Saturday, December 27, 2014

Model Generosity: Leaving a :Lasting Legacy Through Planned Giving of Lenexa, Kansas, United States for Saturday, 27 December 2014

While you're considering your charitable giving in the year 2015, I'd like to tell you more about endowments--a type of planned gift that creates ongoing income for your chosen ministry. Endowments are easy to establish and can be started with a relatively small initial deposit. They:
  • can be funded with cash, stock, real estate, livestock, crops, or any marketable item of value
  • can be named after anyone you wish to honor
  • produce resources to benefit ministries far into the future
I'd like to share a story with you that illustrates how endowments can provide for ministry. An elderly widow, passionate for her local church, was concerned that when she passed away, her local church would no longer receive her tithe. She made a single contribution to an endowment that assures her church an amount equivalent to her tithe for at least 20 years beyond her passing.
If you've been inspired by this story as I have, I invite you to contact us to learn more about endowments. You can reach us at 913.577.2983 or info@nazarenefoundation.org. To read more about our services, visit www.NazareneFoundation.org.
Blessings,
Kenneth R. Roney, J.D.
President
 

 
 
 
 
PERSONAL PLANNER
Income for Surviving Spouse
Income for Surviving SpouseElliot 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 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.
 
SAVVY LIVING
How to Appeal When Medicare Won’t Pay
Savvy SeniorHow do I file an appeal when Medicare won’t pay for something that has been covered in the past?
You will be happy to know that if you disagree with a coverage or payment decision made by Medicare then you can appeal that decision. Appealing a decision you disagree with is worthwhile since about half of all appeals are successful.
However, before appealing a decision talk with the doctor, hospital and Medicare to see if you can spot the problem and resubmit the claim. Some denials are caused by simple billing code errors by the doctor’s office or hospital. If speaking with the doctor doesn’t fix the problem, here is how you appeal a Medicare decision.

Original Medicare Appeals

If you have original Medicare, start with your quarterly Medicare Summary Notice (MSN). This statement will list all the services, supplies and equipment billed to Medicare for your medical treatment and will tell you why a claim was denied.
There are five levels of appeals for original Medicare, although you can initiate a fast-track consideration for ongoing care, such as rehabilitation. Most people have to go through several levels to get a denial overturned.
You have 120 days after receiving the MSN to request a “redetermination” by a Medicare contractor, who reviews the claim. Circle the items you’re disputing on the MSN, provide an explanation of why you believe the denial should be reversed and include any supporting documents (such as a letter from the doctor or hospital) explaining why the charge should be covered. Then, send it to the address on the form.
The contractor will usually make a decision within 60 days after receiving your request. If your request is denied, you can request “reconsideration” from a different claims reviewer and submit additional evidence.
A denial at this level ends the matter, unless the charges in dispute are at least $140. In that case, you can request a hearing with an administrative law judge. The hearing is usually held by videoconference or teleconference.
If you have to go to the next level, you can submit the claim to the appeals council for review. If your claim exceeds $1,400, the final level of appeal is judicial review in a U.S. District Court.

Advantage and Part D Appeals

The appeals process is slightly different if you are enrolled in a Medicare Advantage or Part D prescription drug plan. One difference is that you have only 60 days from the date on the denial notice to file an appeal. In both cases, you start by appealing directly to the plan rather than to Medicare. Follow the plan’s instructions on its explanation of benefits.
Part D has a fast-track appeal of 72 hours if you haven’t received your medication and waiting would jeopardize your health. Otherwise, the plan must notify you of its decision within seven days.
For more information and step-by-step procedures on how to make an appeal visit Medicare.gov. Click on the “Claims & Appeals” tab at the top of the page or call Medicare at 800-633-4227 and request a copy of publication #11525 “Medicare Appeals.” You can also read it online at medicare.gov/pubs/pdf/11525.pdf.

Get Help

If you need help, contact your State Health Insurance Assistance Program (SHIP), which has counselors that can help you understand the billing process and even file your appeal for you for free. To locate your local SHIP, visit shiptalk.org or call the Eldercare Locator at 800-677-1116. The Medicare Rights Center also offers free phone counseling at 800-333-4114.
Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.
 
