Model Generosity - Leave a Lasting Legacy Through Planned Giving from The Global Church of the Nazarene Foundation for Saturday 1 February 2014

Model Generosity - Leave a Lasting Legacy Through Planned Giving from The Global Church of the Nazarene Foundation for Saturday 1 February 2014
As we turn our calendars to another month, I want to personally thank you for your faithful giving during the first month of 2014. It is our goal at The Foundation to assist your heart's call to reach those with the Gospel of Christ.
The Foundation serves those who wish to give in order to make an impact on the future of their favorite ministries. How can we help serve with you this month?
How can we help make it possible for one person to accept Christ because of your donation?
If you would like information on how you can help your favorite ministries, please reply to this email or call our offices at (913) 577-2983.
Blessings,
Kenneth R. Roney, J.D.
President
PERSONAL PLANNER
'Wait A While' Trust
Bill and Clara were talking to their attorney Susan about their family.
Clara: "It may be time to start the inheritance process. Our children are now ages 35, 37 and 38. We might want to give them something during the next few years."
Bill: "Susan, when we spoke by phone, you thought that we might consider a 'Wait A While' trust."
Clara: "How does that work?"
Bill: "Well, the trust is funded with property and pays a fixed amount to charity for a period of years."
Susan: "We might think about a trust that pays for 12 years. You already make gifts to charity so we just would make those same gifts out of the trust. After 12 years, the trust will be distributed to the children. They will then be ages 47, 49 and 50."
Clara: "That's probably a very good time to pass property to them. They may still have children in college and they also will be thinking seriously about investing for their future retirement."
Bill: "Is this the right time to consider a 'Wait A While' trust?"
Susan: "You have come at a good time. Your estate is continuing to grow, both of you have prepared very well for your retirement and this is a good time to think about this trust."
Clara: "Is 12 years a typical length of time for this trust? As I understand the trust, our children will receive our inheritance after that period of time."
Susan: "You may choose the time. Twelve years is a very good option. We can fund the trust with a fairly substantial amount so that there will be a good start to their inheritance at that time. When we fund the trust, there will be a requirement to file a gift tax return and use part of the gift exemption that each of you have. However, you won't actually have to pay any gift tax at that time. In addition, this may save future estate tax. While it's very difficult to know exactly what the estate tax picture will be like in the future, there is a good probability that there will be an estate tax and this trust will produce large tax savings."
Bill: "Is this the primary reason to set up this lead trust? Our desire is to start planning for our children's inheritance."
Susan: "It is a very good reason. Another reason is to help your favorite charities with the payouts for the 12 years."
Clara: "I like the idea of starting the inheritance for children. With our growing estate, there will eventually be a larger distribution. By the time the children receive this first inheritance, they will be more mature. In addition, we'll still be here to offer advice and counsel."
Bill: "We thought that we might start this with about $500,000. We have a portfolio of stocksand bonds that has grown over the years. With this amount and some potential growth in the trust, each of our three children would receive about $200,000 after the trust has made the 12 years of payments to charity."
Susan: "A good idea is to transfer a securities portfolio that is comprised of around 60% stocksand 40% bonds. The bond income will be used first to pay the charities. With the bond income and stock dividends, we can take care of most of the payout. I suggest that the trust pay an annuity amount equal to 5% of the value. If you fund the trust with $500,000, then there would be $25,000 paid to charity each year. If we can earn more than 5% each year, the growth will be transferred to children at the end of 12 years."
Clara: "This sounds like a very good idea. Bill, let's move forward and ask Susan to prepare the documents. I know that this will be great for our children and for our favorite charities."
Charitable Lead Trust Solution
The "Wait a While" trust is called a charitable lead annuity trust. Bill and Clara plan to transfer $500,000 in stocks and bonds to the trust. Because it is an annuity trust, it pays an initial 5% of $500,000 or $25,000 fixed amount to the charity. Over a period of 12 years, the trust will pay $300,000 to charity.
Bill and Clara may select the charities when the trust is created or they may permit children to select charities each year. While most donors select the charities, it's also permissible to allow children to select part or all of the charities to receive the distribution.
The trust's stocks and bonds will continue to be invested. If the total return is 6.5%, it would grow to $630,000 over the 12 year period. Each of the three children would then receive approximately $210,000.
