Church seminar in planned giving & charitable estate planning

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An example seminar for a church group on the topic of estate planning and planned giving

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Church seminar in planned giving & charitable estate planning

  1. 1. Charitable Estate Planning: A Christian Perspective<br />
  2. 2. Why plan?<br />Because we are responsible for our stewardship of resources<br />Because we care about others around us<br />
  3. 3. Estate planning problems in the Bible: Wastefulness<br />Luke 15:11-13. Jesus continued: “There was a man who had two sons. The younger one said to his father, ‘Father, give me my share of the estate.’ So he divided his property between them.   Not long after that, the younger son got together all he had, set off for a distant country and there squandered his wealth in wild living.”<br />
  4. 4. Conflict<br />Luke 12:13-14a. Someone in the crowd said to him, “Teacher, tell my brother to divide the inheritance with me.” Jesus replied, “Man, who appointed me a judge or an arbiter between you?” Then <br />he said to them, “Watch out! Be on your <br />guard against all kinds of greed;” <br />
  5. 5. Estate planning allows you to<br />Leave instructions such as rules to prevent wastefulness and disputes<br />Avoid taxes and expenses<br />
  6. 6. Which do you have?<br />Your Own Plan<br />The Government Plan<br />
  7. 7. Do you want the “government plan”?<br />Your spouse receives one-third of your separate personal property, children get the rest<br />Your spouse can use one-third of your separate real property, children get the rest. (If no children, spouse gets ½, rest to parents and siblings.)<br />Texas Probate Code Ch. II § 38(b)<br />
  8. 8. Do you want the “government plan”? <br />Minor child or grandchild receives entire inheritance… on his 18th birthday<br />
  9. 9. Projected investment decision<br />
  10. 10. Without a will, guardianship of minor children is decided in the courts<br />
  11. 11. If you were leaving on a trip for three weeks, would you leave instructions for the person watching your things?<br />
  12. 12. Simple: Division, guardianship<br />Complex: Trust plans<br />What kind of instructions can you leave?<br />
  13. 13. Example instructions<br />Maybe not in one lump sum<br />Maybe for specific items – education or first house<br />
  14. 14. Spendthrift protection<br />You can protect inheritance payouts from creditors, divorce, or heir borrowing against future income <br />
  15. 15. “A very rich person should leave his kids enough to do anything but not enough to do nothing”<br />- Warren Buffet<br />Instead of guaranteed income, match dollars earned.<br />Make income contingent on passing drug tests.<br />
  16. 16. Do you want the “government plan”?<br />I want all of the contents and values of my estate to be made public in court records.<br />I want any interested salespeople or swindlers to be able to find out exactly how much each of my heirs is receiving.<br />I want to pay the court costs and attorneys fees associated with a probate proceeding.<br />
  17. 17. You can choose to pass assets privately through non-probate transfers or living trust<br />
  18. 18. Do you want the “government plan”?<br />I want to pay the maximum estate taxes knowing in extreme cases this could leave as little as 20.25% of my estate after Dec. 31, 2012.<br />Estate taxes (55%) plus generation skipping taxes (55%) for a large estate being given to grandchildren with previous gifting combines for a 79.75% tax rate<br />
  19. 19. Do you want the “government plan”?<br />I don’t want to decide my medical treatment or have anything to say about who will make medical or financial decisions for me if I am incapacitated.<br />
  20. 20. Do you want the “government plan”?<br />I want to leave absolutely no money to any church or Christian organization<br />
  21. 21. If you want to leave money to a church or nonprofit organization, there are ways to get immediate tax benefits<br />
  22. 22. Giving a church or charity the irrevocable right to own farmland or a home after death by a remainder deed is immediately deductible<br />
  23. 23. Deduction for remainder interest in $100,000 of farm land by <br />age 59 donor<br />1.8% (Dec 10) $68,233<br />11.6% (May 89) $15,684<br />
  24. 24. A Charitable Remainder Trust allows a donor to set aside money from which he takes payments, with any remaining amount going to charity<br />Anything Left at Death<br />Initial Transfer<br />Donor<br />Charity<br />CRT<br />Payments During Life<br />
  25. 25. The donor gets an immediate tax deduction for the present value of the amount that may go to charity<br />Anything Left at Death<br />Initial Transfer<br />Donor<br />Charity<br />CRT<br />Payments During Life<br />
  26. 26. There are no capital gains taxes when the donor transfers to the CRT or when the CRT sells the asset<br />
  27. 27. A Charitable Gift Annuity trades a gift for a lifetime income<br />Typically larger organizations like LCU<br />Charity<br />2010<br />…<br /> 2011 2012 2013 2014 2015 … Death<br />
  28. 28. Example donor ages & rates July, 2010, American Council on Gift Annuities<br />30 3.7%<br />40 4.1%<br />45 4.4%<br />50 4.8%<br />55 5.0%<br />60 5.2%<br />65 5.5%<br />70 5.8%<br />75 6.4%<br />80 7.2%<br />85 8.1%<br />90+ 9.5%<br />
  29. 29. No capital gains tax is paid when transferred to charity<br />Charity<br />2010<br />…<br /> 2011 2012 2013 2014 2015 … Death<br />
  30. 30. 2011 Qualified Charitable Distribution for IRAs<br />Early distribution (before 59 ½)<br />Regular distribution (59 ½ to 70 ½)<br />Required minimum distribution (after 70 ½) <br />
  31. 31. After age 70 ½ participants must take required minimum distributions (account balance / remaining life expectancy) or pay 50% penalty<br />$10,000<br />IRA<br />$10,000 income<br />
  32. 32. Giving after 70 ½ <br />For 2011, congress extended the Qualified Charitable Distribution (QCD): counts toward required minimum distribution without income or deduction<br />$0 income<br />$0 deduction<br />IRA<br />$10,000<br />
  33. 33. Qualified Charitable Distribution (QCD)<br />No private foundations, donor advised funds, charitable trusts, or charitable gift annuities<br />IRAs or IRA rollovers only; no 401(k), 403(b), SEP, SIMPLE, pension or profit sharing plans<br />Participant 70 ½ or older<br />$0 income<br />$0 deduction<br />IRA<br />$100,000 per person maximum<br />$10,000<br />
  34. 34. There are many options in charitable planning and estate planning. <br />The biggest risk is putting it off until “tomorrow”!<br />

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