Model Generaosity - Leave a Lasting Legacy with Planned Giving of the Global Church of the Nazarene Foundation for Saturday, 14 June 2014“They are a fragrant offering, an acceptable sacrifice, pleasing to God. And my God will meet all your needs according to his glorious riches in Christ Jesus.”(Philippians 4:18b-19)
Not only does God meet all of our needs, God is allowing us to help Him meet the needs of others by supporting many ministries through the Church of the Nazarene Foundation. The impact of your sacrifice is felt all over the globe and for years to come.For more information on how to support the future of your favorite ministry, please reply to this email or contact us by phone at 913.577.2983.
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Blessings,
Kenneth R. Roney, J.D.
President
Seven Questions on Gifts to Children
Many questions arise when we consider the options for giving to children. Why should we give? When, what and how should we give? Will gifts impact the self-esteem and initiative of the child? Can a gift plan transfer values to children?These are all very important questions. Clearly there are better ways to give and a prudent parent will consider carefully the manner, nature and amount of gifts. If the gifts are given in a proper way, they can be very beneficial for the child. Alternatively, gifts given at the wrong time or in the wrong amounts can lessen the initiative and even weaken the character of the child. Thus, it is important to make gifts in the optimum manner at the right time.
Why Give to Children?
There are several reasons why you may choose to make gifts to children during life. Some parents wish to start the inheritance process. If they have substantial resources, it is desirable to begin the inheritance while the children are in their 30s, 40s and 50s. Many children can use the help at that time to start careers, purchase a home and assist in the cost of raising their own children.
Another reason for making gifts is to teach conservation. Most parents who have significant resources have been careful to conserve their assets and build them up during life. By making transfers of assets during life, the parents can see how the children handle those assets and, in turn, offer advice and encouragement. In addition, when the parents have the opportunity to see the effect of inheritance on children, it helps to clarify the parents' goals. Goals for inheritance should include the amount transferred during life, the time of transfer, the principal and income amounts and times for transfer of those items to family in the estate.
Starting the property transfer process during life enables parents to understand how to plan for the optimum inheritance for children.
When Should a Parent Start Giving?
There is both an easy answer and a difficult answer to this question. First, parents should start giving to children when they reach the "age of financial responsibility." But what is that age? Some children reach the "age of financial responsibility" at 25, while others might not attain that status at age 75.
Another factor that affects the "when to give" question is the resources of the parent. Many people in our society live to be age 80, 90 or even older. The parents should make certain that they have sufficient assets to provide for long-term care, if that is needed. Some parents may wish to purchase long-term care insurance prior to making gifts to children. Alternatively, other parents of retirement age may determine that they have adequate resources to provide for their long-term care and can make gifts to family members. In making this determination, you will want to consider pensions, Social Security, IRAs and other assets.
If a parent determines that there are sufficient assets and that the children have reached an appropriate age (which in most cases is when children are in their 30s, 40s and 50s), then the parent may choose to start making gifts.
What Should I Give?
In the book The Millionaire Next Door, the authors studied the impact of gifts of cash to children in their 30s and 40s. The essence of their research was that, for most children, gifts of cash are typically spent.
Furthermore, with the exception of elementary school teachers and college professors, children in other professions who received cash gifts actually had less in savings by retirement age than those who received no gifts. Those who received cash gifts not only spent the gifts, but also continued to spend other personal cash and ended up with smaller estates than those who had received no gifts.
If parents are not concerned about whether or not the gift is spent, then the gift of cash is appropriate. However, many parents make gifts to children with the hope that the child will invest and build up some reserve assets. If the hope is that children will invest and begin to build their estates, then gifts of property show much more promise.
For example, many parents hold stock and can transfer shares by gift to the children. Alternatively, some parents hold real property or have created family limited partnerships and can transfer either the real property or the partnership units to children.
If the gifts are less than the annual exclusion amount per parent, per child each year ($14,000 in 2014 and potentially higher in future years), then the gift is not subject to gift tax. It should be noted that the child takes the cost basis of the parent when property is gifted. Thus, if the child were to sell the appreciated stock or land, he or she would have to pay a capital gains tax. Many parents actually look at this as a favorable circumstance, since their intention is for the child to hold the asset. If there is significant appreciation, these parents deem it beneficial since that potential gain could dissuade children from selling the asset, paying the capital gains tax, and spending the money.
