The Global Church of the Nazarene Foundation of Lenexa, Kansas, United States eNewsletter for Saturday, January 30, 2016

The Global Church of the Nazarene Foundation of Lenexa, Kansas, United States eNewsletter for Saturday, January 30, 2016

Dear friends:

To begin the new year, I will be spending the next few weeks highlighting a few of the most effective gift models available for planned and deferred giving through the Foundation. My hope is that this will be both informative and perhaps useful--either now or sometime many years into the future.
Non-cash Gifts
When most people think of giving, they think of writing a check, putting cash in the offering plate, or typing in a credit card number online. However, there are actually many gift options that cannot fit in an offering plate and do not come from your checking account. A Non-cash Gift can consist of many different items of marketable value, including real estate, stock or bonds, personal property, livestock, or agricultural product. These kinds of gifts often enable people to give more than they ordinarily could with cash.
Although many local churches do not have the resources to accept gifts of appreciated stock, real estate, or other assets, the Foundation is able to assist with these gifts on their behalf. Instead of selling your stock or property yourself, you can give it straight to the Foundation. We will handle all the work of selling the asset and then distribute the money to your local church. This also results in greater tax savings, because you will receive a tax benefit for the gift plus avoid capital gains tax on the sale.
For more information on non-cash gifts, please contact us by phone at (913) 577-2983 or by email at info@nazarenefoundation.org. Let us help you find the giving solution that is right for your unique situation.
Blessings,
Ken Roney
President

WASHINGTON NEWS

Healthcare Premium Tax Credit ReportingUnder the Affordable Care Act (ACA), over 4.6 million taxpayers received a premium tax credit (PTC) in 2014 and 2015. In FS-2016-5 the IRS explained various healthcare tax credit requirements.
The premium tax credit is available for families and individuals with income from 100% to 400% of the federal poverty line. The 2015 qualified income amount for a family of four is up to $94,400.
When setting up insurance under the ACA, a taxpayer may estimate his or her income. The available premium tax credit may be paid in advance if the taxpayer prefers. If you receive a premium tax credit paid to the insurance company, you later will need to file IRS Form 8962 “Premium Tax Credit” with your tax return. The amount of credit that you received must be reconciled through this form. This calculation may require payment of an additional premium or add to your tax refund.
The IRS offers specific examples for a family of four. For example, assume that a married couple is filing a joint return and selected a “benchmark qualified health plan” on an approved ACA exchange. This family of four has income equal to 209% of the 2015 federal poverty line. The categories and amounts are listed by the IRS in the explanation letter.

Category	Amount
Expected Family Contribution	$3,300
Benchmark Plan Premium	$9,000
Chosen Plan Premium	$9,000
Premium Tax Credit	$5,670
Actual Family Contribution	$3,330

IRS Commissioner John Koskinen reported to Congress that 4.6 million taxpayers needed to file Form 8962 in 2015 in order to reconcile their 2014 premium tax credit. Over 3 million did file the required form, but 976,000 taxpayers who received a premium tax credit failed to include Form 8962 with their return.
If these persons do not file an amended return, they may lose their 2016 premium tax credit. Their monthly plan will continue to be available, but they may need to make the full premium payment each month to keep their medical insurance active. This will be a major hardship for lower-income persons.
Koskinen’s letter to Congress stated, “This is the first year for this new provision, and we expect that taxpayers will continue to better understand this process as it becomes routine. We are committed to learning from this experience so that we can improve our processes and enhance the support we provide in the future.”
The Affordable Care Act also mandates healthcare coverage in 2016, with limited exceptions. If you fail to obtain the qualified healthcare coverage, there is a penalty payment for the greater of $695 per adult or 2.5% of your income over the filing threshold.
Editor’s Note: Most of the taxpayers who received the premium tax credit and did not file Form 8962 are low-income persons. They may need to contact a tax preparer to file an amended return and restore their healthcare credit for 2016. There are several organizations that provide assistance, including the Voluntary Income Tax Assistance (VITA) program.
Where’s My Refund?
By February, the IRS will be processing millions of tax returns and sending refunds to taxpayers. IRS Commissioner John Koskinen plans to issue 90% of tax refunds within 21 days after you file.
Koskinen suggests that taxpayers should use the “Where’s My Refund?” feature on IRS.gov to monitor their status. Koskinen stated, “As February approaches, more and more taxpayers want to know when they can expect their refunds. There are not any secret tricks to checking on the status of a refund. Using IRS.gov is the best way for taxpayers to get the latest information.”
The “Where’s My Refund?” is normally updated overnight. Therefore, you should check on your status only one time per day. With an electronic tax return, your status will be available within 24 hours. If you file a printed tax return, the delay may be four weeks.
The “Where’s My Refund?” feature displays your tax return and refund status. It will indicate (i) Return Received, (ii) Refund Approved or (iii) Refund Sent.
Another option available for iPhones and Android phones is the “IRS2Go” app. You may download this app and check your refund status. In order to obtain information, you will need some of the information or numbers from your tax return.
Koskinen reminds taxpayers that calling the IRS about refunds will generally not be helpful. IRS staff do not research the status of a refund unless the “Where’s My Refund?” app directs you to call the IRS.
Taxpayers should also consider using the IRS Free File program. Statistics show that 70% of taxpayers have incomes under $62,000 and may use the free commercial tax preparation software on IRS.gov. This is a very convenient and safe way to complete your tax return for this year.

