The Global Church of the Nazarene Foundation eNewsletter in Lenexa, Kansas, United States for Saturday, October 31, 2015

The Global Church of the Nazarene Foundation eNewsletter in Lenexa, Kansas, United States for Saturday, October 31, 2015
On October 1st, the Rev. Jon Twitchell officially joined the Nazarene Foundation as Vice President of Gift Planning. Jon recently relocated to Southern California from Maine in order to serve as a regional representative in the Southwest. His role will be to equip individuals to make God-honoring decisions with their assets and estate plans and to partner with churches in resourcing the work they are doing for God's Kingdom.
If you are connected to a church in California, Arizona, New Mexico, or the lower portions of Nevada and Utah, then Jon is your new Foundation representative. Over the next few months, he will be making connections with pastors and district leaders in order to find out how he can best serve those on his region.
Your church will hear from Jon within the next few weeks, but he is also available to be contacted directly at any time. He can be reached via email atjtwitchell@nazarenefoundation.org or by phone at 207-318-3515.
The Foundation is looking forward to the work that this new partnership will make possible!
“We… must tell a future generation the praises of the Lord.” – Ps. 78:4 (HCSB)


PERSONAL PLANNER

Wills - Good and Bad

Where is the Missing Will?

More than 40 wills were submitted to the probate court, with a multitude of potential heirs each claiming to be the true recipient of a wealthy business owner who passed away in 1976. With a $2.5 billion estate at stake, there was intense interest in the decision of the court.

After extensive review of the 40 documents, the court finally determined that none of the 40 wills were valid. Because there was no valid will, the court divided the $2.5 billion estate among 22 relatives. Court costs, attorney costs and estate taxes were enormous, but the 22 heirs still each received millions of dollars.

Why is a Will Important?

There are at least seven reasons for creating a will. A "peace of mind" estate plan starts with your will. The will passes your property to family, friends and favored organizations, could direct distribution of a recent inheritance, may fix errors in living trust funding, allows you to select a guardian, enables you to disinherit a child or other relative, permits you to select your executor and may help with a simplified probate.

1. Transfer of Property: There are some types of property that are best transferred by will. Many types of personal assets are difficult to transfer through a living trust or are not appropriate for a "pay on death" transfer. Because vehicles and other personal assets are likely to be bought and sold, it is much easier to keep vehicles, furniture, collections and other items in the probate estate and transfer them by will.

2. Potential Inheritance: You might be planning to receive an inheritance from a parent or other relative, but the inheritance could be delayed by the probate process, potential estate issues or other reasons. Therefore, when you finally receive title to the property, there may not be a convenient time or opportunity to transfer the assets into a revocable living trust. As a result, the inheritance will form part of your estate.

There also have been cases in which a person passes away in a tragic accident. The estate may receive an insurance settlement or a claim under a wrongful death action. These assets would become part of the probate estate and are transferred under the residuary clause of your will.

3. Living Trust Errors: A living trust is a very appropriate way of avoiding the probate process. However, in too many cases a person has a valid living trust but has not properly transferred the real estate, securities accounts or other assets to the trust. As a result, the property that has not been legally transferred to the trust will be part of the probate estate covered by your will.

4. Guardian for Minors: The selection of a guardian for minor children is done through your will. Most states do not permit you to use a living trust (there are a few exceptions) for this purpose, so it is very important to designate the guardian in your will. When you create the will and designate the guardian of the person, it is also quite common to establish a family trust for the minor children and appoint the trustee.

5. Disinherit Someone: It is possible to disinherit a child or other heir. The appropriate place to explain that disinheritance or explain why the inheritance is a nominal amount (such as $1.00) is in your will.

6. Select the Executor: Your executor is a key person for a successful estate property transition. The executor will inventory your estate, advertise for creditors, pay bills and taxes, submit your will to the probate court and obtain the court's approval for the final distribution. Your will is the document in which you will name your executor. Even if you have a revocable living trust with a trustee and a successor, it is essential to select an executor who will manage your probate property.

7. Simplify Probate: In many states it is possible for people who pass away with modest to moderate resources to have a simplified or summary probate. This permits your executor to manage your property and make distribution of it with very minimal contact with the probate courts. For example, California allows many estates with assets valued under $150,000 to use a simplified probate process. The executor will follow the directions in your will and distribute your property accordingly. In most cases, this will simplify administration and reduce your estate costs.

Good and Bad Wills

As was the case in the estate of Business Owner, there are many submitted wills that are not deemed valid or legal. In order to have a valid or legal will, you need to comply with the state law requirements for wills. While there is some variation between the states, most states will follow several guidelines.