The trust may be funded with appreciated property. When the children receive their initial inheritance, there may be appreciation. However, the children will have two easy solutions to avoid paying any capital gains tax. If they are making gifts to charity, they may retain their cash income and use the appreciated stocks to make their charitable gifts. This will bypass the capital gain. Alternatively, if they do wish to sell, they could sell part for cash and transfer the balance into a two-life charitable remainder unitrust. The charitable savings from the trust would offset the gain on the part sold and again there would be no capital gains tax paid by the children.
Gift and Estate Taxes
Attorney Susan will file a Form 709 Gift Tax Return. She will report a gift of $500,000 with a charitable gift deduction of $245,000. There will be a taxable transfer of $255,000. However, this is significantly less than the $5.25 million gift exemption of both Bill and Clara. Therefore, there will be no payment of gift tax now. Because the amount of the gift is fixed, if there is a substantial estate tax when Bill and Clara pass away, there will be added estate tax savings.
Summary
The "Wait a While" trust is an excellent plan to start an inheritance. It allows Bill and Clara to continue to benefit favorite charities for a period of years and then transfer the principal to children or other family members.
Their attorney Susan will file a gift tax return, but in virtually all cases there will be no gift tax payable because of the gift exemption. In all probability, the "Wait A While" trust will save a major future estate tax. Finally, it allows Bill and Clara to start an inheritance for the children and to give them advice and counsel on the best use of the funds.
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SAVVY LIVING
How to Pick a Financial Advisor
How can I choose a financial planner or advisor that will help me to meet my life goals? My wife and I are five or six years away from retiring and could use some professional help to get us on track.
With the many individuals and companies offering financial services today, choosing a professional that you can trust and that will help you reach your goals can be confusing. Here are some suggestions that might help your search.
Where to Look
A good place to start your search is by asking friends or relatives for recommendations. If you don't know anyone who can give you a referral and you're looking for broad-based financial advice, hire a Certified Financial Planner (CFP). A CFP is the "gold standard" in the industry. To earn a CFP credential, a person must have a college degree and be educated in a wide range of personal finance subjects. In addition, the person must pass a 2-day exam, have at least three years experience, meet continuing-education requirements and abide by a code of ethics.
CFPs look at the big picture when advising you about your finances. They will ask about your life goals and talk to you about financial strategies that might help you to achieve them. While they focus on the big picture, they will also advise you on the details of your financial life.
It is probably better to hire a "fee-only" CFP rather than one that earns a commission by selling you financial products. Fee-only planners charge only for their services. Fee-only planners typically charge by the hour, a flat fee per project or a fee based on your assets.
To find a fee-only planner in your area, use the online directories for the Financial Planning Association (fpanet.org) or the National Association of Personal Financial Advisors (napfa.org).
If you need financial advice about a specific topic, there are more specialized financial advisors that might meet your needs. A Registered Investment Adviser (RIA) registers with the Securities and Exchange Commission or a state securities regulator to manage investment portfolios. A Chartered Financial Consultant (ChFC) specializes in insurance and estate planning. Finally, a Certified Public Accountant (CPA) can help with tax planning.
Be cautious of many other financial advising titles, designations and certifications that are available. For example, to become a Certified Financial Consultant (CFC) or a Wealth Management Specialist (WMS) a person is simply required to take a few courses at a seminar or online. These certifications do not require the study and experience required for CFP certification. You can read more about nearly every certification or designation at www.finra.org/investors (click on "Tools & Calculators" and then on "Understanding Investment Professional Designations").
How to Choose
After you find a few candidates in your area, call them and schedule an appointment to meet and interview them. Find out about their experience, expertise and the types of services they provide. Ask them about calculation of fees, investment philosophy and availability. You need to know how they will handle your questions and meet your financial needs. Look for someone whose clients are in situations similar to yours and who is available as often as you need them.
It is also wise to do a background check on your potential advisor. You can look up firms and individuals at finra.org or sec.gov, check state financial regulation departments (see nasaa.org for state contact information) and search Better Business Bureau records (go to bbb.org). Also, ask to see the advisor's ADV Form, part 2. On the ADV Form, the SEC requires that financial advisors list their education, services, fees, disciplinary actions and conflicts of interest.
At the end of your meeting, ask yourself: "Do I like this person?" If you have any reservations, move on. There are plenty of qualified advisors out there who can help you.
For more tips on choosing a financial advisor, visit the CFP Board at letsmakeaplan.org.
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
Peace of Mind Gift Annuity
When Fred and Grace Bertolet retired after years in the ministry, they wanted to continue to support the Church. At the same time, they wanted to be faithful with what God had given them for their retirement. 
