Legacy Living Newsletter planned Giving AG financial Solutions fall | Winter 2010
The Cross and the Switchblade
A story of stewardship few books have impacted the world like The Cross and the Switchblade. Selling over 14 million copies and translated into 35 different languages in 150 countries, the book also inspired a film, comic books and tracts, and has touched countless lives. When co-authors, John and Elizabeth Sherrill set out to tell the story of David Wilkerson and the gangs of New York City in the early 1960s, they intended to write only one article. As Elizabeth describes it, “We soon discovered that one story just didn’t cover enough, so we wrote another story, and then another. The more we worked on it, the more we looked at each other and said, ‘This feels like a book.’” When the resulting book manuscript was ready to be sent to the publisher, David took it to his garage which had been turned into his prayer closet. There he knelt down, placing the stack of pages on the seat of his chair. John reflects, “And as David read, he put his hands on every single page of the book, praying for the Holy Spirit’s own blessing of that page.” So from the very first, The Cross and the Switchblade was about ministry and stewardship. In time, due to the original publishers' financial problems, the Sherrills were able to acquire the publishing rights to the book. As the book’s new publisher, whenever they were presented with a request from a struggling overseas company who wanted to print the book, the Sherrills drew up a favorable
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agreement for a minimal price, often for just one dollar. The Sherrills were able to bless these ministries by being good stewards of what God had enabled them to accomplish. Recently the Sherrills placed their rights and interests from The Cross and the Switchblade into a Charitable Remainder Trust. The trust is providing income for John and Elizabeth for the rest of their lives. The remainder will then be gifted to Global Teen Challenge, as the named trust beneficiary, to help further its ministry. As John puts it, “The arrangement was good for all concerned.” What the Sherrills did A Charitable Remainder Trust (CRT) allowed John and Elizabeth to make a generous gift to ministry while still retaining income generated by the trust. Advice from the Sherrills “Don’t try and do anything alone, it is much too complex, much too complicated. Planning is a field for experts. We think that AG Financial Solutions were straight shooters and were very clear on what they did or did not understand and were just unbelievably helpful. Our experience has been one of unqualified appreciation.” The testimonial found on this page is an example of what we have done for clients, and what some of our clients have said about us. However, we cannot guarantee the results in any case. Your results may vary and every situation is different. No compensation was provided for the testimonial.
Welcome to Legacy Living We are excited to bring you the first edition of our biannual newsletter. We hope you will look to Legacy Living, as an ongoing source of practical, timely information on stewardship, estate planning, and other financial matters. This edition includes insight on how other donors began their legacies, an estate tax update, and much more. It is our desire that you be encouraged to consider creating your own legacy. Planning can make a difference and there is no better time than today to start. A planned gift can be used to reach the financial goals you have for yourself and your family, as well as to change lives for eternity. AG Financial Solutions stands ready to help and we look forward to sharing many more inspiring testimonies that highlight the generosity of individuals and families.
Donald M. Headlee Executive Vice President Chief Business Development Officer
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Legacy Living
The Charitable Remainder Trust
Generous giving with monthly income Managing retirement income is a challenge in the best of circumstances—let alone in an unstable economy. With record-low interest rates and high market volatility, this challenge is greatly amplified. Retirees nationwide living on fixed-income investments have seen their income substantially decrease as the interest rates on those investments continue to decline. You may be asking, “What now?” As believers with a heart for ministry, these conditions test our ability to balance smart financial planning and generous giving. The answer can be something as simple as the marriage of the two. And it could increase your income.
To receive confidential, objective advice, please call your planned giving consultant, or visit agfinancial.org for more information.
A Charitable Remainder Trust (CRT) may be the answer. A CRT is a tool that allows you to make a major gift to ministry while still retaining income generated by the trust. In fact, you may receive at least a 5% annual payout. With today’s low interest rate environment, now may be the perfect time to place cash in a CRT. CRTs are also ideal for assets like stocks or real estate with a low cost basis but high appreciated value. CRTs may also aid in reducing estate taxes and eliminating capital gains, while giving you an immediate income tax deduction for your gift to ministry.
Scenario: Increase income five-fold while giving to ministry Charitable Remainder Trust Example: Charles and his wife Claire, both age 78, have a $100,000 bond earning 1% interest. They now need additional income to offset the rising cost of medical care. They had planned to leave money to ministry but that now seems nearly impossible. By putting their asset into a CRT, they have been able to increase their income nearly 5 times while reducing various taxes and still leaving the remainder to ministry.*
Donor places asset in CRT with possibility of a charitable deduction.
