Shalom to you, our partners in ministry. It is an honor to share with you the latest news from Washington, Savvy Living, Personal Planning, gift stories, finance news, and timely articles.
There are no "asks" in this eNewsletter as it is designed totally to be a helpful service to you. Feel free to share it with others in your family or your friends. If you would like me to send it directly to them please send me their email address.
This information is put together in a way to be a help in understanding what is happening in our economy so you can use it to your best advantage. I hope this information is useful to you.
If you have any questions or I can be of assistance to you please contact me.
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David Stone
Director of Donor Relations
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 PERSONAL PLANNERTrusts for Creative SpendersTrusts can be quite useful for protecting children. However, for some children, the trust serves an additional function: It protects the principal from being rapidly spent by a child. These trusts have a specific name—they are called "spendthrift" trusts.
Marla was visiting with her attorney Elizabeth shortly after her husband Harry passed away. She shared her concern for her youngest child, Joe.
Marla: "Harry and I were very fortunate to have four great children. I love each one of them very much. However, when it comes time to making decisions about inheritance, I have a big problem. Our older children Sam and Linda are quite good with financial matters. The third child Lynn is average, but our youngest son Joe is very carefree. If Joe has money, it is gone in a flash. What can I do?"
Elizabeth: "This is a fairly common situation. Many parents would like to treat their children equally, but some children are very good managers and one or two are not. In your case, we hope that Joe eventually learns to become more responsible. But for the present plan, it makes good sense to provide Joe with spendthrift trust provisions."
The Spendthrift Trust Concept
A spendthrift trust allows a parent to protect a certain amount of inheritance. If you have a circumstance like Marla, it may be appropriate to transfer inheritance outright to some of your children and the same amount of property into a spendthrift trust for the "creative spender" child.
A spendthrift trust will need to be managed by a trustee who can make good decisions. For a larger trust, this could be a bank or trust company. In many circumstances a private trustee is selected, such as one of the family financial advisors or even one of the other children.
The trustee will have the usual power to invest and manage the trust assets. The first important provision for the trustee is his or her power over income. The spendthrift trust normally includes seven different provisions that apply to the income:
- Income may be paid to the child.
- Income may be paid to persons or organizations providing benefits to the child. For a spendthrift child, it frequently is necessary to make the payment directly to the provider or the child would simply spend the money.
- The child may not demand the payment of the income. A spendthrift child may desire to purchase some item and would simply demand income if that right existed.
- The child may not pledge or borrow against the trust income or principal. Once again, if the child could pledge or borrow against the trust, they could quickly deplete the trust through those loans.
- The trustee usually has complete discretion over distributions. A parent may indicate the general purposes of the trust, but a trustee is better able to protect the principal and the beneficiary if he or she has complete discretion.
- Trust principal may be used by the trustee for the education, healthcare needs or support of the child.
- Some trusts create incentive plans. In these trusts, the trustee is authorized to distribute income that will match the income of the child.
Spendthrift Trusts and Distributions of Principal
With a spendthrift trust, distribution of principal is also subject to specific requirements. While the parents are given a reasonable level of flexibility in setting forth the distribution rules, there are several general guidelines that are usually followed.
- The trustee will have discretion to distribute principal over the duration of the trust. The trustee normally has quite broad powers to make distribution of principal. In order to protect the child, this is quite important. However, the child may have a very good investment or business opportunity for which he or she needs principal. If the trustee is convinced that the child can use principal responsibly, then the distribution may be made.
- The trust principal is normally held in trust for life or until a fairly senior age, such as 50 or older. If the child eventually acquires the capability of managing assets properly, the trustee can use the discretionary power to move the assets to the child. However, because the parent is concerned that the child may never acquire a high level of management expertise, the trust often lasts for life.
- The child has no right to demand principal. The principal is controlled by the trustee for the protection of the child.
- The child may not pledge the trust principal or borrow against the principal. Because the trustee is not obligated to make payment on any loans by the child, the banks or other lenders will not make loans using the trust income or principal as collateral.
