Sunday, December 29, 2013

Model Generosity – Leave a Lasting Legacy through Planned Giving – Global Church of the Nazarene Foundation – Saturday, 28 December 2013

Model Generosity – Leave a Lasting Legacy through Planned Giving – Global Church of the Nazarene Foundation – Saturday, 28 December 2013
We reread, retell, and re-enact the story of Christmas every year—but sometimes we forget to react. God’s Greatest Gift was delivered to us, so that He could be delivered for us as payment for our sins. What is your response to that life-saving news? On that first Christmas, the lowly shepherds were some of the first to witness Christ’s coming into the world. They responded by “glorifying and praising God” (Luke 2:20). Some time later, the Magi were led to the infant King and they “bowed down and worshipped him…and presented him with gifts” (Matt. 2:11).
Whether your reaction to God’s Saving Gift is one of worship or of giving, we at the Foundation are blessed by your witness and encouraged by your heart-response.
Thank you for your commitment this year to furthering His kingdom. You are truly a godly example of the Father's faithfulness to His children. As 2013 comes to an end, please know that The Foundation is here to assist you with any end-of-year giving. You may contact us by replying to this email or by calling our office at (913) 577- 2983.
Blessings,
Kenneth R. Roney, J.D.
President
The Church of the Nazarene Foundation office will be closed December 24-26.
If you would like to make a donation for 2013, please be sure the envelope is postmarked by December 31, 2013.
PERSONAL PLANNER
Income for Surviving Spouse
Elliot and Alexis were concerned about planning for the future. They had built a substantial estate of $1,200,000. When Elliot was 70, he rolled over his $400,000 qualified retirement plan into an IRA. Because he is now over age 70½, Elliot is taking distributions.
Alexis also has an IRA. They jointly own their home, which is debt free, and have savings accounts, stocks and bonds.
If Elliot were to pass away first, Alexis would like to avoid paying additional tax. In addition to the IRA, Alexis already receives income from their investments.
Alexis said, "We seem to be paying a lot of income tax. When Elliot takes distributions from his IRA, that just pushes our income up higher and we pay more and more tax. Is there a way that I could reduce my income tax if Elliot passed away?"
A Solution for Alexis
Elliot could name Alexis as the designated beneficiary of his IRA. After Elliot passes away, Alexis may roll the IRA over. Alexis is age 70, and will soon be required to start distributions from the IRA. The added income would significantly increase Alexis' taxes.
A solution that gives Alexis protection and good flexibility is for Elliot to transfer his IRA to a special trust for when he passes away. Under the design of this trust, Alexis could receive a 5% income payout or could encourage the trustee to invest for growth.
If Alexis decides to let the income grow inside the trust, it will grow tax free until more income is desired. At a future date, Alexis may decide that the balance of the estate is not producing as much income as desired, and could encourage the trustee to start making the payments. By that time, it is quite possible that the $400,000 would have grown and the trust payouts could be significantly greater.
How to Create the Trust
The trust has a special name. It is called a net income plus makeup charitable remainder unitrust. Elliot and Alexis talked to their attorney, George. He prepared a trust document that Elliot and Alexis signed.
Under their state law, this trust document is valid even though it is not yet funded. Elliot then selected the trust as the designated beneficiary for his IRA and Alexis consented in writing to that designation.
When Elliot Passes Away
If Elliot passes away first, Alexis will own the family home outright and will inherit their other assets, except the IRA. Elliot's IRA will be transferred directly to the unitrust. Because it is a net plus makeup unitrust, the trustee may discuss her goals with Alexis and then invest the $400,000.
Alexis' Options
Alexis may choose to allow the trust to grow for a period of time, if there is sufficient income from the IRA, Social Security and pension. However, if Alexis prefers to receive income from the $400,000 unitrust, then the trustee can invest to produce at least the 5% income and pay that amount to Alexis.