How much can be transferred using annual gift exclusions? There are cases in which appreciated stock gifts were held by family members and there was significant value transferred. After a ten-year period, the stock transferred with annual exclusions may be worth several hundred thousand dollars. In one case, the parents used gift exclusions over a period of 30 years and the children held the gifted stock. At the conclusion of that gifting program, the children were all multimillionaires—and all with zero gift or estate tax!
Should I Give Different Amounts?
Most parents will attempt to treat all children equally. From the perspective of the child, the gift is viewed as a representation of the love of the parent. Thus, it seems appropriate in most circumstances for there to be equal transfers to the children.
However, most rules have reasonable and logical exceptions. The two most common exceptions in this area are the special needs trust and a family business. If one child has a disability, the rest of the family understands the need for additional provision for that child through what is commonly called a special needs trust. This is a trust with an independent trustee who has discretion to make distributions to the child, but is not normally required to do so. The special needs trust makes provision for the maximum benefit of the child and could potentially allow some beneficiaries to also receive government benefits.
The other exception to equal treatment for children may occur with a family business. If some children are involved in the business and other children are not, it is desirable to provide a substantial inheritance for all children. However, maintaining business viability may require the transfer of a majority of the business interest to the child that is involved in the business.
In addition, many parents believe that transfer is fair because the efforts of the children in the business have contributed to the overall growth of the business and the overall growth of the parents' estate. These are delicate questions to which parents should give careful thought, but in the case of the special needs trust and the family business, it is common for one child to receive a greater benefit than the other children.
Will My Gift Decrease Motivation and Self-esteem?
This is a concern of all parents. If an estate is substantial, it is a very important issue to consider. Nearly everyone knows of cases where a large inheritance was transferred to an individual and it was spent in very unhealthy ways. Indeed, sometimes the size of the inheritance contributes to tearing down rather than building up the child's character.
Perhaps the best gift most parents and grandparents should consider is education, which can be used during an entire lifetime. Because one competes with other students in the class, education is also a very good character-building exercise.
A second very fine gift that may not involve significant financial resources is help with a career or business. Many businesspeople are able to assist their children in starting careers or businesses through advice and financing. These opportunities are excellent because the child then has the self-esteem derived from building a career or a business of his or her own.
Another strategy is to wait for a reasonable level of maturity. Some parents wait until the children are in their 40s or 50s to start gifting programs. At that time, values are more likely to be established for the children and they are more likely to make productive use of the property.
Why Don't My Children Think Like Me?
This question surely has crossed the mind of nearly all parents. A parent may consider a particular property or asset and say, "If I had that property, this is what I would do with it."
As all parents know, children quite often hold different opinions. They have generally not been tested in as many different circumstances as their parents. The children need "time to learn." When transferring an inheritance to children, parents need to remember that they have quite often acquired that property over 30 or 40 years. The parents had many opportunities to learn the value of thrift, conservation, investment and careful planning.
Children will not learn these principles from a ten-minute discussion with their parents. They will need to learn some of these lessons out in the real world, operating with real money and real property. It is inevitable that some children will make mistakes. However, their parents also made mistakes along the way. This is the educational part of the gift process.
Parents should be willing to provide "opportunity to make mistakes" property to their children. This does not necessarily mean that the property must have enormous value. However, there must be some value to the property. This "opportunity to make mistakes" property can best be gifted during life. After one or two such episodes, the children may suddenly have a greater understanding of some of the values held by the parents.
How Do I Support Charity and Transfer Values to Children?
One goal of parents is to teach values to children. We all hope that our children will be honest, loving, loyal, faithful, true and upright. How do you teach those values? First, values are caught and not taught. Fortunately, many parents have shared the lesson of the importance of family and extended family with the children. The family includes children and, in some cases, nephew, nieces and other relatives. The extended family includes the wider group of individuals who are helped by charities that the parents support.
One especially effective way to teach the principle of helping others is to model that behavior through support of charities that benefit the extended family. Children realize that they are here on Earth not just to acquire the best homes, fastest cars and most exotic vacations, but also to find a sense of purpose and value through assisting others. The extended family example of the parents is one of the best lessons that encourage children to acquire values similar to the parents. This lesson is taught during life both through contribution of time and gifts of cash and property to charity.
In addition, a very effective teaching method is to use planned giving concepts. These planned giving opportunities can provide benefits for children and a remainder to charity. In using these gift plans, the parent teaches the child to consider both the family and the extended family in planning. If major benefit for the extended family can be realized through tax savings, this becomes a particularly powerful lesson.