1. Legal Age: In most states you must be 18 years old to sign a will.

2. Sound Mind: As we become more senior, we do not have as clear a mind as we had back in our youth. Most states permit you to create a will if you have "lucid intervals" and understand the nature of your property and the fact that the will is going to direct the transfer of that property to your selected recipients.

3. Typed or Printed: A will normally is either typed or printed. While some states permit handwritten or other types of wills, the vast majority of wills will be typed or printed and will contain at least one substantive transfer of property.

4. Date and Sign: Your will must be dated and signed. The date is essential in order to make certain that this is your final will. Many individuals might write and sign two or more wills during a lifetime. Only your final will is going to be used by the probate court to distribute your property.

5. Witnesses: Under your state law, you will need to sign your will in the presence and hearing of two witnesses. Your witnesses must be adults who are of sound mind and should not be beneficiaries under the will. They need to be told that this is a will, but you do not need to disclose the contents of your will to the witnesses.

6. Self-Proving Will: In some states, it is permissible to have a notary or an affidavit witness form in which the will is either notarized or the person pledges under perjury that this is a valid will. If the will is "self-proved," it will simplify the probate process. Ordinarily, the witness is not required to testify in the probate court with a self-proved will. 

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SAVVY LIVING

Understanding Reverse Mortgages: Beware of Misleading Ads

Can you give us a rundown of how reverse mortgages work? I’ve seen well-known actors pitching them on TV and they sound like a good deal. What can you tell me?

When it comes to celebrity spokespeople pitching reverse mortgages on TV, don’t believe everything you hear. Many of these ads are misleading and don’t always give you the whole story. In fact, the Consumer Financial Protection Bureau recently issued a warning to seniors to watch out for these deceptive advertisements. With that said, here’s some helpful information on reverse mortgages.

The Basics

A reverse mortgage is a unique type of loan that allows you to borrow money against the equity in your house that doesn’t have to be repaid until you pass away, sell the house or move out for at least 12 months. At that point, you or your heirs will have to pay back the loan plus accrued interest and fees, but you will never owe more than the value of the house.

It’s also important to understand that with a reverse mortgage, you, not the bank, own the house, so you’re still required to pay your property taxes and homeowners insurance. Not paying them can result in foreclosure.

To be eligible, you must be at least 62 years old, own your own home (or owe only a small balance) and currently be living there.

You will also need to undergo a financial assessment to determine whether you can afford to continue paying your property taxes and insurance. Depending on your financial situation, you may be required to put part of your loan into an escrow account to pay future bills. If the financial assessment finds that you cannot pay your insurance and taxes and have enough cash left to live on, you’ll be denied.

Loan Details

Around 95% of all reverse mortgages offered today are Home Equity Conversion Mortgages (HECM), which are FHA insured and offered through private mortgage lenders and banks. HECM’s also have home value limits that vary by county, but cannot exceed $625,500.

How much you can actually get through a reverse mortgage depends on your age, your home’s value and the prevailing interest rates. Generally, the older you are, the more your house is worth, and the lower the interest rates are, the more you can borrow. For example, a 70-year-old with a home worth $250,000 could borrow around $136,000 with a fixed-rate HECM. To estimate how much you can borrow, use the reverse mortgage calculator at reversemortgage.org.

You also need to know that reverse mortgages are expensive with a number of fees. First, there is a 2% lender origination fee for the first $200,000 of the home’s value and 1% of the remaining value, with a cap of $6,000. Second, there is a 0.5% upfront mortgage insurance premium (MIP) fee, plus an annual MIP fee that’s equal to 1.25% of the outstanding loan balance. Finally, there are appraisal fees, closing costs and other miscellaneous expenses. Most fees can be deducted from the loan amount to reduce your out-of-pocket cost at closing.

To receive your money, you can opt for a lump sum, a line of credit, regular monthly checks or a combination of these. But in most cases, you cannot withdraw more than 60% of the loan during the first year. If you do, your upfront MIP fee will be bumped up to 2.5%.

Get Educated

To learn more, read the National Council on Aging’s online booklet “Use Your Home to Stay at Home,” which you can download at homeequityadvisor.org.

Also note that because reverse mortgages are complex loans, all borrowers are required to get face-to-face or telephone counseling through a HUD approved independent counseling agency before proceeding. Most agencies charge around $125 to $250. To locate one near you, visit go.usa.gov/v2H or call 800-569-4287.

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 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. 

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WASHINGTON NEWS

Candidates Debate over Tax Proposals

In the CNBC debate on October 28, ten Republican Presidential candidates responded to questions on their tax proposals.

Businessman Donald Trump proposed a plan to reduce personal and corporate tax rates. The nonpartisan Tax Foundation estimated the cost of his plan to be approximately $10 trillion over a decade. When asked to respond to the cost estimate for his plan, Trump replied by noting that CNBC commentator Larry Kudlow “loves my tax plan.”