Alexis may decide to allow the trust to grow because there are modest expenses, no debt and sufficient income to enjoy annual traveling. At a future date Alexis could request the trustee change the investments from growth to income. For now, Alexis is comfortable with the trust investments in growth securities.
Saving Income Taxes
Because the growth of the trust is tax free and Alexis is not receiving substantial income from the trust, the income will be lower and there will be substantial tax savings. Alexis shared with their attorney, George, "I have more than enough and I could always spend a portion of my CDs if needed. It is a relief not to have the extra income and have to pay those high income taxes. Plus, I know that the trust is growing and I could receive a larger income in the future if needed."
Benefits for Family and Charity
If necessary in the future, Alexis will receive the income from the unitrust. However, Alexis may choose to allow the trust to grow and live on other income. When Alexis passes away, the trust principal plus growth will go to three favorite charities of Elliot and Alexis.
In addition, the children of Elliot and Alexis will also receive a substantial inheritance. The balance of the estate, including their home, CDs, stocks and bonds, will be divided between their two children.
Alexis is very pleased that income taxes will be reduced, and the estate total will be larger. Over time, the trust could grow quite substantially. The combination of security for Alexis, trust growth for charity and the benefits to family from the inheritance of the balance of the estate create a very good plan for Elliot and Alexis.
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SAVVY LIVING
How Medicare Covers Alzheimer's Disease
What does Medicare cover when it comes to Alzheimer's disease? My wife was recently diagnosed with early stage Alzheimer's and I would like to find out what is covered and what is not.
Most medical costs to treat individuals with Alzheimer's disease are covered by Medicare except for long-term custodial care costs. Here is a breakdown of the services Medicare does and does not cover when it comes to Alzheimer's disease and a few tips that might help you plan ahead.
Medical Care: For the most part, ongoing medical care to diagnose and treat Alzheimer's disease is covered by Medicare Part B. This includes visits to primary care doctors and specialists, lab tests, speech and occupational therapy, home health care and outpatient counseling services. Medicare pays 80% of these costs and the patient will be responsible for the remaining 20% after meeting the annual $147 Part B deductible.
Inpatient hospital care is covered under Medicare Part A with a $1,216 deductible and coinsurance. As part of healthcare reform, Medicare also covers 100% of annual wellness visits, including tests for cognitive impairment.
Medications: Most Alzheimer's medications are covered under Medicare's Part D prescription drug plans, but copayments vary depending on your situation. If you have a Part D plan, use the Medicare Plan Finder tool at medicare.gov/find-a-plan to compare your plan's total drug costs against other plans to be sure you're getting the best coverage. The Alzheimer's Association offers a chart on coverage for common Alzheimer's drugs. To view the chart, go to alz.org and type "drug chart" in the search field to find it.
Long-Term Custodial Care: Many seniors are surprised to learn that Medicare does not cover long-term custodial care. This includes nursing home care as well as the costs of assisted living facilities and adult day care. Medicare does, however, pay for some shorter-term nursing home care. For example, Medicare will cover up to 100 days of nursing home care following a three-day inpatient hospital stay.
Hiring home help for bathing, toileting and dressing (custodial care) is not covered by Medicare. This is true unless the patient is also receiving skilled-nursing care or physical or occupational therapy to help with the recovery from an illness or injury.
To help with these costs, you may want to consider a long-term care insurance policy. If your income and assets are very limited, you may qualify for Medicaid. See longtermcare.gov for a breakdown of long-term care planning options.
Hospice: In the final stages of the disease, Medicare Part A covers nearly all aspects of hospice care. This includes doctor services, nursing care, drugs, medical equipment and supplies, physical and occupational therapy, homemaker services, counseling and respite care. To qualify, a doctor must certify that a patient has six months or less to live.
Other Insurance
Also, you should consider a Medigap (Medicare supplemental insurance) policy if you do not already have one. A Medigap plan will help pay for things that are not covered by Medicare such as copayments, coinsurance and deductibles. To search for plans in your area, visit medicare.gov and click on "Supplements & Other Insurance" or call Medicare at 800-633-4227 and ask them to mail you a free copy of the "Choosing a Medigap Policy" publication 02110.