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PERSONAL PLANNER

'Wait A While' TrustBill and Clara were talking to their attorney Susan about their family.
Clara: "It may be time to start the inheritance process. Our children are now ages 35, 37 and 38. We might want to give them something during the next few years."
Bill: "Susan, when we spoke by phone, you thought that we might consider a 'Wait A While' trust."
Clara: "How does that work?"
Bill: "Well, the trust is funded with property and pays a fixed amount to charity for a period of years."
Susan: "We might think about a trust that pays for 12 years. You already make gifts to charity so we just would make those same gifts out of the trust. After 12 years, the trust will be distributed to the children. They will then be ages 47, 49 and 50."
Clara: "That's probably a very good time to pass property to them. They may still have children in college and they also will be thinking seriously about investing for their future retirement."
Bill: "Is this the right time to consider a 'Wait A While' trust?"
Susan: "You have come at a good time. Your estate is continuing to grow, both of you have prepared very well for your retirement and this is a good time to think about this trust."
Clara: "Is 12 years a typical length of time for this trust? As I understand the trust, our children will receive our inheritance after that period of time."
Susan: "You may choose the time. Twelve years is a very good option. We can fund the trust with a fairly substantial amount so that there will be a good start to their inheritance at that time. When we fund the trust, there will be a requirement to file a gift tax return and use part of the gift exemption that each of you have. However, you won't actually have to pay any gift tax at that time. In addition, this may save future estate tax. While it's very difficult to know exactly what the estate tax picture will be like in the future, there is a good probability that there will be an estate tax and this trust will produce large tax savings."
Bill: "Is this the primary reason to set up this lead trust? Our desire is to start planning for our children's inheritance."
Susan: "It is a very good reason. Another reason is to help your favorite charities with the payouts for the 12 years."
Clara: "I like the idea of starting the inheritance for children. With our growing estate, there will eventually be a larger distribution. By the time the children receive this first inheritance, they will be more mature. In addition, we'll still be here to offer advice and counsel."
Bill: "We thought that we might start this with about $500,000. We have a portfolio of stocks and bonds that has grown over the years. With this amount and some potential growth in the trust, each of our three children would receive about $200,000 after the trust has made the 12 years of payments to charity."
Susan: "A good idea is to transfer a securities portfolio that is comprised of around 60% stocks and 40% bonds. The bond income will be used first to pay the charities. With the bond income and stock dividends, we can take care of most of the payout. I suggest that the trust pay an annuity amount equal to 5% of the value. If you fund the trust with $500,000, then there would be $25,000 paid to charity each year. If we can earn more than 5% each year, the growth will be transferred to children at the end of 12 years."
Clara: "This sounds like a very good idea. Bill, let's move forward and ask Susan to prepare the documents. I know that this will be great for our children and for our favorite charities."
Charitable Lead Trust Solution
The "Wait a While" trust is called a charitable lead annuity trust. Bill and Clara plan to transfer $500,000 in stocks and bonds to the trust. Because it is an annuity trust, it pays an initial 5% of $500,000 or $25,000 fixed amount to the charity. Over a period of 12 years, the trust will pay $300,000 to charity.
Bill and Clara may select the charities when the trust is created or they may permit children to select charities each year. While most donors select the charities, it's also permissible to allow children to select part or all of the charities to receive the distribution.
The trust's stocks and bonds will continue to be invested. If the total return is 6.5%, it would grow to $630,000 over the 12 year period. Each of the three children would then receive approximately $210,000.
The trust may be funded with appreciated property. When the children receive their initial inheritance, there may be appreciation. However, the children will have two easy solutions to avoid paying any capital gains tax. If they are making gifts to charity, they may retain their cash income and use the appreciated stocks to make their charitable gifts. This will bypass the capital gain. Alternatively, if they do wish to sell, they could sell part for cash and transfer the balance into a two-life charitable remainder unitrust. The charitable savings from the trust would offset the gain on the part sold and again there would be no capital gains tax paid by the children.
Gift and Estate Taxes
Attorney Susan will file a Form 709 Gift Tax Return. She will report a gift of $500,000 with a charitable gift deduction of $245,000. There will be a taxable transfer of $255,000. However, this is significantly less than the $5.45 million gift exemption available to both Bill and Clara. Therefore, there will be no payment of gift tax now. Because the amount of the gift is fixed, if there is a substantial estate tax when Bill and Clara pass away, there will be added estate tax savings.
Summary
The "Wait a While" trust is an excellent plan to start an inheritance. It allows Bill and Clara to continue to benefit favorite charities for a period of years and then transfer the principal to children or other family members.
Their attorney Susan will file a gift tax return, but in virtually all cases there will be no gift tax payable because of the gift exemption. In all probability, the "Wait A While" trust will save a major future estate tax. Finally, it allows Bill and Clara to start an inheritance for the children and to give them advice and counsel on the best use of the funds.