YOUR PLAN
Bequests
BequestsJoe 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
White House 2015 Tax Proposals
Washington HotlineAt a press conference on December 19, President Obama was asked about potential tax reform in 2015. With language similar to the hopeful statements on tax reform by Senate Majority Leader Mitch McConnell (R-KY) and Speaker of the House John Boehner (R-OH), the President indicated that the White House will also offer “pretty specific proposals.”
President Obama outlined his general priorities for tax reform in 2015. He noted, “I would like to see more simplicity in the system. I would like to see more fairness in the system. With respect to the corporate tax reform issue, we know that there are companies that are paying the full freight – 35%-- higher than just about any other country on earth if you are paying 35%. Then, there are other companies that are paying 0% because they’ve got better accountants or lawyers, that’s not fair.”
The President continued by observing that some companies are “parking money” overseas to avoid taxes. He suggested that everyone should pay something, especially companies headquartered in the United States.
A key objective of the White House is also to improve America’s infrastructure – roads, bridges, ports, airports, electrical grids, water systems and sewage systems. The White House believes that these bipartisan projects could be combined with tax reform.
Therefore, the White House preferred plan for tax reform could include a lower corporate tax rate, elimination of tax loopholes and funds to improve America’s infrastructure.
Editor’s Note: Assistant Treasury Secretary Mark Mazur indicated on December 16 that Treasury is developing a detailed proposal on corporate tax reform. The White House, the Senate and the House know that tax reform will be difficult and will require cooperation from all parties.

IRS Explains IRA Charitable Rollover Reporting

In IR 2014-117 (22 Dec 2014), the IRS urged taxpayers to quickly complete their Qualified Charitable Distributions (QCDs) before December 31, 2014. Under the Tax Increase Prevention Act of 2014 (H.R. 5771), IRA owners may make a QCD until the end of this year.
The IRS noted, “An IRA owner, age 70½, can directly transfer, tax-free, up to $100,000 per year to an eligible charity. This option, first available in 2006, can be used for distributions from IRAs, regardless of whether the owners itemize their deductions.”
The transfer is directly from the IRA custodian to a qualified charity. Because the transfer is not included in taxable income, there is no charitable deduction. However, the transfer may fulfill part or all of the required minimum distribution for 2014.
The IRS also disclosed the reporting for this year. The IRA custodian will report the QCD by sending the IRA owner IRS Form 1099. The taxpayer is required to show the IRA distribution on line 15a. On line 15b of IRS Form 1040, the taxpayer should write “QCD”. A “QCD” is not included in the adjusted gross income of the taxpayer.
 
FinancesFINANCES
Stocks - Walgreen’s Earnings ImpressWalgreen Co. (WAG), a national drugstore chain, announced its latest quarterly earnings on Tuesday, December 23. The results showed significant gains compared to last year.
Walgreen reported net sales of $19.55 billion for the quarter. This represents an increase compared to the same period last year when the company reported net sales of $18.33 billion.
“This quarter we had solid performance across both our pharmacy and retail products businesses,” said Greg Wasson, Walgreens President and CEO. “We truly appreciate that our 8,200-plus store teams exceeded the overall retail market in year-over-year sales growth heading into the holiday season, as we grew gross profit dollars faster than our costs during the quarter. We also completed our financing to close the Alliance Boots transaction as we move toward our shareholder vote on December 29 to finalize the merger, ahead of our original goal. This truly is an extraordinary time for Walgreens as we achieve our vision of becoming a pharmacy-led, global enterprise for health and well-being with Alliance Boots.”
The company announced quarterly net earnings of $809 million. This represents a fairly significant increase compared to last year when the company reported net earnings of $695 million. Earnings per share came in at $0.85 per share compared with $0.72 per share one year ago.
The Walgreens Flu Index is a report compiled on a weekly basis detailing flu activity in the United States. With over 8,200 drugstores providing antiviral medication in the United States, Walgreens is uniquely qualified to provide information about the severity of breakouts at the local level. For the week ending December 19, the top ten cities with flu activity were in Texas, Illinois, Tennessee, Oklahoma, Louisiana and Missouri.
Walgreen Co. (WAG) shares ended the week at $76.51, up 4.62% for the week.

CarMax Reports Record Earnings

CarMax, Inc. (KMX), retailer of used vehicles, announced its latest quarterly earnings on Friday, December 19. The company reported record third quarter results.
CarMax reported total quarterly revenue of $3.41 billion. This represents an increase of 15.77% from the comparable quarter last year when the company reported revenue of $2.94 billion.
“We had another great quarter,” said Tom Folliard, President and CEO of CarMax. “Continued strong performance in our used wholesale and CAF operations, along with the growth of our store base and our ongoing share repurchase program contributed to our record third quarter earnings per share.”
The company reported net income of $130.05 million for the quarter. This represents an increase of 22.17% from the same period last year when CarMax reported net income of $106.45 million. Earnings per share came in at $0.60 per share, compared to $0.47 per share one year ago.
The CarMax Foundation’s fifth annual CarMax Cares Community Service Award was given to 12 CarMax Associates from across the country at the company’s largest associate recognition event in Las Vegas on December 15. Associates across the country were nominated by their co-workers for their personal volunteer efforts and leadership in community giving. Each winner selected a nonprofit to receive a $5,000 grant on their behalf from The CarMax Foundation.
CarMax, Inc. (KMX) shares ended the week at $67.61, up 0.43% for the week.

