Lenexa, Kansas, United States - Model Generosity: Leave a Lasting Legacy Through Planned Giving from The Global Church of the Nazarene Foundation for Saturday, 19 July 2014

Lenexa, Kansas, United States - Model Generosity: Leave a Lasting Legacy Through Planned Giving from The Global Church of the Nazarene Foundation for Saturday, 19 July 2014
“They will proclaim his righteousness, declaring to a people yet unborn: He has done it!”(Psalm 22:31)
Our God is righteous. Through your obedience in financially supporting a ministry through the Church of the Nazarene Foundation, God's righteousness is being proclaimed to this generation and future generations!
For more information on how to use your resources 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

PERSONAL PLANNER

Integrity and Initiative
Pat and Allen were talking about their three children. They are empty nesters and the three children are off making their way in the world.
Pat: "I've been thinking about our three children. They are all doing fine, but we want to make sure that the inheritance we give them helps them to be better people. The inheritance some of our friends gave to their children was substantial, but the children just didn't use it very well. In fact, when an uncle of mine passed away, the inheritance was used very poorly by his children."
Allen: "But how do we make sure that the inheritance for our children leads to a good result? We need to do some research to make sure that our plan works effectively."
Pat and Allen did their homework. They read articles and spoke with several advisors, seeking wisdom. The result of their study is an inheritance plan that helps the child to be a better person. It is summarized as the "Integrity and Initiative" or "twin I's plan."
Goals of Parents
Your primary goal as a parent is to help each child be a successful person—not just financially, but also in his or her career, family life and social status. While attorneys and CPAs are trained to help you transfer property to children, a good inheritance plan is much more than just transferring property. As Pat noted, there are many plans that are successful in transferring property but lead to a very bad result.
Yes, a successful plan transfers property. But good planning transfers it at the right time, the right way and in the right amount so that it achieves a good result. While a good result cannot be guaranteed, the "Integrity and Initiative" plan will increase the probability of that favorable result.
Time to Learn
Principle one of the twin I's plan is to spread the resources out over time. This gives children some time to learn.
Parents have usually acquired an estate over 20, 30 or even 40 years. If you ask a person of retirement age to recall their early years, they will frequently share stories about the challenges they faced. For most people of retirement age, those challenges were financial "bumps in the road" that were very educational. Without that education, they would not have been as successful in life or in their finances.
Children who will receive a substantial inheritance also need time to learn. An inheritance can be stretched over a period of time. This may enhance the overall probability that the inheritance will facilitate development of integrity and initiative.
A good "Integrity and Initiative" plan could transfer property in four ways:
1. Gifts during life
2. Principal after the parents pass away
3. Income for a period of years
4. Delayed principal
Gifts During Life
When should a parent start making gifts to children? The easy answer is as soon as the children reach the age of financial responsibility.
But what is that age? That will vary, but most children in their 30s, 40s or 50s do reach that point of maturity.
At that time, parents frequently start by making gifts using the annual gift exclusion. This exclusion amount may be gifted with no tax or reporting to the IRS. The annual exclusion in 2014 is $14,000 per child and is adjusted every two to four years.
Generally, it is better to give property rather than cash. Cash tends to be spent fairly quickly. Regular gifts of cash may result in a child acquiring a taste for expensive items that are above his or her normal lifestyle. This can lead to problems later on in life.
By making gifts of stock, land or other types of property, parents encourage children to invest and build their assets. Therefore, a good gift is a gift of property.
Principal When the Parents Pass Away
The second gift strategy is to transfer principal after both parents pass away. This can be a bequest from the estate of the surviving spouse. The principal could also be a distribution from an insurance trust that pays to the children after both spouses have passed away. The transfer of principal could be a specific property such as a home, land or securities or it could be simply a portion of the estate.
Income For a Term of Years
A very popular third option is to create a trust that pays income for a period of 15 or 20 years to the children. For larger estates this is usually a charitable remainder unitrust. The trust is funded after both parents have passed away. It pays a 5% or 6% annual income to the children. In many cases, it is very advantageous to fund the trust with an IRA or other qualified plan. The trust earns income for the family for the selected number of years. At the end of the 15 or 20 years, the trust is then transferred to favorite charities.
The combination of some principal and income for a term of years is very helpful. Parents can treat their children equally; however, there are some children who may require a longer period of time to mature in their financial management. The combination of principal and income for a period of years allows these children the time to learn better money-management skills.