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SAVVY LIVING

Could You Have COPD?I have struggled with some shortness of breath for the past five years or so. I just thought I was getting older and out of shape, but a friend recently mentioned I may have COPD. What can you tell me about this?
Chronic Obstructive Pulmonary Disease (COPD) is a serious lung disease that, over time, makes it hard to breathe. COPD is used to describe a variety of lung diseases, including, emphysema and chronic bronchitis. An estimated 24 million people have COPD today, but about half of them do not realize it.
Many people mistake shortness of breath as a normal part of aging or a result of being out of shape, but that is not necessarily the case. COPD develops slowly, so symptoms may not be obvious until damage has occurred.
Common symptoms include: an ongoing cough, a cough that produces a lot of mucus, shortness of breath (especially during physical activity), wheezing and chest tightness.
Those most at risk are smokers, former smokers over the age of 40 and people who have had long-term exposure to other lung irritants, such as secondhand smoke, air pollution, chemical fumes and dust. Additionally, Alpha-1-Antitrypsin, a rare genetic condition that causes ATT deficiency, can increase the risk of developing COPD.
If you're experiencing any of the aforementioned symptoms, you need to get tested by your doctor. Spirometry is a simple breathing test that your doctor can use to tell if you have COPD and, if so, how severe it is. Early screening can identify COPD before major loss of lung function occurs.
Unfortunately, there is no cure for COPD. However, if you do indeed have COPD, there are things you can do to help manage symptoms and protect your lungs from further damage, including:

• Quit smoking: If you smoke, the best thing you can do to prevent more damage to your lungs is to quit. To get help, the National Cancer Institute offers a number of smoking cessation resources at smokefree.gov or call 1-800-QUIT-NOW FREE. You can also ask your doctor about prescription antismoking drugs that can help reduce your nicotine cravings.
• Avoid air pollutants: Stay away from things that could irritate your lungs like dust, allergens and strong fumes. Also, to help improve your air quality at home you can remove dust-collecting clutter, keep carpets clean, run an exhaust fan when using smelly cleaning products, bug sprays or paint, ban smoking indoors and keep windows closed when outdoor air pollution is high (see airnow.gov for daily air-quality reports).
• Guard against flu: The flu can cause serious problems for people who have COPD, so you should get a flu shot every fall and wash and sanitize your hands frequently to avoid getting sick. You can also ask your doctor about getting the pneumococcal immunizations for protection against pneumonia.
• Take prescribed medications: Bronchodilators (taken with an inhaler) are commonly used for COPD. They help relax the airway muscles to make breathing easier. Depending on how severe your condition, you may need a short-acting version to use only when symptoms occur or a long-acting prescription for daily use. Inhaled steroids may also help decrease inflammation, reduce mucus and prevent flare-ups.

For more information, visit the COPD Foundation at copdfoundation.org or call the COPD information line at 866-316-2673 FREE.
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
A God-Honoring Estate Plan

Like so many others, my wife and I found ourselves without a current and viable estate plan in place. Although we had drawn up a pair of wills years before, it was a shock to see how out-dated and inadequate they had become. Our circumstances, finances, and interests had changed; but our wills had not. A last will and testament is supposed to provide instructions to family and friends about who and what was important to the will-maker in life. With time, our estate plan no longer reflected those values. And to just discard our old wills would leave us without a viable estate plan, causing state laws to take over and leaving our assets to be distributed to distant or unintended relatives, or possibly to the state itself. Neither result was what we wanted to leave behind.
So began our journey to develop a God-honoring estate plan that would include our family and the local church, as well as national and international ministries, after we are gone.
In 1985, my wife and I purchased a small family business from my parents. Over the years, the Lord blessed our hard work and commitment to quality products and services. After operating the business for a number of years, we began to realize that we had many employees who depended on us as well as a great deal of corporate responsibilities. It became obvious we needed an estate plan that would deal with the business issues as well as our personal goals.
About that time, we were invited to our first World Challenge in Tacoma, Washington. The effectiveness of the JESUS Film was very impressive. We appreciated how the JESUS Film Harvest Partners teams work with indigenous peoples to identify pastoral and lay leadership, and how they help establish preaching points and organize local churches to disciple new believers. As a result of that invitation to the Tacoma World Challenge, we included the JESUS Film Harvest Partners ministry in our new estate plan.
Some time later, in a more recent World Challenge, my wife and I were struck with the urgency of getting JESUS Film teams and equipment out to the field. We realized we didn't want to wait until we were dead and gone to support this ministry in a more meaningful way. We wanted to be a part of the ministry during our lifetime. So, we decided to make an immediate and significant pledge.
In order to implement this pledge, we engaged the services of the Foundation. With their help, we were able to establish an endowment fund, which will be funded over a five-year period. Each year, 95 percent of the endowment earnings will go the JESUS Film Harvest Partners ministry and the remaining 5 percent will be plowed back into the endowment to help grow the fund.
After we are gone, our estate will be distributed to various ministries through the Foundation in a God-honoring way. We are so impressed with the Foundation and thankful that we can have the joy of giving now and seeing the results because of our endowments. We are confident the ministries that are important to us will keep on receiving income in perpetuity.

