Tax-Wise Planning to Grow Your Income and Ensure a Legacy

Presented by:

Michael Occhipinti, MBT

Gift Planning Advisor Wycliffe Foundation

&

Scott Talbot, CFP®, CAP®

Director of Planned Giving The Great Commission Foundation

The JESUS Film Project

1. Paying the Bills

2. Caring for Loved Ones

3. Donating to Worthy Causes

4. Paying Our Taxes

5. Outliving Our Assets

Managing One’s Finances Can Be a Challenge.

Increased Income

Increased Donations

Reduced Taxes

Double-Duty Dollars

Strategic Planning can Provide Solutions

Charitable Gift Annuity

Charitable Remainder Trust

Giving Plans that Pay You Income

Charitable Gift Annuity What Is It?

A charitable gift annuity (CGA) is an agreement between a

donor and charity. In exchange for the donor’s irrevocable

gift, the charity is contractually obligated to pay a fixed

lifetime income to one or two annuitants.

Charitable Gift Annuity How Does It Work?

Income for Life

Gift

Cash, Stock, other appreciated assets

Charitable Gift Annuity

Ministry

Gift $ (at death)

Benefits:

Receive income for life (One Life or Two Lives)

Take an income tax deduction

Receive fixed income partially tax-free

Gift portion paid to ministry after death

Why Consider a Charitable Gift Annuity?

Income: Continued low interest rates hits seniors and

retirees particularly hard. CGA’s offer very attractive rates

Tax-free income component

Security

Cannot outlive a CGA

Income is fixed

General obligation of charity

Partially avoid capital gains taxes

Charitable legacy

Sample Age & Rate Chart

Case Study #1: Cash Mary Needmore

Mary is 78 and is in the 15% tax bracket.

Mary has $50,000 in a CD paying 1%.

She wants a higher return without risk.

She wants to help spread the gospel in Africa.

Case Study #1: Cash Mary Needmore

Charitable Gift Annuity vs. Certificate of Deposit

CD Gift Annuity †

Rate 1% 6.40%

Before Tax Income $500 $3,200

After Tax Income $425 $3,133

Donation $0 $50,000

Tax Ded / Savings $0 $22,188 / $3,328

† $2,755 Received Income-Tax-Free † Yields the Same as a Fully-Taxable 7.9%

Case Study #2: Stock George & Barbara

George & Barbara are age 82.

They own $100,000 of stock which they bought for $30,000.

They are receiving 1.5% in dividends.

They need more income and less risk.

They are concerned about paying capital gains taxes ($15,000).

They want to leave a legacy gift to further God’s kingdom.

Case Study #2: Stock George & Barbara

Charitable Gift Annuity vs. Stock

Stock Gift Annuity †

Rate 1.5% 6.10%

Before Tax Income $1,500 $6,100

After Tax Income $1,080 $5,109

Gift $0 $100,000

Tax Ded / Savings $0 $41,556 / $11,635

† $1,535 Received Income-Tax-Free † Yields the Same as a Fully-Taxable 8.0% † Partial Bypass of Capital Gains Tax; Remainder Spread Out Over Life Expectancy

1. Stock, Land, Rental Property, Vacation Home, Business

2. Capital Gains Tax: Fed (15% - 23.8%) + State (0% - 12%)

3. Depreciation Recapture: 25%

4. Donate the asset, give away the tax liability!

Appreciated Assets

Donate the Entire Asset Prior to Sale

Donate a Portion of the Asset (Gift/Sale)

Donate the Asset to a Charitable Remainder Trust

• Avoid all Long Term Capital Gains Tax

• Take an income tax deduction

• Receive income for life

• Make a charitable donation after death

Ways to Avoid Capital Gains Tax

The Charitable Remainder Trust A

t Death

Income

Asset Transfer CRT

Benefits: Income Tax Deduction

Capital Gains Tax Avoidance

Ministry

Data Property Value $100,000 Cost Basis 20,000 Gain 80,000 Age 65 Life Expectancy 20 years Tax Brackets: Income 35% Capital Gains 22%

Assumptions

Sale of Property

Tax Comparison

Investment Comparison

Tax on Gain Charitable Deduction Tax Savings

To Invest Return @ 5%

$17,600 -0- -0-

-0- $14,000

$5,000

$82,400 4,120

$105,000 5,250

No Trust With Trust

CONCERNS:

Preparing to sell the farm and retire

Needed income for retirement

Wanted to make a large donation

Knew they were going to get hit with capital gains taxes

SOLUTION:

Charitable Remainder Trust

Donor Advised Fund

Marty and Loudean Martin

OUTCOME:

Avoidance of Long Term Capital Gains Tax

An income tax deduction

About 40% more income for life for the Martins

A significant immediate charitable donation

Another donation earmarked for ministry after death

Marty and Loudean Martin

Charitable Gift Annuity Charitable Remainder Trust Summary

Tax Deduction Gift Portion Present Value of Remainder Roughly the Same

Capital Gains Tax Avoided / Spread out Avoided CRT reduces Cap Gains tax

Ideal Age Better for Ages 65+ Works well for most ages Retirees may prefer CGA

Returns Fixed, Secure

Return of Principal

Flexible, Customizable

Can Vary

Depends on Risk/Reward

Tolerance

Administration Handled by

Charity

Attorney Creates, Trustee

Manages, CPA Tax Returns CGA is simpler, no cost

Charitable Beneficiary Issuing Charity One or multiple charities

Can change

CRT greater flexibility

for multiple charities

Strengths Simplicity & Consistency Flexibility & Complete

Cap Gains Tax Avoidance

Depends on goals, desires,

comfort level of donor

Comparison of CGA & CRT

Our services are designed for you, our partners. This is our ministry to you.

Your information is kept confidential, and there is never any cost or obligation to give.

We can interact with your trusted advisors, as desired.

You may have multiple charitable interests. We believe it is the Holy Spirit’s job to tell you where to give.

How Can We Help You?

Why Include Us on Your Team?

No cost, no pressure, no hidden agenda

Help from friends you know and trust

Understand all of your options

You will reap the benefits of wise stewardship

Please feel free to contact Michael or Scott. We look forward to the opportunity to be of service to you and pledge our finest efforts and complete confidentiality.

Scott Talbot, CLU®, ChFC®, CFP®, CAP®

Director of Planned Giving Phone: (877) 281-2006 stalbot@gcfccc.org www.gcfccc.org

Michael J. Occhipinti, MBT Gift Planning Advisor Phone: (800) 681-5103 michael_occhipinti@wycliffe.org www.wycliffefoundation.org

May we be of service to you?

Michael J. Occhipinti, MBT Gift Planning Advisor

Phone: (800) 681-5103 michael_occhipinti@wycliffe.org www.wycliffefoundation.org

Scott Talbot, CLU®, ChFC®, CFP®, CAP®

Director of Planned Giving

Phone: (877) 281-2006 stalbot@gcfccc.org www.jesusfilm.org/donate/planned-giving