Gifts to children during life can accomplish many goals and objectives. Parents need to give careful thought to the children's needs and opportunities. If your assets permit, you may have the ability to give children "time to learn," provide them the "opportunity-to-make-mistakes" property and to facilitate the transfer of values. Truly, these objectives make giving during life an important part of your efforts to "help the child become a better person."
SAVVY LIVING
How to Make an Online Memorial for a Departed Loved One
What can you tell me about online memorials? After my uncle passed away, my family thought it would be nice to pay tribute to him by creating an online memorial. This seems like a great way to accommodate the many family members and friends scattered around the country who couldn’t attend his funeral.An online memorial is a great idea! Online memorials have become increasingly popular over the past decade. Millions of people have created them for departed loved ones as a way to recognize and remember them.
What is an Online Memorial?
An online memorial is a website created for a deceased person that provides a central location where family and friends can visit to share stories, fond memories and photographs. It is also a place to comfort one another and grieve together. The memorial can remain online for a defined period of time or for an indefinite period. This allows people to visit and contribute any time in the privacy of their own space.
Online memorials started popping up on the Internet in the late 1990s, but they were created primarily for people who were well known. Now, these sites are created by anyone who wants to pay tribute to a departed family member or friend.
An online memorial’s content typically includes a biography, pictures, stories contributed by family and friends, a timeline of key life events, favorite music and even videos.
Another common feature is to allow visitors to the site to support the grieving party by sending condolences, candles or other items.
An online memorial can also direct visitors to make a donation to the departed person’s favorite charity or cause as an alternative to sending funeral flowers.
How to Make One
To make an online memorial, you can either create an independent website or use an established memorial site template. Most people choose to use an established memorial site template since they are very easy to personalize. The entire process can be completed in less than 30 minutes.
There are literally dozens of these types of sites on the Internet today. To locate them, do an online search for “Online Memorial Websites.” In the meantime, here are a few good sites to check into.
The biggest and most established site in the industry is Legacy.com, which publishes about 75% of the obituaries in North America each year through its newspaper affiliations. Creating an online memorial through this site (see memorialwebsites.legacy.com) will cost $49 for the first year plus an annual $19 sponsorship fee to keep it visible.
Two more popular memorial sites are ForeverMissed.com and iLasting.com. ForeverMissed.com offers a free option and a premium plan that costs $35 per year or $75 for life. iLasting.com costs $49 per year or $99 for permanent display.
If you are on a tight budget consider LifeStory.com. LifeStory.com is completely free to use, but requires you to log in through Facebook. iMorial.com is free if you allow the site to post ads on your uncle’s page and costs $50 without ads.
If your uncle used Facebook, you can also turn his profile into a memorial for free when you show proof of death. Once his page is memorialized, his sensitive information will be removed and his birthday notifications will stop. However, depending on his privacy settings it still allows family and friends to post memories and condolences. In addition, you can also request a Look Back video, which is a short video created by Facebook highlighting your uncle’s pictures and most liked status messages.
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.
YOUR PLAN
Bequests
Joe and Anna have been faithful supporters of our organization. They believe it is important to support and encourage our mission.Joe: Several years ago, Anna and I decided to become part of the organization's mission. We believe that they are truly helping others. We think that it is important to partner with them to make a difference. For that reason, Anna and I have made gifts over the years to help others.
Anna: We wanted to do more than to just make gifts. Joe and I have been careful over the years and have accumulated some resources. We plan to be generous with family, but we also have the ability to be generous with charity.
After talking it over, we decided to leave a bequest in our will. Our attorney took the simple language available from the organization and included a nice bequest. We are delighted that we will be helping others through them.
You also may want to make it easy and convenient to have a bequest included in your will. The language link below shows how a bequest can very easily be included in your will.
You might find it helpful to print this page and the bequest language. Please feel free to give this information to your attorney. If he or she has any questions, please contact us.
Click Here to review sample bequest language.
*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.
WASHINGTON NEWS
New Taxpayer Bill of Rights
On June 10, IRS Commissioner John Koskinen and National Taxpayer Advocate Nina Olson participated in a joint press conference in Washington. They joined together in an announcement of a new Taxpayer Bill of Rights. The IRS noted that this was the first joint press conference involving the IRS Commissioner and the National Taxpayer Advocate.Commissioner Koskinen explained the reason for the new Taxpayer Bill of Rights. He stated, “The Taxpayer Bill of Rights contains fundamental information to help taxpayers. These are core concepts about which taxpayers should be aware. Respecting taxpayer rights continues to be a top priority for IRS employees, and the new Taxpayer Bill of Rights summarizes these important protections in a clearer, more understandable format than ever before.”
