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Jeremiah 29:11 –“For I know the plans I have for you, declares the Lord, plans to prosper you and not to harm you, plans to give you hope and a future.”

We hope you have a better idea about the subject of planned giving from the previous five weeks and also about ways you can participate in it at St. George’s. You have no doubt realized that “one size doesn’t fit all” when it comes to planned giving. We have just scratched the surface of some of these topics, particularly with last week’s life income gifts or the donation of long term assets directly to the church.

What matters in the end is how your financial picture can improve at the same time the church benefits.  Some churches such as St. Paul’s Episcopal in Richmond have a long history of planned gifts from which they are benefiting.

Our planned gifts history has been spotty: We can do better. Gifts for our trusts and funds are requested only in Lent and Advent. I remember only one charitable annuity. We have at least eight people who have named St. George’s in their wills. The most significant gift was over $500,000, which brought the Endowment Fund to life and is the basis for the gifts it makes yearly for church projects.

Please consider the vast range of possibilities and then come forward and make a gift yourself. We can definitely do better.  In any case, the next step is yours, with some examples from this series:

• Consider a gift this Easter for the Memorial Trust Fund or Endowment Fund. There are no minimum amounts. Anyone can do this. The donation will live on beyond this Easter or next.
• If you don’t have a will, consult an attorney in 2017 and make one. If you have one, have you reviewed it recently for provisions that need changing? Please consider adding a gift to St. George’s in your will.
  
• Do you have any appreciated stock? You may have thought about selling it since it has done well. Consider donating it to St. George’s in the name of the Memorial Trust Fund or Endowment Fund, and let the church sell it for you, giving you a deductible contribution for the value of the appreciated stock on the day of donation and saving you capital gains tax as well.
• Similar advice is for other long term assets. Consider making a listing of your long term assets to see how they could be made to work better for you.
  
• Are you needing additional income?   Transfer assets to Charitable Annuity or trust. You will still have them but gain a tax deduction on the year of donation, income over a number of years with the residual passed on to St. George’s.  Planned Giving for all parties in one stop!
• Do you have a charitable IRA and are 70.5 or approaching that age? Do you need the “required minimum distribution” (RMD)? If not, have your IRA holder transfer the RMD to us and avoid the tax impact!

In any case, I would definitely talk to your accountant, financial planner or attorney for additional suggestions on how planned giving can benefit your financial situation as well as the church.  If you need names of professionals, please contact me for some suggestions without any endorsements.

I am ending these articles with a question for you – “Were these articles helpful? Are you more likely to make that planned gift? Do you have questions you would like an answer?    Let me know: ben.hicks@stgeorgesepiscopal.net.

Planned Giving in Lent – Part 5 

Matthew 6:21 –“For where your treasure is, there your heart will be also.”

Our final destination – charitable annuities and charitable trusts.

These products are sometimes called life income gifts since they grow out of donor’s lifetime income stream and they are managed for you.  They are somewhat more complicated because of this. You need a third party to draw up a contracts and to manage the life income gift. The new Diocese of Va. Planned Giving site has that capacity –  as well as providing a deeper treatment of life income gifts than what I can do here.

Life income products are typically designed for older parishioners. There may be minimum age requirements and minimum investable amounts.  For example, with the charitable annuity at the Episcopal Church Foundation, there is a minimum age of 55 and a minimum contribution of $5,000.

The opportunity to make life income gifts grew out of the 1969 tax reform act, which, for the first time, made a distinction between an asset and its earnings, enabling a person to keep the asset and give away the earnings, or to keep the earnings and give away the asset.

The several forms of life income gifts but they essentially work the same way:

1. Assets are transferred to an entity such as the Episcopal Church Foundation (ECF).
2. The ECF invests the assets, (or sells them) and produces income, which is paid to the donor and/or spouse, or another person if desired. In many cases, the income is generated monthly.
3. At death or at the end of the term the remaining funds will go to the church.

The advantage is that you don’t have to sell your income-producing assets to take advantage of life income gifts.  If you are younger and feel pressure to save for retirement or you are older at retirement on a fixed income, these products may be of interest. If your assets are “tied up” in an investment, such as a beach home or business, this may work for you.  Don’t sell the asset, but transfer it to an entity like the ECF and have them set it up in an annuity or trust.

A Charitable Gift Annuity is a contract between a donor and the ECF through which the Foundation promises to pay a fixed annuity income to a donor for the rest of his or her (or their) life.  These amounts are guaranteed. There are both for singles and couples. Generally you give cash and securities to establish the annuity.

There are several benefits for the donor:

1. Receiving a tax deduction on the year you make the gift based on your age.
2. Donating the asset but not giving up the assets earning power. The asset is invested and you will received annuity payments over each year, in many cases a monthly or quarterly check. There is also a variant – a deferred gift annuity where you establish the gift annuity today, receive a charitable income tax deduction this year for the gift, but defer the payments until a designated date sometime in the future.
3. A portion of each annuity payment is tax free— also determined by Treasury tables.
4. At death, the annuity is completely excludable from the donor’s taxable estate since it goes back to the ECF and then St. George’s.

A Charitable Remainder Trust is similar to the Charitable Gift Annuity; the difference is that your return is not for the rest of your life, but over a specific period, generally a maximum of 20 years.  Also your return may be either a fixed percent based on market value on the date trust was created (annuity trust) or a fixed percent based on the value on specific date of the year (unitrust). The latter payout will vary since it is based on the investment performance of the assets.

Note that unlike the charitable annuity there is no guaranteed return.  Another difference is a wider variety of assets that can be transferred, including real estate. You transfer your assets into a trustee who is responsible for selling appreciated assets, and investing and reinvesting those assets, together with any income therefrom, and for making distributions to you and/or your designated beneficiary. When the trust terminates the remainder would go to St. George’s.

I am ending these articles with a question for you – Would a life income gift be a planned giving vehicle you would be willing to consider? Why or why not? What attracts you and also what causes you concern?  Let me know ben.hicks@stgeorgesepiscopal.net.  I will pick the best answer or if there are too many a random one that is complete. The winner gets at $5 Hyperion card to “have one on me.”