After much research, they decided on a Charitable Gift Annuity. 
This gift option allowed the Bertolets to:
*enjoy the security of regular, guaranteed income, even if interest rates drop;
*reduce their taxes;
*provide for the ministry of the Church after their death.
Fred and Grace were so pleased with the results of their first Charitable Gift Annuity that they established 10 more, with payout rates ranging from 7.7% to 11.0%. Even though Grace has since passed away, Fred will continue to receive income for the remainder of his life. With each annuity they were able to designate the ministries to receive funding after their deaths. 
Charitable gift annuities have been a blessing to Fred and Grace Bertolet. They can be a blessing to you, too.
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WASHINGTON NEWS
Will myRA Boost Retirement Saving?
In the State of the Union Address this week, President Obama proposed a new retirement plan called "myRA." It is designed to help increase retirement savings for Americans who do not have a workplace retirement plan.
The White House fact sheet describes "myRA" as a "simple, safe and affordable starter plan." The fact sheet describes four basic features of myRA plans.
1. Safe and Secure – Plan contributions will be invested in government securities similar to a savings bond. The investment plan is patterned after the Government Securities Investment Fund, a part of federal employees' Thrift Savings Plan. The government plan paid 1.4% in 2012. Previously, it had paid over 3%. The myRA investments are designed to produce a very secure but modest return.
2. Contributions – Participants may make very modest contributions, with amounts as low as $5 or $25. The contributions will be after-tax amounts in a manner similar to the Roth IRA. However, the primary group that will be interested in myRA is likely to be low or moderate income workers who pay little or no federal income tax. The myRA will not be available for upper-income workers, and the limits will be the same as the Roth IRA.
3. Fund Limits – When the myRA reaches a fund balance of $15,000, the individual will be required to move to a Roth IRA. Many financial service organizations provide comparable service and multiple investment options to an individual with that fund balance.
4. Goal – The primary purpose of the myRA is to encourage lower income workers to start saving for retirement.
Editor's Note: The myRA and Roth IRAs are both plans with a good purpose – to help regular Americans save for retirement. The primary challenge for those with moderate incomes is that the majority of these Americans have very limited dollars available for retirement savings. The MyRA and Roth IRA programs will be helpful, but it also will be most important for these workers to obtain education in financial management skills so there are more funds available for retirement savings.
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FINANCES
Stocks - Apple Reports Record Quarterly Revenue
Apple Inc. (AAPL), designer and retailer of iPods, iPads and iPhones among other devices, reported its quarterly earnings on Monday, January 27. The company reported record quarterly revenue and net income.
Apple reported record revenue of $57.59 billion for the quarter. This represents an increase from the same quarter last year when the company reported revenue of $54.5 billion.
The company announced quarterly net income of $13.07 billion or $14.50 per share. This is a slight decrease from the comparable quarter last year when the company reported net income of $13.08 billion or $13.81 per share.
"We are really happy with our record iPhone and iPad sales, the strong performance of our Mac products and the continued growth of iTunes, Software and Services," said Tim Cook, Apple's CEO. "We love having the most satisfied, loyal and engaged customers, and are continuing to invest heavily in our future to make their experiences with our products and services even better."
Although Apple sold a record number of iPhones and iPads this quarter, investors are looking for something more. "What we've gotten over the last year or so is impressive products, but they are really enhancements of current products and not necessarily the next new thing," said Jack Ablin, Chief Investment Officer with BMO Private Bank. "Apple investors want the next new thing – that's the catalyst that people are waiting for."
Apple Inc. (AAPL) shares ended the week at $500.60, down 9% for the week.
Facebook Reports Impressive Earnings
Facebook Inc. (FB), a social networking site with more than 1 billion monthly active users, reported its quarterly earnings on Wednesday, January 29. The company's stock price increased following the announcement of increased advertising revenue.
Facebook reported revenue of $2.59 billion for the quarter. This represents an increase of 65% over the same period last year when the company reported revenue of $1.59 billion.
The company reported net income of $523 million or $0.20 per share. This represents a significant increase over the comparable period last year when the company reported net income of $64 million or $0.03 per share.
"It was a great year for Facebook," said Mark Zuckerberg, Facebook founder and CEO. "We're looking forward to our next decade and to helping connect with the rest of the world."