Delayed Principal
The fourth concept is an additional payment of principal when the children have become more mature. Following the expiration of the payouts for the unitrust term of years, an additional amount can be distributed. This frequently is done through the "Wait a While" trust. Your attorney may have another name for that trust—the charitable annuity lead trust.
For the term of years that the children were receiving unitrust income under the third part of the plan, the charities receive the payouts from the lead trust. After the unitrust income payments have been made to children and that trust terminates, the children receive their delayed principal distribution from the lead trust.
Keys to Successful Planning
A successful "twin I's plan" is created by understanding the four transfer options and then setting goals. These goals will frequently include a target amount for the inheritance for the children at each level. In addition, it is useful to create a total inheritance target amount per child.
For example, one parent wanted the children to receive $25,000 each year in income. Because a unitrust funded with $500,000 paying a 5% payout produces $25,000, the family decided to set up a unitrust of that amount for each child.
Over the 20 years, the trust paid more than $500,000 as income to each child with the remainder then distributed to charity.
Conclusion
Allen and Pat carefully thought through the four different options. They established the overall target inheritance number for each child. After learning about the different options, they decided to use the first three options. With a combination of gifts during life, some principal from an insurance trust when both parents pass away, plus income from a unitrust for a term of 20 years, they were able to achieve all of their objectives.
Pat concluded, "We now feel that we have a much better plan. We are not just transferring property to our children, but we have carefully thought through the ways in which the inheritance will help the children. With the combination of gifts during life, some principal, and then income for a term of 20 years, we are giving our children the best possible opportunity to develop integrity and initiative."
SAVVY LIVING

Alternative Lodging Options for Retirees Who Travel
Since retiring, my husband and I love to travel but hotel costs eat up our budget so fast we can’t stay as long, or go as often as we’d like to. I’ve heard that there are alternative lodging options like short-term apartment rentals or even house sitting that offer a much cheaper way to travel. How can we find these?
If you’re willing to do a little research and preplanning, there are a number of ways you can lower (or eliminate) your travel-lodging costs and live more like a local when you travel. Here are some different options to consider and some resources that can help you locate them.
Apartment/House Rentals: There are literally hundreds of thousands of privately owned properties in the United States and abroad that are offered as short-term vacation rentals. For retirees, this has become a very popular alternative to hotels.
Renting a fully furnished apartment or house is usually significantly cheaper than hotel rooms of comparable quality. Furthermore, they frequently offer more space, a homier feel and a kitchen, which can save you the expense of eating out every meal.
Short-term rentals are offered through the individual property owners or property-management companies. Some of the best sites for finding them include homeaway.com, airbnb.com, flipkey.com, vrbo.com and wyndhamvacationrentals.com. Most sites are free to use for travelers. You can also look for rentals at any online search engine by typing in your destination city plus short-term apartment/house rentals (for example, “New York short-term apartments for rent”).
B&B Clubs: If you like staying in bed-and-breakfasts and have a spare bedroom yourself, you should consider the Evergreen Club (evergreenclub.com) or the Affordable Travel Club (affordabletravelclub.net). These are B&B clubs for travelers over ages 50 or 40 that offer inexpensive lodging in the spare bedroom of other club members, or they may stay with you when they’re on the road. You pay a modest gratuity of between $15 and $25 per night, with breakfast. And the clubs charge membership fees of $65 to $80 per year.
House Sitting: If you have a flexible schedule and you don’t mind doing a few household chores when you travel, house sitting is another option that offers lodging for free. How it works is you live in someone else’s home while they’re away for a long weekend or even a few months. And in exchange for the free accommodations, you take care of certain responsibilities such as their pets, lawn, garden, mail, etc. To find these opportunities, try sites like caretaker.org, housecarers.com, housesittersamerica.com and sabbaticalhomes.com – they all charge a small membership fee.
Home Swapping: Another way to get free accommodations when you travel is by swapping homes with someone who’s interested in visiting the area where you live. To make a swap, you’ll need to join an online home exchange service where you can list your home and get access to thousands of other listings. Then you simply email the owners of houses or apartments you’re interested in – or they email you – and you make arrangements. Most home exchange sites like homeexchange.com, homelink.org and intervac-homeexchange.com charge membership fees ranging from $39 to $120.