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FINANCES

Stocks - Apple Reports Quarterly Earnings 

Apple, Inc. (AAPL) reported its full-year and quarterly results on Tuesday, January 26. The report revealed record revenue and net income for the tech giant.
Apple reported quarterly revenue of $75.9 billion. This was a 1% increase from revenue of $74.6 billion during the same period last year.
"Our team delivered Apple's biggest quarter ever, thanks to the world's most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV," said Tim Cook, Apple's CEO. "The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices."
Apple also announced record net income for the quarter of $18.4 billion. Last year at this time the company's reported net income was $18.0 billion.
While Apple boasted its record earnings, critics focused on the expected decrease in iPhone sales. On Tuesday, Apple reported the slowest year-over-year growth ever for its leading device. Since the iPhone accounts for two-thirds of Apple's total revenue, this news caused concern among many investors. However, with iPhone 7's expected release later this year, analysts remain hopeful Apple's stock will bounce back.
Apple, Inc. (AAPL) shares ended the week at $97.34, down 4% for the week.
Facebook Earnings Surpass Expectations
Facebook, Inc. (FB) announced its full-year and fourth quarter results on Wednesday, January 28. The company beat estimates as the number of users and ad revenue continue to rise.
Facebook reported full-year revenue of $17.93 billion, an increase of 44% from last year. Facebook's quarterly revenue was $5.84 billion, up 52% from the year-earlier period and beating the consensus estimate of $5.37 billion.
"2015 was a great year for Facebook. Our community continued to grow and our business is thriving," said Mark Zuckerberg, Facebook founder and CEO. "We continue to invest in better serving our community, building our business, and connecting the world."
Facebook reported net income of $3.69 billion for the full year and $1.56 billion for the quarter. Both figures were up compared to the same period last year.
Facebook's soaring revenue report was in large part due to its growth in mobile advertising. Today, mobile advertising makes up 80% of Facebook's advertising revenue. Mobile advertising alone produced $4.51 billion in revenue for the quarter, again exceeding analysts expectations.
Facebook, Inc. (FB) shares ended the week at $112.21 up 12% for the week.
Ford's Earnings Accelerate
Ford Motor Company (F) announced its full-year and quarterly results on Thursday, January 28. The company's results exceeded expectations.
Ford reported full-year revenue of $149.6 billion, surpassing last year's annual revenue by $5.5 billion. The company's quarterly revenue was $40.3 billion—$4.4 billion higher than in the year-earlier period.
"We promised a breakthrough year in 2015, and we delivered," said Mark Fields, Ford President and CEO. "In 2016, we will continue to build on our strengths and accelerate our pace of progress even further."
Ford reported that full-year and quarterly net income were $7.4 billion and $1.9 billion, respectively. The company announced fourth-quarter earnings per share of 58 cents, 28 cents higher than the same quarter last year.
Ford's quarterly earnings were mostly derived from the North America market where vehicle sales have been fueled by falling gasoline prices. Ford's popular F-Series pickup truck rose in sales by 15% in December. The F-Series has held the title of best selling truck in the United States for 39 years.
Ford Motor Company (F) shares ended the week at $11.94, down 3% for the week.
The Dow started the week of 1/25 at 16,086 and closed at 16,466 on 1/29. The S&P 500 started the week at 1,906 and closed at 1,940. The NASDAQ started the week at 4,575 and closed at 4,614.

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Bonds - Treasury Yields Hit Nine-Month Low 

Despite gains earlier in the week, Treasury yields began to fall midweek and hit a nine-month low on Thursday, January 29 when the 10-year note fell 4.9 basis points. Japan's introduction of negative rates, a weakening U.S. economy and a dismal report of December's durable goods orders contributed to the decline.
The Bank of Japan's surprise move to adopt a negative interest rate policy pushed up the prices of Treasuries and caused interest rates to fall. Analysts are calling Japan's move "a bold one" as Japan attempts to spur its economy and get inflation moving towards its target of 2%.
"The big news overnight was Japan going to negative rates, which quickly gave a bid to Treasuries and for that matter all of fixed income in general," said Justin Lederer, a Treasury strategist at Cantor Fitzgerald in New York. Stocks jumped worldwide as a result of Japan's shocking move.
Weak data regarding the state of the U.S. economy did not ease the pressure on yields. The U.S. gross domestic product expanded 0.7% in the fourth quarter, comparatively slower than the 2% growth in the third quarter.
Additionally, dreary durable goods data for December released on Thursday increased the demand for bonds. The December data revealed the biggest drop in 16 months for orders of U.S. manufactured goods.
"We are responding to the weaker capital shipments within the durable goods report ... it really puts downward pressure on tomorrow's GDP estimates," said Ian Lyngen, a senior government bond strategist at CRT Capital in Stamford, Connecticut.
The 10-year Treasury note yield finished the week of 1/25 at 1.93% while the 30-year Treasury note yield was 2.76%.