Investors were all too happy to see Facebook report impressive revenue and income numbers. The market has been questioning whether Facebook will remain a viable social networking company since it reported that lower numbers of teenagers were using the site regularly. It is essential that Facebook keep the teenage demographic engaged in order to stay relevant in the social media space. Whether the flight of teenagers from Facebook to other social media sites like Twitter and Snapchat is a trend that will continue is something that Facebook and investors will be watching closely in the coming months.
Facebook Inc. (FB) shares ended at $62.57, up 14.3% for the week.
Google Continues its Meteoric Rise
Google Inc. (GOOG), operator of the web browser of the same name, reported its quarterly earnings on Thursday, January 30. Google beat analysts' revenue estimates and combined their earnings report with other announcements that encouraged investors.
Google reported revenue of $16.86 billion for the quarter. This represents an increase of 17% over last year when the company reported revenue of $14.42 billion. Analysts had expected revenue of $16.75 billion.
Google reported quarterly net income of $3.38 billion or $9.90 per share. This represents an increase from the comparable period last year when the company reported net income of $2.89 billion or $8.62 per share.
"We ended 2013 with another great quarter of momentum and growth. Google's standalone revenue was up 22% year on year, at $15.7 billion," said Larry Page, CEO of Google. "We made great progress across a wide range of product improvements and business goals. I'm also very excited about improving people's lives even more with continued hard work on our user experiences."
In addition to reporting impressive earnings, Google also reported that it will sell Motorola Mobile to Lenovo for $2.9 billion and that it is going to engage in a stock split in April 2014. As a result, Google stock rose to a record high in early Friday morning trading. The company's stock price rose to a high of $1,186.65 on Friday, January 31.
Google, Inc. (GOOG) shares ended at $1,180.97, up 4.9% for the week.
The Dow started the week of 1/27 at 15,879 and closed at 15,699 on 1/31. The S&P 500 started the week at 1,791 and closed at 1,783. The NASDAQ started the week at 4,132 and closed at 4,104.
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Bonds - Treasury Yields Fall to Three Month Low
The U.S. 10-year Treasury yield fell to its lowest level in nearly three months on Friday, January 31. Emerging markets have suffered losses, partly due to the Federal Reserve's decision to reduce bond purchases, and this has caused investors to leave these markets in favor of the security of U.S. government bonds.
"You're seeing a flight to quality out of other asset classes and into U.S. Treasuries," said Thomas di Galoma, head of U.S. Rates Sales at ED&F Man Capital Markets. "The market will continue to probably push closer to the 2.6% level on 10-year notes with month-end buying taking place." The 10-year yield fell four basis points to 2.66% in early Friday morning trading. This is the lowest level since early November 2013.
The Federal Reserve announced this week that it will cut bond purchases from $75 billion in January to $65 billion in February. At the same time a Bloomberg metric that tracks 20 developing nation's currencies fell 3.2% in January to its lowest level in nearly five years. Seeing this decline, many investors have sought the safety of U.S. Treasuries.
Despite the trouble in emerging markets, indications are that the U.S. economy is slowly growing. A report released on January 30 announced that the U.S. economy expanded at a 3.2% annual rate in the final quarter of 2013. This was in line with economists' predictions. In addition, although the Institute for Supply Management-Chicago Inc.'s metric fell to 59.6 in January, any reading above 50 signals growth. It seems the U.S. economy continues its slow march forward.
The 10-year Treasury note yield finished the week of 1/27 at 2.67% while the 30-year Treasury note yield finished the week at 3.62%.
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CDs and Mortgages - Interest Rates Fall Slightly
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, January 30. The results show average fixed mortgage rates falling slightly lower this week.
The 30-year fixed rate mortgage averaged 4.32% for the week. This represents a decrease from last week when it averaged 4.39%. One year ago at this time, the 30-year fixed rate mortgage averaged 3.53%.
This week, the 15-year fixed rate mortgage averaged 3.4%. This is slightly lower than last week when it averaged 3.44%. Last year at this time, the 15-year fixed rate mortgage averaged 2.81%.
Frank Nothaft, Vice President and Chief Economist at Freddie Mac, commented on the weekly survey results. "Mortgage rates eased somewhat as new home sales fell 7% in December to a seasonally adjusted pace of 414,000 units, below the consensus. The S&P/Case-Shiller 20-city composite house price index declined 0.1% for the month of November, the first decrease since November 2012."
The money market fund finished the week of 1/27 at 0.4%. The 1-year CD finished at 0.7%.
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Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, KS 66220 United States
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