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

Deferred Gift Annuity
Several years ago Larry and Allison invested $30,000 in what they believed to be an attractive stock. It turned out to be a very wise decision, because the value of the stock increased to $100,000 a few years later. Though they were not in need of additional income at the time, the couple decided to cash in on this growth and began considering selling the stock.
Allison: We had had a good year and were looking for ways to maximize deductions and reduce what we owed in taxes. At the same time, we had been exploring the best way to make a gift to our favorite charity.
Larry: Allison and I were both age 50 at the time, in good health and still working. And though we didn't really need extra current income, we were planning to retire at age 65 so we were always interested in smart retirement planning. Our goal was to be able to live comfortably and travel in our motorhome to visit friends and family.
Allison: I remember when we met with a gift planner. He explained the benefits of setting up a deferred gift annuity. Instead of selling, we could give our stock to our favorite charity and receive an immediate charitable tax deduction. Plus, when we turn 65, the deferred gift annuity would make annual retirement income payments to us for our lifetime.
Larry: We decided to set up the deferred gift annuity. And we experienced first hand each of the benefits Allison mentioned: we received a charitable tax deduction and tax savings immediately. And now that we're retired, we receive income each year that helps make our retirement travel possible. On top of all of this, the deferred gift annuity makes a portion of the income payments we receive tax free.
*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 gift annuity benefits may be different, you may want to click here to view a color example of your benefits.
WASHINGTON NEWS

IRA Rollover Passes House – On To Senate
On July 17 the IRA rollover and four other charitable bills passed the House on a 277-130 vote. Of the 12 different permanent tax extenders that have moved through the House Ways and Means Committee, 10 have now been passed by the full House of Representatives.
The five charitable bills were combined into the America Gives More Act of 2014 (H.R. 4719).
1. IRA Charitable Rollover – The Permanent IRA Charitable Contribution Act of 2014, introduced by Aaron Schock (R-IL), makes permanent the option for IRA owners over 70½ to transfer up to $100,000 per year to qualified charities.
2. Food Inventory Gifts – The Fighting Hunger Incentive Act of 2014, introduced by Tom Reed (R-NY), permanently extends an enhanced deduction for charitable gifts of food and inventory.
3. Conservation Easements – The Conservation Easement Incentive Act, introduced by Jim Gerlach (R-PA) permanently extends the higher deduction limits and potential 15-year carry forward of conservation easement gifts.
4. Private Foundation Excise Tax – The Private Foundation Excise Tax Simplification Act of 2014, introduced by Erik Paulsen (R-MN), simplifies the current 1% and 2% excise tax on private foundation income with a single 1% rate.
5. April 15 Gift Deduction – The Charitable Giving Extension Act, introduced by Mike Kelly (R-PA), permits donors to make deductions after December 31 and before April 15, with an election to take the deduction for the prior tax year.
The America Gives More Act will now be sent to the Senate. It is expected that the remaining two tax extenders passed by the Ways and Means Committee will be voted on by the House later this month.
Editor’s Note: The Founding Fathers planned for a system that encourages compromise between the House and the Senate. By this fall, the House will have passed 12 of the traditional 55 tax extender bills, but all are proposed to be enacted permanently. The Senate EXPIRE Act is expected to be passed during the November lame-duck session. It extends all 55 provisions for two years. The question is whether Majority Leader Harry Reid (D-NV) and other Senators will insist that all 55 provisions be enacted for two years or whether some extenders will be made permanent and others short term. It is very helpful for philanthropy that the strong bipartisan 277-130 vote included over 40 Democratic votes. If the Senate leadership is willing to make any of the tax extenders permanent, this strong bipartisan support suggests that the charitable provisions have good potential for permanent enactment. While it now is likely that there will be an IRA rollover for 2014 passed in November and retroactive to January 1, the duration of that provision is still uncertain.Washington Supports Philanthropy
While the America Gives More Act of 2014 received solid bipartisan support, there was the customary diversity of opinions on the bill expressed by Members of the House.
Speaker John Boehner (R-OH) supported the bill. He stated, “Americans have always given generously to help their neighbors who are in need, and the tax code has long encouraged the significant, more-efficient role that individuals and private organizations have in providing a helping hand to the less fortunate in our communities. By expanding this support and making it permanent, this bipartisan legislation will help increase resources for charities, reduce poverty and hunger, and insure more lives are changed for the better.”