At the debate, Sen. Ted Cruz (R-TX) advocated a flat tax plan. He proposed a 10% flat tax for individuals and a 16% flat tax rate on businesses. Cruz stated, “Imagine a 10% income tax, with every American filling out his or her taxes on a postcard or iPhone app. And abolishing the IRS as we know it.”

The plan by Cruz eliminates nearly all itemized deductions. He would retain mortgage interest deductions for loans up to $500,000 and would also permit charitable tax deductions.

Retired neurosurgeon Ben Carson has not yet published a detailed plan. He initially discussed a 10% flat tax plan based on the Biblical tithe. At the debate, Carson suggested that the flat tax rate for his plan will be closer to 15%. When questioned about a potential budget shortfall, Carson responded, “You also have to get rid of all the deductions and all the loopholes. You also have to have strategic cutting in several places. Remember, we have 645 federal agencies and sub-agencies. Anyone who tells me that we need every penny and every one of those is in a fantasy world.”

Ohio Governor John Kasich suggested that these three plans would lead to “trillions in debt.” He continued, “I am the only one on this stage that has a plan that would create jobs, cut taxes, balance the budget, and can get it done because I am realistic. You just do not make promises like this.”

Editor’s Note: As a service to our readers, your editor will continue to report tax proposals from the presidential candidates of both parties.

House Ways and Means Chairman?

On October 29, the House Ways and Means Chairman Paul Ryan (R-WI) was elected speaker of the House on a 236-184 vote. Reps. Kevin Brady (R-TX) and Patrick Tiberi (R-OH) immediately announced their desire to be selected as the incoming Chairman of the House Ways and Means Committee.

Tiberi sent a letter to the House Ways and Means Republicans. He pointed to the House and Senate failure to pass tax extenders for 2015 and stated, “On day one we need to provide leadership to address tax extenders before year’s end.”

Tiberi established three major goals. The next Chairman of Ways and Means must fix the federal infrastructure through a long-term highway bill. The second goal involves advocating free trade agreements such as the Transpacific Partnership. Finally, Tiberi plans to build a fair, simpler tax code through comprehensive tax reform.

Rep. Brady was second to Paul Ryan in the last election for Chairman of the House Ways and Means Committee. Brady stated, “The next Chairman of the Ways and Means Committee will have to hit the ground running. In addition to major accomplishments as leader of two subcommittees and Chairman of the Joint Economic Committee, I have worked hard to earn a reputation for fairness, hard work and respect for members’ opinions across the spectrum.”

Editor’s Note: Speaker Paul Ryan is expected to move quickly to fill the Ways and Means Committee position. There are imminent votes on the Highway Bill and tax extenders. It will require leadership from the Chairman of the Ways and Means Committee to move this legislation forward. 

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FINANCES

Stocks - Apple Reports Record Earnings 

Apple, Inc. (AAPL) announced its fourth quarter results on Tuesday, October 27. The company impressed investors by reporting record earnings.

Apple reported total revenue of $51.5 billion for the quarter. This represents an increase of 18.2% compared to the same quarter last year.

"Fiscal 2015 was Apple's most successful year ever, with revenue growing 28% to nearly $234 billion," said Apple's CEO Tim Cook. "This continued success is the result of our commitment to making the best, most innovative products on earth, and it's a testament to the tremendous execution by our teams. We are heading into the holidays with our strongest product lineup yet, including iPhone 6s and iPhone 6s Plus, Apple Watch and with an expanding lineup of cases and bands, the new iPad Pro and the all-new Apple TV which begins shipping this week."

The company reported quarterly net income of $11.12 billion. This represents an increase of 23.9% compared to the same quarter last year.

Apple's successful year is largely due to the company's impressive performance in China. The company generated $23 billion in operating income in China during Fiscal 2015 compared to $11.04 billion in Fiscal 2014.

Apple, Inc. (AAPL) shares ended the week at $119.50, up 1.2% for the week.

Ford's Profitable Quarter Not Enough

Ford Motor Co. (F) announced its third quarter results on Tuesday, October 27. The company's strong earnings were not enough to impress investors.

Ford reported total revenue of $38.1 billion for the quarter. This represents an increase of 11% compared to the same quarter last year when the company reported revenue of $34.9 billion.

"The Ford team delivered an outstanding quarter - with record third quarter profit, best quarter ever for North America, higher wholesales, higher revenue, higher market share and improved margin," said Mark Fields, Ford President and CEO. "We are delivering a breakthrough year."

The company reported quarterly net income of $1.9 billion or $0.45 per share. This is more than two times the net income reported for the comparable quarter last year.