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CDs and Mortgages - Interest Rates Continue to Drop

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, January 28. The report showed interest rates falling for the fourth straight week.
The 30-year fixed rate mortgage averaged 3.79% this week. This represents a decrease from last week when it averaged 3.81%. Last year at this time, the 30-year fixed rate mortgage averaged 3.66%.
This week, the 15-year fixed rate mortgage averaged 3.07%. This was down from last week when it averaged 3.10%. The 15-year fixed rate mortgage averaged 2.98% one year ago.
"The recent market turmoil has given the Fed pause; as was universally expected, the Fed stood pat this week but kept its options open for a rate increase in March," said Sean Becketti, Chief Economist at Freddie Mac. "This week's housing releases confirmed the momentum of home sales going into 2016. A hesitant Fed, sub-4% mortgage rates (at least for a little while longer), and strong housing fundamentals should generate 3% increase in home sales this year."
The money market fund finished the week of 1/25 at 0.3%. The 1-year CD finished at 0.5%.

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To model generosity inspires others to do the same. Thank you for your interest in the Foundation as we strive to partner with churches, ministries, and Christians around the world to fund the important work of God's Kingdom.
To access updated financial and gift planning information, please visit our website, www.nazarenefoundation.org. If you would like more information about your charitable giving options or about how a Foundation representative can visit your church, contact us by phone at (913) 577-2983 or by email at info@nazarenefoundation.org.
The Global Church of the Nazarene Foundation, 17001 Prairie Star Parkway, Suite 200

Lenexa, Kansas 66220, United States
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The Global Church of the Nazarene Foundation of Lenexa, Kansas, United States Newsletter for Saturday, January 9, 2016

Dear friends:

To begin the new year, I would like to spend the next few weeks highlighting a few of the most effective gift models available for planned and deferred giving through the Foundation. My hope is that this will be both informative and perhaps useful--either now or sometime many years into the future.
A Donor-Advised Fund (DAF) is a tool that allows you to give now but decide on the purpose of the gift later. You can donate a lump sum of cash or give property, appreciated stock, or other assets. The Foundation then invests that money, and when you see a need or ministry project that you would like to give to, you simply request that we distribute funds from the DAF on your behalf.
A DAF is a great way to simplify your giving and can exist throughout your lifetime, even being passed on to your children in future years. It is a great alternative to a private foundation, and gifts from your giving fund can be distributed to any ministry, including your church, a missions project, or a college or university.
If you are interested in opening a Donor-Advised Fund, or simply have questions about the tax implications, giving process, etc. please do not hesitate to reach out. The Foundation is available at any time to speak with you by phone at (913) 577-2983 or by email at info@nazarenefoundation.org.
Blessings,
Ken Roney
President

WASHINGTON NEWS

Dr. Ben Carson Proposes a Flat TaxFollowing in the path of ten presidential candidates of both parties, Dr. Ben Carson published his proposed tax reform plan on January 5, 2016.
Carson proposes a 14.9% flat tax on income. He would protect those with lower incomes. They would pay a very small amount until they have reached 150% of the Federal Poverty Level (FPL). For a family of four, this amount is $36,375. Over that income amount, the 14.9% flat tax will apply.
The tax rate would be the same for personal income, corporate income, partnerships, limited liability companies and other small businesses.
The Carson plan eliminates itemized deductions. There would no longer be deductions for home mortgage interest, gifts to charitable organizations or for state and local tax payments.
He also eliminates several substantial taxes. There would be no tax on capital gains, dividends or interest. The alternative minimum tax (AMT) and the estate tax are also eliminated.
Carson does not plan to add other taxes. In contrast to plans offered by some other candidates, he notes, “Nor does it falsely claim to be a flat tax while still deriving the bulk of its revenues through higher business flat taxes that amount to a European-style value-added tax (VAT).”
A prime benefit of the plan is simplicity. Carson continued, “Through my flat tax plan, we will improve transparency and restore equal treatment in the collection of taxes.”
The Carson plan sets a goal of increasing the economy by 1.6% each year. If this growth is achieved, there will be five million new jobs over a decade and incomes would increase by over 10%.
The nonpartisan Tax Foundation estimates the plan will cost $5.6 trillion in lower tax revenue. If the projected economic growth occurs, there will be increased tax revenue, but the plan still would cost $2.5 trillion over a decade.
Editor’s Note: As a service to our readers, your editor will cover tax proposals by Presidential candidates from both parties.