If you are enrolled in a Medicare Advantage plan (like an HMO or PPO), your plan must give you at least the same coverage as original Medicare does. However, make sure your doctors are in your insurer's network to avoid excess costs. Also, find out whether you need a referral or prior authorization before getting care.
Financial Assistance
If you can't afford your Medicare out-of-pocket costs, or need help with medication expenses, there are government programs that can help. Go to benefitscheckup.org to search or contact your Eldercare Locator (800-677-1116) who can refer you to local services to assist you.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Senior" book. The 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 Senior, P.O. Box 5443, Norman, OK 73070.
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YOUR PLAN
A God-Honoring Estate Plan
Like so many others, my wife and I found ourselves without a current and viable estate plan in place. Although we had drawn up a pair of wills years before, it was a shock to see how out-dated and inadequate they had become. Our circumstances, finances, and interests had changed; but our wills had not. A last will and testament is supposed to provide instructions to family and friends about who and what was important to the will-maker in life. With time, our estate plan no longer reflected those values. And to just discard our old wills would leave us without a viable estate plan, causing state laws to take over and leaving our assets to be distributed to distant or unintended relatives, or possibly to the state itself. Neither result was what we wanted to leave behind.
So began our journey to develop a God-honoring estate plan that would include our family and the local church, as well as national and international ministries, after we are gone.
In 1985, my wife and I purchased a small family business from my parents. Over the years, the Lord blessed our hard work and commitment to quality products and services. After operating the business for a number of years, we began to realize that we had many employees who depended on us as well as a great deal of corporate responsibilities. It became obvious we needed an estate plan that would deal with the business issues as well as our personal goals.
About that time, we were invited to our first World Challenge in Tacoma, Washington. The effectiveness of the JESUS Film was very impressive. We appreciated how the JESUS Film Harvest Partners teams work with indigenous peoples to identify pastoral and lay leadership, and how they help establish preaching points and organize local churches to disciple new believers. As a result of that invitation to the Tacoma World Challenge, we included the JESUS Film Harvest Partners ministry in our new estate plan.
Some time later, in a more recent World Challenge, my wife and I were struck with the urgency of getting JESUS Film teams and equipment out to the field. We realized we didn't want to wait until we were dead and gone to support this ministry in a more meaningful way. We wanted to be a part of the ministry during our lifetime. So, we decided to make an immediate and significant pledge.
In order to implement this pledge, we engaged the services of the Foundation. With their help, we were able to establish an endowment fund, which will be funded over a five-year period. Each year, 95 percent of the endowment earnings will go the JESUS Film Harvest Partners ministry and the remaining 5 percent will be plowed back into the endowment to help grow the fund.
After we are gone, our estate will be distributed to various ministries through the Foundation in a God-honoring way. We are so impressed with the Foundation and thankful that we can have the joy of giving now and seeing the results because of our endowments. We are confident the ministries that are important to us will keep on receiving income in perpetuity.
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WASHINGTON NEWS
Commissioner Koskinen's Message to the IRS
Following his confirmation on December 20 as the new Commissioner of the Internal Revenue Service, John Koskinen sent greetings to all IRS employees. He stated that he "took the oath of office this morning and a top priority is to reach out immediately to IRS employees; to greet you and to share my enthusiasm about joining you at this important time."
Koskinen indicated that he plans to travel extensively in 2014 and visit "as many IRS offices as possible." He notes that the IRS will soon be entering the very busy filing season for 2013 tax returns. His highest priority is to ensure the filing season goes "as smoothly as possible."