While Ford reported impressive earnings, investors were expecting slightly more from the nation's second largest automaker. Analysts expected earnings per share of $0.47. After the earnings release, Ford's stock price immediately dipped 5%.

Ford Motor Co. (F) shares ended the week at $14.81, down 5.8% for the week.

Twitter's Guidance Disappoints

Twitter, Inc. (TWTR) announced its third quarter results on Tuesday, October 27. The company reported an increase in revenue during the third quarter, but also released fourth quarter guidance that disappointed investors.

Twitter reported total revenue of $569.24 million for the quarter. This represents an increase of 58% compared to the same quarter last year.

"We continued to see strong financial performance this quarter, as well as meaningful progress across our three areas of focus: ensuring more disciplined execution, simplifying our services, and better communicating the value of our platform," said Jack Dorsey, CEO of Twitter. "We've simplified our roadmap and organization around a few big bets across Twitter, Periscope, and Vine that we believe represents our largest opportunities for growth."

The company reported a net loss of $131.69 million for the quarter. This represents a smaller net loss than the net loss of $175.46 million that was reported during the comparable quarter last year.

Growth in the number of users that are active on Twitter every month has steadily declined for the past two years. Compared to last year's third quarter, Twitter's monthly active users grew 8% this quarter. That is Twitter's slowest growth rate since the company's initial public offering. Growth in the number of regular active users is critical to Twitter's goal of revenue growth. Twitter announced guidance of $695 million to $710 million in revenue for the fourth quarter, well below analyst estimates that the company will earn $741 million. As a result, Twitter's stock price fell almost 12% after the earnings announcement.

Twitter, Inc. (TWTR) shares ended the week at $28.46, down 7.1% for the week.

The Dow started the week of 10/26 at 17,650 and closed at 17,664 on 10/30. The S&P 500 started the week at 2,075 and closed at 2,079. The NASDAQ started the week at 5,031 and closed at 5,054.

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Bonds - Fed Policy Statement Causes Selloff 

The Federal Open Market Committee (FOMC) held its monthly policy meeting on October 27 and 28. In the policy statement released after the meeting, the FOMC announced that it will not raise the federal funds rate above its current level of 0-.25% for the month of November. The statement said that, "in determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress - both realized and expected - toward its objectives of maximum employment and 2% inflation."

"The statement has led the bond market to take the possibility of a rate hike in December more seriously," said Andrew Hollenhorst, Short-Term Interest Rate Strategist at Citigroup Global Markets, Inc. "December remains a live meeting." Latest data by the CME Group shows that investors and traders believe there is a 50% chance that the Fed will raise rates at its December meeting, up from 38% on October 27.

Higher interest rates reduce the value of outstanding bonds and make newly issued bonds more attractive. As such, investors worried about a December rate hike have an incentive to sell bonds today when the price is still high. The selloff following the Fed meeting caused the 10-year Treasury bond yield to rise to a one-month high of 2.18% on Thursday, October 29. The yield on the 10-year Treasury bond was 2.02% on Tuesday, October 27.

The pressure to sell eased somewhat Friday morning as bond yields began to fall slightly from Thursday highs. However, overall the market is still preparing for rising interest rates in the near future.

The 10-year Treasury note yield finished the week of 10/26 at 2.15% while the 30-year Treasury note yield finished the week at 2.93%.

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CDs and Mortgages - Interest Rates Remain Mostly Unchanged 

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, October 29. The report showed interest rates changed very little this week.

The 30-year fixed rate mortgage averaged 3.76% this week. This represents a slight decrease from last week when it averaged 3.79%. Last year at this time, the 30-year fixed rate mortgage averaged 3.98%.

This week, the 15-year fixed rate mortgage averaged 2.98%, unchanged from last week. The 15-year fixed rate mortgage averaged 3.13% one year ago.

"Treasury yields oscillated without a clear direction heading into the October FOMC meeting, as investors were confident there would be no rate increase," said Sean Becketti, Chief Economist at Freddie Mac. "The 30-year mortgage rate was little changed, declining just 3 basis points to 3.76% this week. While the FOMC left rates unchanged at this meeting, they kept a December rate hike as an option causing Treasuries to sell off in the latter part of the day, after our survey closed. Recent housing reports have done little to add or detract from the possibility of a December rate increase. Existing home sales were strong, contrasting with disappointing new home sales."

The money market fund finished the week of 10/26 at 0.3%. The 1-year CD finished at 0.6%.

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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, a college or university, 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 updated financial and gift planning information, please visit our website.
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The Global Church of the Nazarene Foundation

17001 Prairie Star Parkway, Suite 200

Lenexa, Kansas 66220 United States
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