National Taxpayer Advocate Olson has been encouraging the IRS to publish the new guidelines. She noted, “Taxpayer surveys conducted by my office have found that most taxpayers do not believe they have rights before the IRS and even fewer can name their rights. I believe the list of core taxpayer rights the IRS is announcing today will help taxpayers better understand their rights in dealing with the tax system.”
The new Taxpayer Bill of Rights has 10 principles.
1.The Right to Be Informed
2.The Right to Quality Service
3.The Right to Pay No More Than the Correct Amount of Tax
4.The Right to Challenge the IRS’s Position and Be Heard
5.The Right to Appeal an IRS Decision in an Independent Forum
6.The Right to Finality
7.The Right to Privacy
8.The Right to Confidentiality
9.The Right to Retain Representation
10.The Right to a Fair and Just Tax System
Editor’s Note: The Taxpayer Bill of Rights is a welcome step forward by Commissioner Koskinen. If the IRS questions your tax return or a deduction, you have a clear right to pay only the correct amount of tax. Any taxpayer also may challenge the IRS, must be heard by IRS representatives, may appeal a decision and may have his or her selected representative. This clear statement of the taxpayers’ rights is good for both the IRS and all Americans.
FINANCESStocks - H&R Block Sees Positive Annual Gains
H&R Block, Inc. (HRB) announced its financial results for fiscal 2014 on Thursday, June 11. The company saw increases in both revenue and net income for the year.
H&R Block reported revenue for the year of $3.024 billion. This was a 4.1% increase over the $2.906 billion it reported for fiscal 2013.
H&R Block’s President and CEO, Bill Cobb, had this to say about the company’s fiscal 2014 results: “We delivered a strong year of both revenue and earnings growth and lived up to our long-standing tradition of being the world's leading tax services provider. Though we anticipated an overall decline in return counts, our Tax Plus strategy is working, and we will continue to focus on enhancing the client experience and delivering best-in-class products and services to drive profitable growth. Our improving client satisfaction scores are a testament to the value we bring to our clients, positioning us well for 2015 and beyond.”
Net income for the year was $500 million or $1.81 per share. This was an 8% increase over the $465 million, or $1.69 per share, reported for fiscal 2013.
H&R Block also announced that during fiscal 2014 they prepared 24.2 million tax returns. This was a 2.6% decrease from the prior year. The company primarily attributed this decline to its decision to discontinue its U.S.-based free federal 1040EZ promotion. The discontinuance of this promotion was part of the company’s strategy to increase revenues through a balance of an improved return mix and changes to its pricing strategy. In addition to its traditional return preparation services, H&R Block also develops and markets tax preparation software known as H&R Block At Home.
H&R Block, Inc. (HRB) shares ended the week at $32.49.
Burlington Stores Announces Results
Burlington Stores, Inc. (BURL), a retailer of branded apparel, announced its first quarter results on Tuesday, June 10. Burlington Stores pleased investors with increases in net sales and net income.
Burlington Stores net sales for the quarter were $1.13 billion, an increase of 5.9% or $63.3 million over the same period last year. Net sales were bolstered by a 2.7% increase in comparable sales.
Tom Kingsbury, President and CEO of Burlington Stores, had this to say about the company’s quarter: “We are extremely pleased with our solid results in the first quarter as we continued to build upon our momentum from 2013 with both strong sales and bottom line performance. We achieved a comparable store sales increase of 2.7%, on top of a 3.4% increase last year, which we believe is a direct result of the continued improvement in the execution of our off-price model. We remain focused on delivering great value, brands and fresh product to our customers every day as well as executing our growth initiatives to improve comparable store sales, expand our retail store base and enhance our operating margins.”
Net income for the quarter was $18.6 million or $0.25 per share. This was a marked improvement over the net income of $6.1 million, or $0.08 per share, reported during the comparable period last year.
As CEO Tom Kingsbury mentioned, Burlington’s 2.7% increase in comparable store sales during the first quarter follows on the heals of a 3.4% increase from last year. The company also saw an increase of $40.3 million from new and non-comparable stores during the quarter. Burlington Stores attributed these increases to improved execution of its off-price model. It was good news for investors that the company was able to continue its momentum from the prior year to start its next fiscal year.
Burlington Stores, Inc. (BURL) shares ended the week at $26.69.
