estate planning opportunities for believers…
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Estate Planning Opportunities for Believers…. Salem Nazarene Foundation Presentation March 4, 2007. Five Reasons Not to Make a Will. 1. The courts can do a better job deciding how to disburse your assets than you can. - PowerPoint PPT PresentationTRANSCRIPT
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Estate Planning Estate Planning Opportunities for Opportunities for
Believers…Believers…
Salem Nazarene Foundation Salem Nazarene Foundation PresentationPresentation
March 4, 2007March 4, 2007
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Five Reasons Not to Make a Will1. The courts can do a better job deciding how to
disburse your assets than you can.
2. The courts can choose a better personal representative to handle your estate during probate than you can.
3. The courts can choose a more caring guardian for your minor children than you can.
4. The government will use your estate tax dollars more efficiently than your church or favorite charity would use a charitable bequest.
5. Your grieving loved ones will be better off looking after your affairs without your will.
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Incorporated
September 1, 1983September 1, 1983
The Foundation shares the vision statement of Salem First Church of the Nazarene to promote the long-
term financial security and mission of the church.
Salem Nazarene Foundation
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2007 Board Members
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The Bible Memorial Fund
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In 2006, The Foundation . . .
• Gave an NIV Bible to each baptismal candidate for a total of 44 Bibles.
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In 2006, The Foundation . . .• Helped Matt Porter’s
college class go on a Work and Witness trip to New Orleans.
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In 2006, The Foundation . . .
• Helped Skyler Anderson fund his “Project Amazon” missionary trip.
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In 2006, The Foundation . . .
• Established The Firm Foundation Endowment Fund.
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In 2006, The Foundation . . .• Hired Gene Christian to assist our
congregation with estate planning.
• Over 22 years experience in planned giving and development.
• Leading regional authority in estate and charitable planning.
• Consultant for Luis Palau and various churches and para-church organizations.
K. Gene Christian, BA, MEA.
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Why So Much Attention On Estate Planning These Days?Why So Much Attention On
Estate Planning These Days?
• The Nation Is Aging Rapidly
• Overall Taxation Remains High
• Strength of Financial Markets
• Four Affluent Generations Alive Simultaneously
• Huge Transfer of Wealth Occurring
• 40% of Americans Have A Retirement Plan
• The Nation Is Aging Rapidly
• Overall Taxation Remains High
• Strength of Financial Markets
• Four Affluent Generations Alive Simultaneously
• Huge Transfer of Wealth Occurring
• 40% of Americans Have A Retirement Plan
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““GIVE IT TWICE”GIVE IT TWICE”
A Unique Strategy in Estate A Unique Strategy in Estate Planning…Planning…
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New Minimum Distribution New Minimum Distribution
Rules for IRAs Adopted Rules for IRAs Adopted
Four Years Ago…Four Years Ago…
Rational for “Give it Twice”Rational for “Give it Twice”
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The Old RuleThe Old Rule
Rational for “Give it Twice”Rational for “Give it Twice”
90/90/9090/90/90
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CORPUS GROWTHunder old minimum distribution rules
(assumes 10% annualized return)
10.5%
14.5%
20.0%
27.0%
8.0%6.2%
$-
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
$140,000.00
$160,000.00
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
$90,000
CORPUS
MANDATORY PAYOUTS
Rational for “Give it Twice”Rational for “Give it Twice”
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The New RuleThe New Rule
90/90/90/90/180180!!
Rational for “Give it Twice”Rational for “Give it Twice”
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PROJECTED CORPUS GROWTHusing new, uniform minimum distribution table
(assumes 10% annualized return)
4.60%5.70%
7.20%
9.50%
12.80%
3.80%
$-
$20,000.00
$40,000.00
$60,000.00
$80,000.00
$100,000.00
$120,000.00
$140,000.00
$160,000.00
$180,000.00
$200,000.00
-1.00%
4.00%
9.00%
14.00%
19.00%
24.00%
$184,080
CORPUS
MANDATORY PAYOUTS
Rational for “Give it Twice”Rational for “Give it Twice”
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Sample for “Give it Twice”Sample for “Give it Twice”
PROPOSED ESTATE PLANPROPOSED ESTATE PLAN
Stocks & Bonds
Life
InsuranceHome
Personal Effects
REIT SharesQualified Plan (IRA)
2nd Passing2nd Passing
“Give it Twice” Trust (CRT)
A substantial gift to Charity!A substantial gift to Charity!
12 years pass12 years pass
8% income8% income
each yeareach year
for 12 yearsfor 12 years(Heirs)(Heirs)
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QuestionsQuestionsor or
Comments?Comments?
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Why So Much Attention on Estate Planning These Days?Why So Much Attention on
Estate Planning These Days?