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PERSONAL PLANNER

Trusts to Protect Children
Trusts are an excellent way to provide for the support and care of children while protecting them. Two important reasons to create a trust are to care for minor children or for a special needs child. In both circumstances, trusts can be an essential part of making plans to provide the best possible care.
How Trusts Work
There are several people and terms that you should know about to understand how trusts work. Let's examine the different people or terms that will be useful in setting up and operating a trust for children.
Trustee: A trustee will be charged with managing the property under the terms of a trust document. The three choices for trustee are a bank or trust company, a private trustee or a charitable trustee for a trust that benefits charity.
A trustee has a particular name—a fiduciary. This means that the trustee is required under state law to provide appropriate management of the trust. Based on the trust document that you sign as the trust grantor, the trustee will do his or her best to follow your intent.
Property: The trust exists to hold and manage property. While in many states a trust is legally in existence after you sign the trust document, it doesn't actually have any purpose until it receives property. Your trustee refers to this as the "funding" of the trust. The trustee will manage the property according to the terms of your trust document.
Investments: Under state law, your trustee is required to follow the standards of a prudent investor. In most cases, the trustee will invest in a portfolio of stocks and bonds. Approximately 50% to 60% of the typical trust portfolio is invested in a diversified group of stocks, with the balance invested in bonds.
Under the prudent investor rules, the trustee is obligated to diversify. Through diversification the risk of loss will be reduced and the probability that the trust will function as you intend is greater.
Income: Income is defined under the law as either ordinary income or capital gain. The interest from bonds and mortgage notes is ordinary income. Historically, trusts have paid out their ordinary income. However, because many trustees now have more than half of the trust property invested in stocks, trusts now may pay out a portion of recognized capital gain as income.
Capital Gain: Capital gain is the other type of earnings of a trust. While a portion of the capital gain represents principal and will be retained in the trust to benefit the remainder recipient, part of the gain under modern investment strategies is typically allocated to income. The trustee will look at the trust document to determine who will receive the income. Normally, the trustee will pay out on a quarterly basis the ordinary income and part of the recognized capital gains.
Remainder: Under the trust document, the trust will pay income for a period of time, such as a life of a person or a term of years. After all of the income payments have been completed, the trust principal or remainder is usually transferred to the beneficiaries.
For example, a trust was funded with $300,000 and paid income to children Billy, Susie and Linda until they were age 30. At that time, the trust remainder value of $300,000 was divided between the three children. Because each received one-third of the remainder, the inheritance amount for each child was $100,000.
Trusts for Minor ChildrenParents correctly understand that a minor child is not ready to receive a substantial inheritance. Therefore, it is very common for parents to create in their will or living trust a plan to set up a trust for minor children.
The trust for minor children frequently permits the trustee broad latitude to pay income and principal to the children or spend it for their healthcare or other needs. Because of this flexibility, the trustee of the trust for minor children is frequently a family member or professional advisor for the family. After all of the children reach a particular age, the trust is then usually distributed in equal shares to the then-living children.
Trust for Children Billy and MaryBill and Clara Jones are 36 and 34. They have two children—Billy (age four) and Mary (age one).
After visiting with their attorney, Bill and Clara signed their first will. If one of them should pass away, estate property and guardianship of the children will pass to the survivor. However, if they both pass away, then they have selected Clara's brother, Harold, and his wife as the guardians for the children. They also have selected Bill's sister, Susan, who is a CPA, as the trustee of their family trust for Billy and Mary.
CPA Susan has discretion under the trust instrument to make distributions of income or principal to Billy and Mary or to pay providers for their support or medical care. In order to provide maximum protection for Mary, the entire trust principal is retained until Mary is age 30. By that time, Bill and Clara believe that Mary will have completed her education and be well established in life. Even though Billy will be 33 and Mary will be 30, the trust principal will be divided equally between the two of them at that time.
With a family trust for minor children, the assets of the family are typically not large. Most trusts for minor children are funded primarily by term life insurance on the lives of Bill and Clara. Therefore, it is very common for the trust to continue in existence until the youngest child reaches the desired age. While this means that older children may have to wait longer for their inheritance, that is a secondary goal to making sure that the youngest children are all taken care of until they reach the selected age.
Special Needs TrustA child with a disability or special need will require both a caregiver and financial resources.
During the lives of the parents, they are often able to provide the required care for a special needs child. However, after they pass away, there may need to be a more structured option that involves a special facility for that child.
To plan for the case when both parents pass away, arrangements for the care facility and financial requirements of a special needs child should be made in advance. A special needs child often has no major assets and therefore is qualified for the Social Security SSI Program or for Medicaid.
However, if the parents were to give the child an inheritance outright or a vested income stream, then those funds will all be expended before the child could receive federal benefits. As a result, the special needs trust was designed to allow parents to provide help for children, even though the child may be receiving federal or state benefits.
The key to the special needs trust is that the trustee has complete discretion over principal and income. He or she may add the income back to the trust corpus, or may make distributions to the child or for the benefit of the child.
Because the special needs trust depends on federal and state laws that regularly change, an attorney who specializes in these trusts is often used to draft the specific provisions. However, there generally are several items the trustee can provide the special needs child and still maintain his or her qualification for federal and state benefits. These include a vehicle, a home, home furnishings, property for self-support, medical care and educational expenses.
The special needs trust also should have an intention to preserve the trust for a remainder beneficiary. Even though the special needs child may receive income and principal that actually does exhaust the trust, the hope that another entity or person would benefit from the remainder is quite helpful.