RadioShack’s Woes Continue
RadioShack Corporation (RSH) announced its first quarter results on Tuesday, June 10. For a company that has seen consecutive quarters of losses, the first quarter for RadioShack did not provide any relief.
RadioShack reported that net sales for the quarter were $736.7 million, a substantial fall from the $848.4 million reported during the same period last year. Compounding the bad news, comparable store sales fell 14% from the comparable period last year.
RadioShack’s CEO, Joseph C. Magnacca, commented on the quarterly results: “Overall, our first quarter performance was challenged by an industry-wide decline in consumer electronics and a soft mobility market which impacted traffic trends throughout the quarter. In particular, our mobility business was weak due to lackluster consumer interest in the current handset assortment and increased promotional activities across the industry including the wireless carriers. This resulted in disappointing sales and gross margin performance.”
RadioShack reported a loss of $98.3 million or $0.97 per share. This loss was a significant decrease over the $23.3 million loss reported during the comparable period last year.
This past quarter showed that RadioShack’s hard times seem unstoppable and are in fact continuing to worsen. Last year the company closed 22 stores and expects to close an additional 200 stores this year. With the bad news for RadioShack only getting worse, many analysts predict the company could soon file bankruptcy. Right now all eyes are on whether the company can find some way to get out of its current tailspin.
RadioShack (RSH) shares ended the week at $1.16.
The Dow started the week of 6/9 at 16,926 and closed at 16,776 on 6/13. The S&P 500 started the week at 1,949 and closed at 1,936. The NASDAQ started the week at 4,324 and closed at 4,311.
Bonds - Treasuries Fall on Rate Hike Speculation
Treasury prices fell on Friday, June 13 as speculation regarding future interest rate hikes kicked into high gear following comments from Bank of England Gov. Mark Carney. In addition, Treasury prices responded to mixed data released this week regarding the U.S. economic recovery.
Short-term Treasury bonds, such as the three and five-year bonds, responded negatively on Friday, June 13 to comments late Thursday from Bank of England Gov. Mark Carney. In a speech yesterday, Gov. Carney suggested that the central bank may need to raise interest rates earlier than previously expected. That news caused tremors across the Atlantic as analysts and investors speculated that the Federal Reserve could announce similar news at its monthly meeting next week.
Fears that the Federal Reserve may soon announce interest rate hikes were echoed by Ira Jersey, an interest-rate strategist in New York at Credit Suisse Group AG. “You have a hawkish statement out of a central bank,” he said. “That could mean the Fed may not be too far behind.”
Shorter Treasury bonds, such as the three and five-year bonds, are more susceptible to interest rates. As such, the 3-year bond yield was headed for its highest close early Friday morning since September, having risen four basis points on the day to 0.939%. The 5-year Treasury note rose four basis points to 1.701%.
Treasuries were able to cut losses on Friday, however, after a flurry of mixed economic data drove investors to the safety of U.S. government bonds. The Thomson/Reuters consumer sentiment index fell from 81.9 to 81.2 for June. This was well below the forecast for a rise to 83.
Wholesale prices also surprisingly fell last month by 0.2%. Economists had expected a rise of 0.1%. Import prices, which help measure inflation, increased 0.1% during May. That was half the increase economists had predicted.
The 10-year Treasury note yield finished the week of 6/13 at 2.60% while the 30-year Treasury note yield finished the week at 3.41%.
CDs and Mortgages - Interest Rates Rise on Jobs Data
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, June 12. The results show mortgage rates rising after a positive jobs report last week.
The 30-year fixed rate mortgage averaged 4.20% this week. This represents an increase from last week when the 30-year fixed rate mortgage averaged 4.14%.
This week, the 15-year fixed rate mortgage averaged 3.31%. This was an increase from last week when the 15-year fixed rate mortgage averaged 3.23%.
Frank Nothaft, Vice President and Chief Economist at Freddie Mac, commented on this week’s increase in rates: “Mortgage rates continued to climb for the second week in a row following the increase in 10-year Treasury yields. Also, the economy added 217,000 jobs in May, following a 282,000 surge in April and a 203,000 increase in March. Meanwhile, the unemployment rate in May held steady at 6.3%.”
The money market fund finished the week of 6/13 at 0.4%. The 1-year CD finished at 0.7%.
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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, college, 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 any of this updated financial and gift planning information, please select our website.
Church of the Nazarene Foundation
17001 Prairie Star Parkway, Suite 200
Lenexa, KS 66220 United States
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