House Ways and Means Chairman Dave Camp (R-MI) also was very positive. He noted, “The American people are the most charitable people in the world, donating money, food and clothing in times of need. Their donations ensure that charities and foundations can help individuals and communities across the country. There are numerous provisions in the tax code that encourage giving, and the bill we have before us today, H.R. 4719 – The America Gives More Act – ensures that some of these provisions are made permanent, so individuals, businesses and farmers can donate and give back more.”
Chairman Camp also reviewed the specific provisions within the bill. He explained the reason for the new provision allowing deductible gifts up to April 15th each year. Camp stated, “If taxpayers were permitted to make and deduct contributions prior to filing their tax return, I believe many Americans will be even more generous in supporting religious and charitable causes.”
Ways and Means Committee Ranking Member Sander Levin (D-MI) noted his record of support for philanthropy. He stated, “We all support the good works of the charitable community and strive to provide charities with the resources they need to carry out their mission. Indeed, along with Congressman Gerlach, I am the sponsor of the food donation deduction.”
However, Ranking Member Levin expressed concern that there were no offsets for the permanent tax extender bills. He noted that the total cost of the extender bills is $825 billion over the next decade and that there were no increased taxes to offset that cost.
Similarly, the White House published a press release that shared the same opinion. The release stated that the White House “supports measures that enhance nonprofits, philanthropic organizations, and faith-based and other community organizations in their many roles, including as a safety net for those most in need, an economic engine for job creation, a tool for environmental conservation that encourages land and protections for current and future generations, and an incubator of innovation to foster solutions to some of the nation’s toughest challenges.” However, the White House also indicated it was concerned about the America Gives More Act because there were no tax offsets.
FINANCES

Stocks - Yahoo Sees Earnings Decline

Yahoo! Inc. (YHOO) announced its second quarter results on Tuesday, July 16. Investors were disappointed to see revenue and earnings decline during the quarter.
Yahoo reported that second quarter revenue was $1.08 billion, a 4% drop from $1.14 billion reported during the same period last year. Analysts expected quarterly revenue of $1.09 billion.
“Our top priority is revenue growth and by that measure, we are not satisfied with our Q2 results,” said Yahoo CEO Marissa Mayer. “In Q2, we saw display revenue decline, further highlighting the fact that we need to work faster to ameliorate the negative trends. I believe we can and will do better moving forward. Overall, I remain confident in Yahoo’s future, our strategy, and our return to long-term growth.”
Earnings per share for the quarter was $0.26, which fell below pre-release estimates calling for $0.39 per share. It was also a 15% drop from the comparable period last year when earnings per share was $0.30.
Yahoo’s revenue decline reflected the fact that its ad sales are slumping compared to competitors Google and Facebook. According to a prominent Internet research firm, eMarketer, Microsoft is expected to soon supplant Yahoo as number three in the world when it comes to digital ad sales. Yahoo’s recent challenges of late have not been kind on its share price, which has fallen close to 12% since the beginning of the year.
Yahoo! Inc. (YHOO) shares ended the week at $33.33.
eBay Survives Challenging Quarter
eBay Inc. (EBAY), operator of an online auction house, announced its second quarter results on Wednesday, July 16. Despite some difficult setbacks during the quarter, the company’s revenue and net income increased.
eBay reported net revenue during the quarter of $4.366 billion. This was 13% better than the comparable period last year and in line with pre-release forecasts.
John Donahoe, eBay’s President and CEO, had this to say about the quarter: “In a challenging second quarter, our commerce and payments platforms delivered strong enabled commerce volume growth of 26%. PayPal generated another strong quarter while eBay’s growth was hampered by its global password reset for all users. We continued our momentum in the four competitive commerce battlegrounds of mobile, local, global and data. We delivered new experiences for PayPal and eBay customers, extended PayPal and eBay into new markets, made it simple and easy for developers to integrate PayPal and offered new ways to help merchants grow.”
Net income for the quarter was $868 million or $0.69 per share. This was a 6% increase over the $822 million reported during the same period last year. Pre-release estimates called for earnings per share to be slightly lower at $0.68 per share.
Investors were pleased with eBay’s quarterly results, especially in light of a cyberattack on the company during the spring. In early May, eBay announced that it discovered a breach on its servers that occurred between February and March of this year. The number of users potentially affected was as high as 145 million. Despite the breach, eBay claimed that no financial data was compromised. Still, the cyberattack caused eBay to lower its annual sales targets by $200 million. Following the earnings announcement on July 16, eBay’s share price increased a little over 1% in after-hours trading.
eBay Inc. (EBAY) shares ended the week at $51.48.