A Solution for "Creative Bill"
Sam and Sandy have an estate of $1 million. Their children—Alice, Jim and Bill—are all in their mid-thirties. Alice is age 38 and Jim is age 37. They are both solid and responsible. However, Bill is 33 and is quite a creative person. Sandy says that "If Bill had a million dollars, he would use it creatively in three weeks."
Because of their desire to treat everyone equally and to protect Bill from his creative spending habits, Sam and Sandy created a fairly typical plan for their circumstances. If one spouse passes away, the $1 million estate will be transferred to the survivor. When the survivor passes away, their favorite charity will receive a bequest of 10% of the estate. The other 90% will be divided. Alice and Jim will receive their shares outright. However, the third share will be transferred into a spendthrift trust with family advisor Steven as trustee. There will also be a successor trustee—First Bank from their local community.
As trustee of the spendthrift trust, Steven will receive approximately $300,000. He will invest this amount in a diversified portfolio of stocks and bonds. Steven will have discretion to distribute income and/or principal to Bill. When Bill reaches age 55, he will then receive the full inheritance. Sam and Sandy believe that by that time he will be responsible in managing the property.
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 SAVVY LIVINGGetting Around When You No Longer DriveWhere can I find out about alternative transportation options for my elderly mother? She needs to give up driving, but before she does we need to figure out how she’ll get around.
Alternative transportation services vary widely by community, so what’s available to your mom will depend on where she lives. Here’s what you should know.
Transportation Options
It’s important to know that while most urban areas offer seniors a variety of transportation services, the options may be few to none for those living in the suburbs, small towns and rural areas. Alternative transportation is an essential link in helping seniors who no longer drive get to their doctor’s appointments, stores, social activities and more.
Depending on where your mom lives, here’s a rundown of possible solutions that can help her get around and some resources to help you locate them.
Family and Friends: This is the most-often-used and favorite option among seniors. So make a list of all possible candidates your mom can call on, along with their availability and contact information.
Local Transportation Programs: These are usually sponsored by nonprofit organizations that serve seniors. These services may charge a nominal fee or accept donations and often operate with the help of volunteer drivers.
Also check out the Independent Transportation Network (itnamerica.org), which is a national nonprofit that has 27 affiliate transportation programs in 23 states. With this program, seniors pay membership dues and fees based on mileage. Most programs will let your mom donate her car in return for credits toward future rides.
Demand Response Services: Often referred to as “dial-a-ride” or “elderly and disabled transportation service,” these are typically government-funded programs that provide door-to-door transportation services by appointment and usually charge a small fee or donation on a per ride basis. Many use vans and offer accessible services for riders with special needs.
Taxi or Car Service: These private services offer flexible scheduling but can be expensive, though they’re cheaper than owning a car. Some taxi or car services may be willing to set up accounts that allow other family members to pay for services while others may offer senior discounts. Be sure to ask.
Another option to look into is ride-sharing services that connect people that have cars with people who need rides. Uber (uber.com), Lyft (lyft.com) and Sidecar (side.cr) are three of the largest companies offering services in dozens of cities across the U.S.
Private Program Services: Some hospitals, health clinics, senior centers, adult day centers, malls or other businesses may offer transportation for program participants or customers. Also, some nonmedical home-care agencies that provide companionship and run errands or do chores may also provide transportation.
Mass Transit: Public transportation (buses, trains, subways, etc.) where available can also be an affordable option and may offer seniors reduced rates.
Hire Someone: If your mom lives in an area where there are limited or no transportation services available, another option to consider is to pay someone in the community to drive her. Consider hiring a neighbor, retiree, high school or college student that has a flexible schedule and wouldn’t mind making some extra money.
Where to Look
To find out what transportation services are available in your mom’s community, contact the Rides in Sight national toll-free call center at 855-607-4337 (or see ridesinsight.org) and the Eldercare Locator (800-677-1116), which will direct you to her area agency on aging for assistance.
Also contact local senior centers, places of worship and retirement communities for other possible options. Finally, check with her state Department of Transportation at www.fhwa.dot.gov/webstate.htm and the American Public Transportation Association at publictransportation.org.
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.
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 YOUR PLANDeferred Gift AnnuitySeveral 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.