Asset is sold, avoiding upfront payment of capital gains.
Asset value
100,000
$
Donor establishes a desired lifetime income of at least 5% annually. Trust could also potentially pay income to family for 20 years.
100,000
$
Asset is sold
$
78,711
Lifetime income benefit (Annual payments of $5,000 for life)
Ministry receives remaining amount when the end of the CRT term is reached.
107,733
$
Approximate gift to ministry
*This example is based on a hypothetical fact scenario and is intended for illustration purposes only. The terms, tax benefits, expected income and expected ministry benefit are dependent on several variables that are different in each situation, including age(s) of the donor(s), tax bracket of the donor(s), term of the trust, type of asset(s) used to fund the trust, type of Charitable Remainder Trust used, and investment of the trust assets. Consult your tax advisor for more information that is specific to your situation.
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Fall | Winter 2010
Insights & Answers
Is God against wealth? By Bob Lamb, Cfp® SVP Planned Giving and Investment Solutions I believe Luke 12:13-21 is one of the great Scriptures showing God’s attitude towards finances. The easy misconception with this passage is that God does not want us to achieve wealth. This is not the case. In the context of the story, the farmer was already considered wealthy in his time. The downfall for the farmer was his attitude when God blessed him beyond his financial needs. Instead of honoring the Lord with his blessing and giving back his abundance, the farmer lost sight of God as the source and owner of his wealth.
Living today in the world’s wealthiest nation, it can be very difficult for American believers to determine, “How much is enough?” As personal wealth increases, it is easy to adopt changes in lifestyle—lifestyles that require more and more of our resources. As with the wealthy farmer, we have to guard against holding on to our wealth. Rather, we should continue to honor the Lord, the giver of the wealth, by giving a portion back. This leads all of us to ask the question, “How big does our barn really need to be?”
Have an idea? Need an answer? This newsletter is for you. We would love to have your input and questions in order to address the topics that interest you most. In addition to our planned giving consultants, we have experts in a variety of fields to address your planned giving questions. Please contact us with your questions and input at 866.561.8860 or legacyliving@agfinancial.org.
What you should know
Estate tax law update By John Vaughan, JD Planned Giving Attorney Senator Chuck Grassley (R-Iowa), ranking Republican member on the Senate Finance Committee, is urging action from Senate Majority Leader Harry Reid (D-Nevada) and Finance Committee Chairman Max Baucus (D-Montana) in an attempt to move forward on changes to the estate tax laws before the current code reverts back to its pre-2001 state.
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The “unified credit exemption equivalent” is the measure of whether a deceased person’s estate owes federal estate taxes. The unified credit exemption equivalent has increased over the last decade until it reached $3.5 million. This allows estates under that amount to be exempt from estate tax. In 2010, the estate tax is repealed for a one-year period, so no federal estate tax will be owed on any estate that arises from a death in 2010. What happens in 2011? That question remains unanswered. The current law is set to revert the unified credit exemption equivalent back to $1 million in 2011. In that event, any estate greater than $1 million will be taxable. This means that more taxpayers—especially farmers, small businesses owners, or those with sizeable retirement plans or life insurance policies—will have estate tax exposure, not to mention exposure to a top estate tax rate of 55%.
Senators Jon Kyl (R-Arizona) and Blanche Lincoln (D-Arkansas) have presented a bipartisan plan that would create a permanent 35% tax on estates greater than $5 million (phased in over 10 years) and maintain the “stepped up” basis on inherited assets. Grassley has noted that the proposal will not gain traction without the backing of Majority Leader Reid. At the present time, there is no anticipated timeline for passage, but we will keep watching as things progress in Washington, D.C.
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Planned Giving
Legacy Living Newsletter A heart for giving. A mind for smart planning. Yes, you can do it all. Whether you’re approaching retirement or already have a giving plan in place, it’s crucial to stay informed about changes in tax and estate laws. Plus, new options are continually arising. This biannual newsletter delivers helpful information and solutions for your giving and retirement plans. Contact our team of experts today to get started.
Jim 417.
Jaso 417.
Lee 417.
Larr 417.
Cha 417.
Larry Lister
Jason Lister
Charles Reubell
Jim Schmidly
Lee Watson
417.861.1391 llister@agfinancial.org
417.872.9595 jlister@agfinancial.org
417.848.6756 creubell@agfinancial.org
417.848.2242 jschmidly@agfinancial.org
417.848.1586 lwatson@agfinancial.org
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