Treasury Secretary Jacob Lew welcomed Koskinen to his new position. Lew noted, "John shares my ironclad commitment to continuing to rebuild the public's trust in the IRS. The work of the IRS, which is carried out by dedicated public servants, touches virtually every American, and we need someone at the helm who brings both a strong commitment to high quality customer service and the practical abilities to strengthen the agency." Lew stated that he believes a primary focus for Koskinen will be to rebuild the credibility of the IRS.
The White House echoed this statement by Sec. Lew on rebuilding trust. It published a press release and noted that Koskinen "has always acted with the absolute integrity Americans demand from those in public service, and his strong leadership and unquestioned expertise make him the right person to lead the IRS."
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FINANCES
Stocks - Scholastic Reports Strong Results
Scholastic Corporation (SCHL), a children's book publishing company, announced its latest quarterly earnings on Thursday, December 19. The company reported strong earnings despite increased expenses for the quarter.
Scholastic announced quarterly revenue of $623.2 million. This represents an increase of 1.6% over the same period last year when the company reported revenue of $613.5 million. However, overall revenue had to increase 19% on the year to offset a $13.4 million impairment charge accounted for this quarter. The charge is related to an acquisition made 10 years ago.
The company reported net income of $58.3 million. This is a slight decrease from last year when the company reported net income of $61.8 million. Scholastic reported earnings per share of $1.80.
Richard Robinson, President and CEO of Scholastic commented on the company's quarterly results. "Scholastic had a very strong second quarter, driven by profit improvement in each part of our children's book business and excellent educational technology program sales. Scholastic continues to be a critical source for books that support children's independent reading in school and at home. Our new collaborative marketing efforts in children's book clubs and fairs enable us to provide books to teachers, parents and children through our school channels in a more streamlined, profitable manner."
Scholastic is the publisher behind such recent successes as the Harry Potter series and the Hunger Games trilogy. They also publish favorites such as the Magic School Bus and Goosebumps series. The company has been working to increase digital readership this year. Scholastic finalized an agreement with Apple to provide Scholastic titles as eBooks, including the Hunger Games trilogy.
Scholastic Corporation (SCHL) shares ended the week at $33.76, up 6.97% for the week.
Pier 1 Imports' Earnings Impress
Pier 1 Imports, Inc. (PIR), a home furnishings retailer, reported its quarterly earnings on Thursday, December 19. The company reported strong sales and net income for the quarter.
Pier 1 announced quarterly revenue of $465.46 million. This represents an increase of 9.6% over the same period last year when the company reported revenue of $424.53 million.
The company reported net income of $26.76 million for the quarter. This represents an increase of 11.5% over the comparable quarter last year when the company reported net income of $23.69 million. Pier 1 announced earnings per share of $0.26.
"We're pleased to deliver solid third quarter financial results," said Alex W. Smith, President and CEO of Pier 1 Imports. "Our unique and special merchandise assortments created a well-positioned value offer that resonated with our customers. Our more overtly promotional marketing stance drove strong traffic, and our store and e-commerce teams delivered on conversion. In fact, this year marked a new, all-time sales record for both Black Friday and the full post-Thanksgiving weekend."
Pier 1 Imports survived the recession by focusing on making its merchandise unique. CEO Alex Smith hired more buyers to focus on finding distinct pieces for its retail locations. As a result, not all Pier 1 locations have the same merchandise. This has allowed Pier 1 to avoid competing with giants like Amazon and carve out a niche market. Consequently, Pier 1's stock price has increased over 6,000% since its near bankruptcy in late 2008.
Pier 1 Imports (PIR) shares ended the week at $23.11, up 1.94% for the week.
Walgreen Co. Reports Solid Earnings
Walgreen Co. (WAG), operator of a chain of drugstores, reported its quarterly earnings on Friday, December 20. The company announced impressive revenue and net income figures despite a difficult consumer spending environment.
Walgreen reported quarterly revenue of $18.33 billion. This represents an increase of 5.9% over the same period last year when the company reported revenue of $17.12 billion.
The company reported net income of $695 million or $0.72 per share. This represents an increase of 68.3% from the comparable quarter last year when the company reported net income of $413 million.
