about how a Foundation representative can visit your church, contact us by phone at (913) 577-2983 or by email at info@nazarenefoundation.org.
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The Global Church of the Nazarene Foundation
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To model generosity inspires others to do the same. Thank you for your interest in the Foundation as we strive to partner with churches, ministries, and Christians around the world to fund the important work of God's Kingdom.
To access updated financial and gift planning information, please visit our website, www.nazarenefoundation.org. If you would like more information about your charitable giving options or about how a Foundation representative can visit your church, contact us by phone at (913) 577-2983 or by email at info@nazarenefoundation.org.
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The Global Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, Kansas 66220, United States
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