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 WASHINGTON NEWSIRS Launches 2015 Filing SeasonIn IR-2015-3, the IRS announced that the 2015 filing season has now opened. Between January 15 and April 15, the IRS expects to receive over 150 million individual tax returns.
IRS Commissioner John Koskinen observed that the IRS Free File program opened on January 16. In addition, the IRS will accept and process all returns starting on Tuesday, January 20.
The Free File program is available to an estimated 100 million individuals or families with incomes of $60,000 or less. There are two basic options on www.irs.gov. First, taxpayers who are familiar with the IRS forms may fill them out electronically and submit them to the Service. Second, there are 14 commercial software companies who provide free online versions of their programs.
Commissioner Koskinen points out that filing electronically is the best way to receive a prompt refund. He stated, “If you haven’t already, you should consider filing electronically. It’s fast, accurate and the best way to get your refund quickly.”
The IRS refund target is to have 90% of taxpayer refunds sent within 21 days of receiving the return.
This is also the first year for filing under the Affordable Care Act (ACA). There will be three general categories of taxpayers. Many taxpayers have qualified ACA insurance, some will be exempt from the requirement to have health insurance and the balance of taxpayers will make an “Individual Shared Responsibility Payment (ISRP).” The ISRP is the applicable penalty payment for persons without qualified health insurance. For 2015, many individuals will have a penalty payment of $95.
1. Qualified Insurance – Individuals who have a healthcare plan that is compliant with the ACA requirements will check a box that they are in compliance. There is a chart on irs.gov/aca that will help determine if your insurance plan is qualified under ACA.
2. Exempt – Some individuals will be exempt from the ACA healthcare requirement. It will be necessary to file IRS Form 8965, Health Coverage Exemptions, with your tax return if you are exempt. Some exemptions are also obtained through the Healthcare Marketplace.
3. Individual Shared Responsibility Payments – If an individual does not have qualified insurance or an exemption for each month of the year, then the ISRP will be required. On irs.gov, there is a “Calculating the Payment” page that may be helpful.
4. Premium Tax Credit – Most individuals who purchased ACA compliant insurance on the Marketplace will receive IRS Form 1095-A, Health Insurance Marketplace Statement. The statement should be received the first week of February from the Marketplace where the policy was acquired. Koskinen noted that individuals should not contact the IRS for this form, because only the Healthcare Marketplace or insurance provider has the available information.
Taxpayers who received a premium tax credit to help pay for their health insurance will need to complete IRS Form 8962, Premium Tax Credit. Depending upon the level of income and the amount of credit received, there may be an additional refund or an added payment to the IRS.
Most individuals will need to wait until they have received all W-2s from employers, the appropriate Forms 1099 from banks and financial institutions and Form 1095-A from their marketplace in order to file their income tax return.
IRS Plans to Reduce Service
At a press conference on January 15, IRS Commissioner John Koskinen discussed the planned reductions in IRS staff. Because of budget limits, there will be fewer IRS employees available to answer taxpayer questions by phone. Those taxpayers who call may expect long delays, perhaps 30 minutes or more before speaking with an IRS representative. Many taxpayers will not be able to reach an IRS representative and will not have their questions answered.
The IRS budget request for this year was reduced by $346 million to $10.9 billion. When asked whether or not the phone staff reductions were an intentional effort to reduce service and put pressure on Congress, Koskinen responded that the phone service staff reductions were simply the result of budget limits. He stated, “We are working very hard not to have a shutdown. I have been around town long enough, and I know enough about this agency, there are a lot of things that we could do that would be very visible and would be susceptible to a claim about that. We are actually working very carefully, because we have an organization dedicated to and concerned about taxpayer service.”
The IRS challenge is that there are fewer staff and greater responsibilities. The IRS is required to implement the Affordable Care Act and the Foreign Account Tax Compliance Act. However, between 2010 and 2015, the IRS reduced its staff by 17,000 employees.
Koskinen continued, “Seventy-two percent of our budget is people, so the only flexibility we have is in information technology, taxpayer service and tax enforcement. And we are making cuts in all of those areas.”