"Given the continued soft economy, we were generally satisfied with our top-line growth where we increased both traffic and sales for the quarter as well as our pharmacy market share," said Walgreen President and CEO Greg Wasson. "We will continue our sharp focus on expense management as we address the challenging environment, and we expect to realize the synergies from our strategic partnership consistent with our previously stated goal."
On December 9, Walgreen announced that it is now offering daily testing for cholesterol, blood glucose and body composition at more than 60 stores in Maryland. The tests are administered to those over 18 without an appointment. A person can have their cholesterol, blood glucose, body composition and blood pressure tested for $65. "Providing convenient, affordable access to health testing services is an important part of our commitment to disease prevention and chronic care management," said Jon Reitz, Market Pharmacy Director at Walgreen Co.
Walgreen Co. (WAG) shares ended the week at $57.43, down 3.15% for the week.
The Dow started the week of 12/23 at 16,225 and closed at 16,478 on 12/27. The S&P 500 started the week at 1,823 and closed at 1,841. The NASDAQ started the week at 4,136 and closed at 4,157.
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Bonds - Treasury Yields Rise on Economic Data
Treasury yields rose and prices fell this week as the market reacted to the economic news of the past two weeks. The 10-year Treasury yield rose to its highest level in over three months.
On December 18, the Fed announced that it will reduce its bond purchases to $75 billion next month. In addition, the U.S. Department of Labor announced that initial claims for jobless benefits declined 42,000 to 338,000 during the week ending December 21. Analysts' expected a decline of 35,000.
This economic data caused the 10-year Treasury yield to rise to 2.998%, its highest level since September 6, in early trading on Thursday, December 26. On September 6, the 10-year Treasury yield reached 3.005%, the highest level since July 2011.
One question for investors is how quickly the Federal Reserve will diminish its bond purchases over the next few months. Jim Vogel, Head of Agency-Debt Research at FTN Financial commented, "They are going to do the first couple of tapers and then see what happens. The data dependency will come probably starting at the April meeting. That's when they will have enough time to gauge reaction to tapering."
Another issue is how long the Federal Reserve will continue to keep the federal funds rate at its current level of between zero and 0.25%. At last week's meeting, the Federal Open Market Committee ("the Committee") stated that it will likely be appropriate to maintain the current range well past its initial 6.5% unemployment rate target. However, the Committee failed to give further guidance.
"They'll try to keep rates anchored as much as they can, but it will be difficult if data continues to come in strong," said Thomas Roth, Senior Treasury Trader at Mitsubishi UFJ Securities USA, Inc. "The risk is if the economy speeds up faster than people expect, the Fed won't want to, and won't be able to, keep rates where they are."
The 10-year Treasury note yield finished the week of 12/23 at 3.01% while the 30-year Treasury note yield finished the week at 3.94%.
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CDs and Mortgages - Interest Rates Remain Largely Unchanged
Freddie Mac released the results of its weekly Primary Mortgage Market Survey (PMMS) on Thursday, December 26. The results show average fixed mortgage rates remaining largely unchanged to end the year.
The 30-year fixed rate mortgage averaged 4.48% this week. This represents a slight increase from last week when it averaged 4.47%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.35%.
This week, the 15-year fixed rate mortgage averaged 3.52%.This represents a slight increase from last week when it averaged 3.51%. Last year at this time, the 15-year fixed rate mortgage averaged 2.65%.
"Mortgage rates were little changed this week following mixed economic reports," said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. "Real GDP was revised upwards to 4.1% growth in the third quarter of this year. However, existing-home sales dropped 4.3% to a seasonally adjusted annual rate of 4,900,000 in November. Also, new home sales fell 2.1% to a seasonally adjusted annual rate of 464,000."
The money market fund finished the week of 12/23 at 0.4%. The 1-year CD finished at 0.7%.
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Global Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, KS 66220 United States

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