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SAVVY LIVING

Paying Income Tax on Social Security BenefitsWill I have to pay federal income taxes on my Social Security benefits when I retire?
Whether or not you'll be required to pay federal income tax on your Social Security benefits will depend on your income and filing status. About 35 percent of Social Security recipients have total incomes high enough to trigger federal income tax on their benefits.
To figure out if your benefits will be taxable, you'll need to add up all of your "provisional income," which includes wages, taxable and non-taxable interest, dividends, pensions and taxable retirement-plan distributions, self-employment and other taxable income, plus half your annual Social Security benefits, minus certain deductions used in figuring your adjusted gross income.
How To Calculate
To help you with the calculations, get a copy of IRS Publication 915 "Social Security and Equivalent Railroad Retirement Benefits," which provides detailed instructions and worksheets. You can download it at irs.gov/pub/irs-pdf/p915.pdf or call the IRS at 800-829-3676 FREE and ask them to mail you a free copy.
After you do the calculations, the IRS says that if you're single and your total income from all of the listed sources is:
Less than $25,000, your Social Security will not be subject to federal income tax.
Between $25,000 and $34,000, up to 50 percent of your Social Security benefits will be taxed at your regular income-tax rate.
More than $34,000, up to 85 percent of your benefits will be taxed.
If you're married and filing jointly and the total from all sources is:

• Less than $32,000, your Social Security won't be taxed.
• Between $32,000 and $44,000, up to 50 percent of your Social Security benefits will be taxed.
• More than $44,000, up to 85 percent of your benefits will be taxed.
• If you're married and file a separate return, you probably will pay taxes on your benefits.
• To limit potential taxes on your benefits, you'll need to be cautious when taking distributions from retirement accounts or other sources. In addition to triggering ordinary income tax, a distribution that significantly raises your gross income can bump the proportion of your Social Security benefits subject to taxes.

How to File
If you find that part of your Social Security benefits will be taxable, you'll need to file using Form 1040 or Form 1040A. You cannot use Form 1040EZ. You also need to know that if you do owe taxes, you'll need to make quarterly estimated tax payments to the IRS or you can choose to have it automatically withheld from your benefits.
To have it withheld, you'll need to complete IRS Form W-4V, "Voluntary Withholding Request" (irs.gov/pub/irs-pdf/fw4v.pdf), and file it with your local Social Security office. You can choose to have 7%, 10%, 15% or 25% of your total benefit payment withheld. If you subsequently decide you don't want the taxes withheld, you can file another W-4V to stop the withholding.
State Taxation
In addition to the federal government, 13 states - Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia - tax Social Security benefits to some extent too. If you live in one of these states, check with your state tax agency for details.
For questions on taxable Social Security benefits call the IRS help line at 800-829-1040FREE or visit an IRS Taxpayer Assistance Center (see www.irs.gov/localcontacts) where you can get face-to-face help.
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
Peace of Mind Gift Annuity

When Fred and Grace Bertolet retired after years in the ministry, they wanted to continue to support the Church. At the same time, they wanted to be faithful with what God had given them for their retirement.
After much research, they decided on a Charitable Gift Annuity.
This gift option allowed the Bertolets to:

• enjoy the security of regular, guaranteed income, even if interest rates drop;
• reduce their taxes;
• provide for the ministry of the Church after their death.Fred and Grace were so pleased with the results of their first Charitable Gift Annuity that they established 10 more, with payout rates ranging from 7.7% to 11.0%. Even though Grace has since passed away, Fred will continue to receive income for the remainder of his life. With each annuity they were able to designate the ministries to receive funding after their deaths. 

Charitable gift annuities have been a blessing to Fred and Grace Bertolet. They can be a blessing to you, too.