As a result of the staff reductions, there will be fewer audits and reviews. While approximately one million returns will be subject to some level of review, Koskinen anticipates fewer full-fledged audits of individual taxpayers.
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 FINANCESStocks - Intel Reports Earnings
Intel Corporation (INTC), a seller of integrated technology platforms, reported its latest quarterly and annual earnings on Thursday, January 15. The company reported strong revenue and net income.
Intel reported quarterly revenue of $14.7 billion and annual revenue of $55.9 billion. This represents an increase over the same periods last year when the company reported quarterly revenue of $13.8 billion and annual revenue of $52.7 billion.
“The fourth quarter was a strong finish to a record year,” said Intel CEO Brian Krzanich. “We met or exceeded several important goals: reinvigorated the PC business, grew the Data Center business, established a footprint in tablets, and drove growth and innovation in new areas. There is more to do in 2015. We’ll improve our profitability in mobile, and keep Intel focused on the next wave of computing.”
The company reported quarterly net income of $3.7 billion and annual net income of $11.7 billion. These figures represent increases over the previous comparable periods when Intel reported quarterly net income of $2.6 billion and annual net income of $9.6 billion.
Krzanich gave a presentation at this year’s Consumer Electronics Show in Las Vegas on January 7. In his speech he focused on the “next wave of computing,” which he said would be driven by Intel’s RealSense technology. RealSense technology uses cameras and sensors to sense the depth between two objects. Krzanich said that this technology will soon be included in many consumer electronic products. It will allow us to interact with computers more like we interact in everyday life. Among many other applications, we will soon see computers that respond to our gestures and tablets that can scan 3D objects into a digital framework.
Intel Corporation (INTC) shares ended the week at $36.45, down 1.2% for the week.
Rocky Mountain Chocolate Factory Reports Earnings
Rocky Mountain Chocolate Factory, Inc. (RMCF), a confectionery retailer, reported its latest quarterly earnings on Tuesday, January 13. The company also announced a stock buyback program and a quarterly dividend.
Rocky Mountain reported revenues of $10.56 million during the quarter. This represents an increase when compared to the comparable quarter last year when the company reported revenue of $9.28 million.
“We are pleased to report a strong operating and financial performance for the third quarter of Fiscal 2015, when compared with last year’s third fiscal quarter,” said Bryan Merryman, COO and CFO of Rocky Mountain Chocolate Factory. “Improved operating results in our chocolate franchising, retailing and manufacturing business, combined with a 94% reduction in the net loss recorded by U-Swirl, Inc., allowed the Company to pose a 36.4% increase in diluted GAAP earnings per share for the quarter ended November 30, 2014, when compared with the prior-year period.”
The company reported quarterly net income of $962,000. This represents an increase over the same period last year when the company reported net income of $699,000. Rocky Mountain reported earnings of $0.15 per share for the quarter.
On January 13, Rocky Mountain authorized the repurchase of up to $3 million of the company’s outstanding common stock. The company also announced a fourth quarter dividend of $0.12 per common share outstanding. Merryman commented on the announcement by saying, “Since our bank balances are currently earning interest at a very low rate, the Board has authorized our twelfth cash dividend increase and has reset our share repurchase authorization at $3 million.”
Rocky Mountain Chocolate Factory, Inc. (RMCF) shares ended the week at $13.29, up 0.76% for the week.
Alcoa Reports Earnings
Alcoa, Inc. (AA), a producer of aluminum, reported its latest quarterly and annual earnings on Monday, January 12. The company reported strong earnings for the quarter and for the year.
Alcoa reported quarterly revenue of $6.38 billion for the quarter and $23.91 billion for the year. Both figures represent increases from the comparable periods last year when the company reported revenue of $5.59 billion for the quarter and $23.03 billion for the year.
“Our strong fourth quarter capped a pivotal year as we significantly accelerated Alcoa’s transformation,” said Klaus Kleinfeld, Alcoa Chairman and CEO. “As we built out our value-add businesses, we gained profitable share across exciting downstream markets and captured aerospace and automotive growth in the midstream. On the commodity side, our hard work reshaping the portfolio continues to pay off with improved performance for the 13th quarter in a row. In 2014 we delivered Alcoa’s strongest operating results since 2008; we enter 2015 on solid footing, poised to continue transforming and growing.”