Carnival Cruises to Solid Earnings

Carnival Corp. (CCL), an international cruise line, reported its latest quarterly and annual earnings on Friday, December 19. The company reported significantly higher revenue and earnings than during the same periods last year.
Carnival reported quarterly revenue of $3.72 billion and annual revenue of $15.88 billion. Both figures represent increases over the same figures last year when the company reported quarterly revenue of $3.66 billion and annual revenue of $15.46 billion.
“Full year earnings were significantly higher than the prior year primarily due to strong profit improvement at both our Carnival Cruise Lines and Costa Cruises brands,” said Arnold Donald, President and CEO of Carnival. “We worked hard to contain costs and achieved an almost five percent reduction in fuel consumption for the year as we continue to implement energy conservation measures. Based on our current 2015 guidance, we expect to achieve a 50% improvement in earnings compared to 2013 and are firmly on a path toward delivering double-digit returns on invested capital.”
The company reported a net loss for the quarter of $102 million and net income for the year of $1.24 billion. This compares favorably to last year when the company reported net income of $66 million for the quarter and $1.08 billion for the year. Annual earnings per share came in at $1.59 per share, compared to $1.39 per share one year ago.
Carnival will air its first Super Bowl commercial during Super Bowl XLIX on Sunday, February 1, 2015. The company is currently asking customers for input on the final four concepts it has put together for the spot. Those that participate have the opportunity to win a yearly cruise for life. The final ideas for the commercial were created by the world-renowned advertising agency BBDO and the 60-second commercial will be directed by Academy Award winning director Wally Pfister.
Carnival Corp. (CCL) shares ended the week at $45.87, up 2.37% for the week.
The Dow started the week of 12/22 at 17,812 and closed at 18,054 on 12/26. The S&P 500 started the week at 2,069 and closed at 2,089. The NASDAQ started the week at 4,759 and closed at 4,807.

Bonds - Japan’s Economic Recovery Slows
Economic figures released this week in Japan show that the country’s economy is still struggling to recover from recession. The world’s third-largest economy behind the United States and China will engage in economic stimulus to aid the recovery.
Japan’s trade minister announced on Thursday, December 25 that output decreased 0.6% in the month of November compared to October. A survey of economists by Bloomberg News called for a 0.8% increase in output for the month. In addition, inflation slowed for the fourth consecutive month and industrial production as well as retail sales dropped. Finally, consumer prices rose 2.7% compared to one year ago, which made an April sales tax hike even more difficult for many Japanese citizens.
This unwelcome news added even more anticipation for the announcement of Japan’s economic stimulus package by Prime Minister Shinzo Abe on Friday, December 26. The package is expected to provide help to low-income households and lagging regional economies. The total cost of the package is likely to be about $29 billion.
An early release draft of the stimulus package stated, “this package is aimed at ensuring a virtuous economic cycle and spreading the benefits of Abenomics to all regions by swiftly focusing on fragile parts of the economy.” The policies of Prime Minister Abe have increased stock prices and caused the yen to decline against the dollar. This has helped exporters and investors, but has increased costs and living expenses for low-income groups, small firms and rural areas that rely on imports. The stimulus is designed to help these groups that have been hit hardest by Japan’s current economic policies and recession.
The 10-year Treasury note yield finished the week of 12/22 at 2.30% while the 30-year Treasury note yield finished the week at 2.88%.

CDs and Mortgages - Interest Rates Rise Slightly
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Wednesday, December 24. The results showed average fixed mortgage rates rising slightly, but remaining near yearly lows.
The 15-year fixed rate mortgage averaged 3.1% this week. This represents a slight increase from last week when it averaged 3.09%. One year ago at this time, the 15-year fixed rate mortgage averaged 3.52%.
This week, the 30-year fixed rate mortgage averaged 3.83%. This represents a slight increase from last week when it averaged 3.8%. Last year at this time, the 30-year fixed rate mortgage averaged 4.48%.
“Mortgage rates were up slightly, following a week of mixed economic releases,” said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. “Existing home sales were down 6.1% in November to an annual rate of 4.93 million units, below economists’ expectations. New home sales fell 1.6% last month to an annual rate of 438,000, also below expectations. Meanwhile, the third quarter real GDP was revised sharply higher to 5% according to the final estimate released by the Bureau of Economic Analysis.”
The money market fund finished the week of 12/22 at 0.4%. The 1-year CD finished at 0.7%.

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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