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FINANCES

Stocks - Sonic's Earnings Boom

Sonic Corp. (SONC), a chain of drive-in restaurants, announced its first quarter results on Tuesday, January 5. The company once again reported mid-single digit sales growth.
Sonic reported that revenue rose 4.3% during the quarter to $145.8 million. This topped estimates of $144.28 million.
"Improvements in core menu items, combined with limited-time-offer promotions, drove healthy same-store sales growth of 5.3% for the system during the quarter, building upon 8.5% same-store sales growth in the prior-year quarter," said Sonic Corp. CEO Cliff Hudson. "In addition to strong sales and profit growth, we are especially pleased to have repurchased more than 1.8 million shares during the first fiscal quarter at an average price of $25.73, representing 3.4% of our outstanding shares since fiscal 2015."
Sonic reported earnings per share of $0.24, a 33% increase from the same period last year. Estimates were for earnings per share of $0.23.
Sonic's earnings stood out in a marketplace where chains such as Chipotle and others have struggled in recent months. The company reported same-store sales growth during the quarter of 5.3%. Sonic's ability to grow revenue while maximizing profit is welcome news to investors. For the rest of the year the company is forecasting same-store sales growth of 2% to 4%.
Sonic Corp. (SONC) shares ended the week at $30.54, down 3.6% for the week.
Bed, Bath & Beyond's Profit Falls
Bed, Bath & Beyond Inc. (BBBY) announced its third quarter results on Thursday, January 7. The company's profit fell during the quarter.
Bed, Bath & Beyond reported that revenue during the quarter increased 0.3% to $2.95 billion. Estimates were for revenue to be $2.97 billion.
"During the third quarter, we experienced a low single digit percentage decline in our comparable sales consummated in-stores," said Bed, Bath & Beyond CEO Steven H. Temares. "At the same time, in our customer facing digital channels, we are pleased that we have seen continued growth in both number of visits to our selling websites as well as in the number of orders placed on both desktop and mobile."
The company reported that earnings per share fell to $1.09 compared to $1.23 per share during the same period last year. This number was in line with pre-release expectations.
Bed, Bath & Beyond revealed that comparable-store sales for the quarter fell 0.4% compared to a 1.7% rise during the same period last year. The company also had to cut third-quarter earnings guidance late last month because of sales that were below expectations. For the fourth quarter the company expects comparable sales to rise about 2%.
Bed, Bath & Beyond (BBBY) shares ended the week at $47.60, down 2% for the week.
WD-40 Reports Increased Profit
WD-40 Company (WDFC) announced its first quarter results on Thursday, January 7. The company reported an increased profit during the quarter despite falling sales.
The company reported sales during the quarter of $92.5 million. This is a 4% decrease from $96.4 million during the same period last year.
"Although foreign currency exchange rate fluctuations negatively impacted our reported sales, we continue to see maintenance product sales growth in local currencies in nearly all our markets," said WD-40 Company President and CEO Garry Ridge. "While we expect we will continue to see fluctuations in the performance of certain markets quarter to quarter, our long-term growth plans remain unchanged."
WD-40 reported net income during the quarter of $12.1 million or $0.83 per share. This was an increase of 12% compared to the same period last year.
WD-40 indicated that currency rates hurt its sales numbers for the quarter. Consequently, the company lowered its full-year sales guidance to between $393 million to $401 million compared to $400 million to $408 million previously. However, the company did raise its earnings guidance to $3.30 to $3.37 per share compared to $3.26 to $3.33 previously.
WD-40 Company (WDFC) shares ended the week at $97.59, relatively unchanged for the week.
The Dow started the week of 1/4 at 17,405 and closed at 16,346 on 1/8. The S&P 500 started the week at 2,038 and closed at 1,922. The NASDAQ started the week at 4,898 and closed at 4,644.

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Bonds - China Woes Drive Treasuries Down

Yields on Treasury bonds fell on Friday, January 8 after a week of global market turmoil led by a falling Chinese stock market. Concern about the global economy overshadowed an upbeat U.S. jobs report.
U.S. and global stock markets were dragged down this week on brewing concerns over the Chinese economy. China's stock market fell this week and didn't stabilize until Friday. Furthermore, China's currency has significantly weakened.
On the positive front, the most recent jobs report showed the economy adding 300,000 jobs in December. While this was good news, the report also showed weak wage growth during the month.
After the release of the jobs report, the benchmark 10-year yield rose to 2.197%, but it later fell to 2.119% as investors flocked to the safety of U.S. government bonds. As yields rise, prices fall.
The lack of wage growth in the latest jobs report is leading many investors and analysts to believe there is little chance the Federal Reserve will raise interest rates again anytime soon. "Wage inflation is still dormant, and I don't think this report is strong enough for the Fed to raise rates soon," said Gary Pollack, head of fixed-income trading in New York at Deutsche Bank AG's private wealth management.
Indeed, Fed funds futures show a 10% likelihood that the Fed will raise interest rates at its January 26-27 policy meeting. The odds of a rate increase at the March meeting are significa
ntly better at 48%.
The 10-year Treasury note yield finished the week of 1/4 at 2.13% while the 30-year Treasury note yield was 2.92%.

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CDs and Mortgages - Interests Rates Start 2016 Lower 

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, January 7. The report showed interest rates remaining below 4% to start the new year.
The 30-year fixed rate mortgage averaged 3.97% this week. This represents a decrease from last week when it averaged 4.01%. Last year at this time, the 30-year fixed rate mortgage averaged 3.73%.
This week, the 15-year fixed rate mortgage averaged 3.26%. This was up from last week when it averaged 3.24%. The 15-year fixed rate mortgage averaged 3.05% one year ago.
"Concerns about overseas economic developments have dominated financial markets to start the year," said Sean Becketti, Chief Economist at Freddie Mac. "U.S. Treasury bond yields fell amidst a global equity selloff and flight to safety. In response, the 30-year mortgage rate dipped 4 basis points to 3.97%."
The money market fund finished the week of 1/4 at 0.3%. The 1-year CD finished at 0.6%.

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To model generosity inspires others to do the same. Thank you for your interest in the Foundation as we strive to partner with churches, ministries, and Christians around the world to fund the important work of God's Kingdom.
To access updated financial and gift planning information, please visit our website, www.nazarenefoundation.org. If you would like more information about your charitable giving options or about how a Foundation representative can visit your church, contact us by phone at (913) 577-2983 or by email at info@nazarenefoundation.org.
The Global Church of the Nazarene Foundation

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