• The Nation is Aging Rapidly
• Overall Taxation Remains High
• Strength of Financial Markets
• Four Affluent Generations Alive Simultaneously
• Huge Transfer of Wealth Occurring
• 40% of Americans Have Retirement Plan
• Real Estate Values Have Risen Tremendously
• The Nation is Aging Rapidly
• Overall Taxation Remains High
• Strength of Financial Markets
• Four Affluent Generations Alive Simultaneously
• Huge Transfer of Wealth Occurring
• 40% of Americans Have Retirement Plan
• Real Estate Values Have Risen Tremendously
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A CASE ILLUSTRATIONA CASE ILLUSTRATION
REAL ESTATE SALE WITH A CHARITABLE TWIST…
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CASE PROFILE…CASE PROFILE…
•Bob (age 59) and Alice (age 58) Auburn
•He owns/manages a small residential construction
company
•She is an independent contractor currently consulting
for ODOT
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CASE PROFILE - cont.CASE PROFILE - cont.
•Nearing retirement - they want to travel more
•Don’t want to dramatically affect children’s inheritance - close family
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CASE PROFILE - cont.CASE PROFILE - cont.
•$200,000 life insurance on him
•$125,000 life insurance on her
•$328,000 his SEP-IRA
•$210,000 her 401(k) & IRAs from past employers
•$12,000 in ROTH IRAs
•$170,000 home paid off
•$320,000 rental properties (two homes)
•They have a $1,365,000 estate:
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Rental properties
A VISUAL LOOK AT THE A VISUAL LOOK AT THE AUBURN’S ESTATE...AUBURN’S ESTATE...
Life Insurance
Home
ROTHS
Her 401(k) & IRAs
His SEP IRA
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Sale vs. UnitrustSale vs. Unitrust
I. Analysis of Increased Income…
Sale vs. CRT • Value of Rentals $320,000 $320,000
• Closing Costs ($ 22,400) ($ 22,400)
• Taxable Value $297,600 $297,600
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Sale vs. UnitrustSale vs. Unitrust
I. Analysis of Increased Income Continued…
Sale vs. CRT • Taxable Value $297,600 $297,600
• Or. Cost Basis $ 88,000 N/A
• Cap. Gain Tax ($ 48,200) $ -0-
• Dep. Cost Basis $ 5,000 N/A
• Cap. Gain Tax ($ 26,500) $ -0-
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Sale vs. UnitrustSale vs. Unitrust
I. Analysis of Increased Income Continued…
Sale vs. CRT • Legal/App. Fees $ ? ($ 2,500)
• Investable Funds $ 223,000 $ 297,600
• Pre-Tax Income $13,400 $ 17,900
• 31.1-YR Exp. $795,000 $1,065,500
• PV of Income $269,000 $ 365,500
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TRADITIONAL WEALTH TRADITIONAL WEALTH ACCUMULATION…ACCUMULATION…
TODAY
NICE & BIG PERSONAL ESTATE
31.1 years pass
2037 AD
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Adding the Charitable Dimension...Adding the Charitable Dimension...
CRT
TODAY
NICE & BIG
ESTATEX BIG CRT
2037 AD
………………………………………………………………………….
Even LARGER Overall Estate!
=
Rentals
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Gift AnnuitiesGift Annuities
Charitable Retirement PlanningCharitable Retirement PlanningThrough...Through...
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Low Interest Rate Environment Low Interest Rate Environment Continues…Continues…
• One-year CD rates under 3%
• Money market funds – 1%
• Ten-year Treasuries – 4%
• Thirty-year Treasuries – 4.5%
• Long-term Corporate Bonds – 4-5%
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ChallengeChallenge
In Light of the Low Interest Rate In Light of the Low Interest Rate Environment What Can You do?Environment What Can You do?
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Consider a Gift Annuity!Consider a Gift Annuity!
Definition:Definition:
“… “…A simple contract between an A simple contract between an individual(s) and a charity which individual(s) and a charity which
provides three favorable outcomes by provides three favorable outcomes by virtue of one financial transaction…”virtue of one financial transaction…”
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Gift Annuity Rates…Gift Annuity Rates…
AGEAGE
60 5.7% 65 6.0% 70 6.5% 75 7.1% 80 8.0% 85 9.5% 90+ 11.3%
Single PersonSingle PersonCurrent RatesCurrent Rates
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Reasons People Do Gift Annuities…Reasons People Do Gift Annuities…
•Good Source of Retirement IncomeGood Source of Retirement Income
•Replace Decreasing Bond or CD IncomeReplace Decreasing Bond or CD Income
•To Purchase Long-Term Care InsuranceTo Purchase Long-Term Care Insurance
•Supplemental Income for Parent or Supplemental Income for Parent or GrandparentGrandparent
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Estate and Planned Estate and Planned Giving Services…Giving Services…
K. Gene Christian, BA, MEAK. Gene Christian, BA, MEA
The Salem Nazarene FoundationThe Salem Nazarene Foundation
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Services Include…
Free Will and Trust Planning Guide
Free Estate Inventory Form
Free Personal Planning Assistance
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QuestionsQuestionsor or
Comments?Comments?
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Thank You for Thank You for Coming to Sunday School Coming to Sunday School
Today!Today!