The company reported net income of $159 million for the quarter and $268 million for the year. This represents an increase from the same periods last year when the company reported a quarterly net loss of $2.34 billion and an annual net loss of $2.29 billion. Annual earnings per share came in at $0.21 per share.
On December 4, Alcoa announced a breakthrough in aluminum manufacturing. Alcoa patented a new process of manufacturing aluminum that allows for production of aluminum alloy for automotive purposes that has 40% greater formability and 30% greater strength than the aluminum used today. “Alcoa Micromill represents a major breakthrough in aluminum materials,” said Kleinfeld. “This technology will unlock the next generation of automotive products with strength, formability and surface quality combinations never before possible.”
Alcoa, Inc. (AA) shares ended the week at $15.28, down 6.8% for the week.
The Dow started the week of 1/12 at 17,742 and closed at 17,512 on 1/16. The S&P 500 started the week at 2,046 and closed at 2,019. The NASDAQ started the week at 4,714 and closed at 4,634.
Bonds - Treasuries Fall on Economic News
Treasury prices fell and yields rose on Friday, January 16 as the United States continues to outperform other major economies. In addition, the Swiss National Bank announced a policy change that caused European bond yields to drop.
The United States economy added 252,000 jobs in December making 2014 the best year for the labor market in fifteen years. Also, the unemployment rate dropped to 5.6% last month, the lowest level since 2008. In addition, the University of Michigan consumer sentiment index rose to 98.2, the highest in eleven years. Economists surveyed by Bloomberg only expected the index to rise to 94.1.
Also, the Swiss National Bank announced today that it is abandoning its cap on the franc of 1.2 francs per euro. This sent the franc almost 30% higher against the euro in early trading. The SNB’s purpose for this move was likely to avoid pressure to abandon the cap after the ECB announces its quantitative easing program next week. Swiss critics say that Switzerland is a country that relies heavily on exports to the euro zone and that this move by the SNB will only hurt exporting businesses. This move caused bond yields across the euro zone to drop, causing investors to look elsewhere for higher yields.
All of this economic news created a desire for U.S. treasury bonds, which are safe assets with higher yields than can be found throughout the euro zone. The 10-year U.S. Treasury note yield rose nine basis points to 1.81% during early Friday trading. In addition, the 30-year yield increased six basis points to 2.43%. “It’s a matter of money rushing here because it’s the only place with any yields,” said Thomas Roth, Senior Treasury Trader at Mitsubishi UFJ Securities USA, Inc.
The 10-year Treasury note yield finished the week of 1/12 at 1.82% while the 30-year Treasury note yield finished the week at 2.44%.
CDs and Mortgages - Interest Rates Fall
Freddie Mac released the results of its latest Primary Mortgage Market Survey (PMMS) on Thursday, January 15. The results showed average fixed mortgage rates falling for the third consecutive week.
The 15-year fixed rate mortgage averaged 2.98% this week. This represents a drop from last week when it averaged 3.05%. One year ago at this time, the 15-year fixed rate mortgage averaged 3.45%.
This week, the 30-year fixed rate mortgage averaged 3.66%. This represents a decline from last week when it averaged 3.73%. Last year at this time the 30-year fixed rate mortgage averaged 4.41%.
“Mortgage rates fell for the third consecutive week as oil prices plummeted and long term treasury yields continued to drop despite a strong employment report,” said Frank Nothaft, Vice President and Chief Economist at Freddie Mac. “The economy exceeded expectations by adding 252,000 jobs in December which followed an upward revision of 50,000 jobs to the prior two months. The unemployment rate fell to 5.6% which was the lowest since June 2008.”
The money market fund finished the week of 1/12 at 0.4%. The 1-year CD finished at 0.7%.
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Thank you for your interest in planned giving. To access any of our resources, please go to our website.
Your Brother in Yeshua (Jesus),
David Stone
Jews for Jesus
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Jews for Jesus
60 Haight Street
San Francisco, California 94102 United States
Phone 415-864-2600 |
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