Yum’s Results Not Quite Enough
Yum! Brands, Inc. (YUM), operator of brands such as Taco Bell, Pizza Hut and KFC, announced its second quarter earnings on Wednesday, July 16. Despite positive improvement from Taco Bell and KFC, results from Pizza Hut disappointed investors.
Yum reported that revenue during the quarter was $3.2 billion. This was a 10% increase over the $2.9 billion reported during the same period last year.
“Yum! Brands is well on its way to delivering full-year EPS growth of at least 20%, with second-quarter EPS growth of 30%,” said David C. Novak, Chairman and CEO. “Overall, we have a compelling business model and will continue to invest behind the significant growth opportunities we see around the world. We remain focused on the three keys to driving shareholder value: new-unit development, same-store sales growth and generating high returns on invested capital.”
The company reported net income for the quarter of $334 million or $0.73 per share. This was a 19% increase over the $281 million or $0.61 per share reported during the comparable period last year.
Looking deeper into the numbers, Yum’s KFC division experienced a 21% same-store sales increase while the Taco Bell division’s same-store sales increased 2%. Analysts pointed to Taco Bell’s addition of a breakfast menu during the spring as a contributor to the increase. Although Yum Brands saw growth in its KFC and Taco Bell divisions, investors were more worried about the performance of the Pizza Hut division. Led by a 4% decline in U.S. sales, Pizza Hut experienced a global same-store sales decline of 3%. On news of the disappointing Pizza Hut sales, the company’s share price fell 2.5% in after-hours trading on July 16.
Yum! Brands, Inc. (YUM) shares ended the week at $77.42.
The Dow started the week of 7/14 at 16,951 and closed at 17,100 on 7/18. The S&P 500 started the week at 1,970 and closed at 1,978. The NASDAQ started the week at 4,441 and closed at 4,432.
Bonds - World Tensions Cause Treasuries to Fall
Treasury prices fell on Friday, July 18 as the crises in Ukraine and Israel took dark turns. International events were strong enough to overshadow new economic data released this week, muting their effect on Treasury yields.
The world was shocked yesterday when a Malaysian flight carrying 298 passengers from Amsterdam to Kuala Lampur was shot down over eastern Ukraine. So far, both Ukraine and Russia blame each other for the incident, though early indications point to pro-Russian separatists as the culprits.
The tragic events in Ukraine happened the same day the ceasefire between Israel and Palestine ended. Claiming Hamas terrorists were using underground tunnels to shuttle weapons, supplies and soldiers into Israel, Israeli troops and tanks plunged deep into the Gaza strip. Israel hopes the new ground operations will allow them to close the tunnels and prevent further Hamas attacks inside the country.
During early Friday trading the 10-year note yield rose 2.5 basis points to 2.498%. Yields move inversely to prices, so as yields rise, prices fall. The 30-year bond rose 2 basis points to 3.310%.
“The market is digesting what the geopolitical concerns mean for the economy,” said Jason Rogan, managing director of U.S. government trading at Guggenheim Securities. “When you get these geopolitical concerns, economic data gets pushed to the side.”
In terms of economic news this week, the Conference Board’s gauge of leading economic indicators, which measures the economic outlook for the next three to six months, rose 0.3%. In addition, James Bullard, President of the St. Louis Fed, said he believes the central bank may need to raise interest rates sooner than planned because of falling unemployment and rising inflation.
The 10-year Treasury note yield finished the week of 7/14 at 2.48% while the 30-year Treasury note yield finished the week at 3.29%.
CDs and Mortgages - Interest Rates Trend Lower
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, July 17. The results show mortgage rates slightly falling compared to the previous week.
The 30-year fixed rate mortgage averaged 4.13% this week. This represents a decrease from last week when the 30-year fixed rate mortgage averaged 4.15%.
This week, the 15-year fixed rate mortgage averaged 3.23%. This was a slight decrease from last week when the 15-year fixed rate mortgage averaged 3.24%.
Frank Nothaft, Vice President and Chief Economist at Freddie Mac, had this to say about this week’s rates decrease: “Mortgage rates were little changed amid a week of light economic reports. Of the few releases, industrial production rose by 0.2% in June, below the market consensus forecast. Also, the producer price index for final demand rose 0.4% in June, rebounding from a 0.2% decline the prior month.”
The money market fund finished the week of 7/14 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, Kansas 66220 United States
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