"IN THE BEGINNING GOD CREATED THE HEAVENS AND THE EARTH" - Genesis 1:1
This simple statement at the beginning of the Bible is established once and for all the immutable relationship between ourselves and the world around us. All that we are, all that we have, comes from God and will one day return to God.
Jesus often talked about our relationship to the things we possess. In Luke 12:13-21 Jesus is asked about dividing a family inheritance. He replies with a story. A rich man decides to build new barns to hold his bumper crop, then to "eat, drink, and be merry."
However, "God said to him, 'Fool! This night your soul is required of you; and the things you have prepared, whose will they be?' So is he who lays up treasure for himself, and is not rich toward God."
We are stewards of God's bounty. Caretakers. For a brief period we are given time, energy, and resources. What we do with these gifts ultimately defines the character of our life and the depth of our spiritual understanding.
Gift planning is one expression of the wise use of the personal resources God has entrusted to us. Understanding gift planning and making it available through your church is both a ministry to the donor (giving the donor a means of thoughtfully transferring resources to the next generation), and to the church (helping the church to gather the resources necessary for its mission and the ministry).
What is Gift Planning?
Gift planning encompasses a variety of ways that gifts can be made to the church from accumulated resources. It usually involves financial or estate planning; however, it is not reserved for the wealthy. Gift planning is a means by which anyone concerned with the wise use of his or her personal resources makes a considered choice about their ultimate disposition.
In general planned gifts are made through:
A Bequest in a Will
A Life Income Gift...such as a pooled income fund, a charitable gift annuity, or a charitable remainder trust
Gifts of Special Assets (real estate, closely held stock, life insurance
Gift planning establishes a way for a donor to provide for family members while remembering the church as well. It often enables the donor to provide more for his or her heirs and to make a larger gift than though possible. It often reduces taxes. Planned gifts can be designated for an organization's general fund or for its endowment. Planned gifts are either outright gifts (i.e., gifts of appreciated securities, real property, personal property, etc.) or deferred gifts (i.e., charitable gift annuities, charitable trusts).
A Bequest in a Will
If you die without a will, the state will divide your assets among your spouse and children (regardless of their age); appoint an administrator that will cost the estate large fees; and appoint guardians, who may or may not have been your choice, for your minor children. The state makes no charitable contributions, and it will ensure that your estate pays as much tax as possible.
By making a will, you appoint your own administrator; you name the guardian of your minor children; you control applicable taxes; you can create a family or charitable trust; and you can share your resources with your family, church, or other institutions as you choose.
A bequest in a will can take the form of a set amount of money, a percentage of an estate, a specific asset, a trust, or the naming of a church-related organization as a contingent beneficiary.
Sample language for including our church in your will might be: "I give, devise, and bequeath (state amount, asset, or percentage of the estate) to Legacy Fund of the Church of the Resurrection, 399 Gregory Lane, Pleasant Hill, California, 94523, to be used (describe use) or as the Board of the Legacy Fund of the Church of the Resurrection deems appropriate."
Life Income Gifts
Life income gifts provide you or your designated beneficiary an income for life in exchange for your gift.
They can be established in several ways, the most common of which includes the Episcopal Church Foundation's Pooled Income Fund, a Charitable Gift Annuity, and a Charitable Remainder Trust.
In the Pooled Income Fund, gifts ($2,500 minimum) are "pooled" with other gifts and invested in a professionally managed investment portfolio. The donor receives the following benefits:
A guaranteed income for life. The amount of the income depends on the rate of return of the fund's investments. The income can also flow to another designated beneficiary.
An immediate federal income tax deduction. The amount of the deduction is usually based on the age of the donor and/or beneficiaries.
The elimination of the capital gains taxes if dunded through appreciated securities such as stocks, bonds, mutual funds, or real estate.
A possible reduction in estate taxes.
At the death of the final beneficiary, the property goes to the church or church-related beneficiary that you named.
The benefits of establishing a Charitable Gift Annuity are similar to that of a Pooled Income Fund with the following differences:
The income for life is guaranteed at a fixed rate.
A portion of the gift is deductible from income taxes.
Some of the income earned would be tax exempt.
The minimum gift is $5,000.
A Charitable Remainder Trust involves larger sums of money ($100,000 or more) and is individually managed. Like the Pooled Income Fund and Charitable Gift Annuity, the Charitable Remainder Trust provides income for life, an income tax deduction, relief from capital gains taxes (if funded through appreciated property), and a possible reduction in estate taxes.
A Charitable Remainder Trust can be added to over the years, and a portion of the trust can be set aside for growth as a hedge against inflation. The rate of return fluctuates based on the performance of the portfolio. If you are seeking a set rate of return annually, a Charitable Remainder Annuity Trust is an option to consider.
The Charitable Lead Trust, another estate planning tool, enables you to transfer assets to a trust that pays its income to the church or church-related organization for a set period of time. At the end of the term, the principal and all capital appreciation returns to you or others that you name.
Gifts of Real Estate, Appreciated Property, and Tangible Personal Property.
Real estate or securities can be the source of your gift to the church.
Using a Charitable Life Estate Contract, for example, you can deed your home, vacation home, farm, or condominium to the church and retain the right to live on the property and/or receive income from the property as long as you live. You receive an income tax deduction when the property is deeded to the church and avoid any capital gains taxes when making the transfer. Your inheritance and estate taxes may be reduced at the time of your death.
Gifts of appreciated real estate or securities allow you to avoid capital gains taxes. It is important to transfer the stock or real estate to the church prior to selling it. However, if the securities or real estate have decreased in value, you should sell the assets before making the gift, thus establishing a capital loss and a potential tax deduction.
Gifts of tangible personal property, such as jewelry, coins, works of art, automobiles, etc. may also be given to the church. You are responsible for setting an appraised value on the gift. Any gift over $5,000 must be independently appraised.
Gifts of Life Insurance
Life insurance is another way to make a sizable gift to the church. For example...
You can purchase a new policy and make the church the owner and beneficiary of the policy. This enables you to "leverage" your gift, ultimately making a much larger gift than is otherwise possible. Contributions to the church to pay for the ongoing premiums become tax deductible.
You can make the church the owner and beneficiary of an existing policy. The current value of the policy is tax deductible, as are future premium payments. You can make the church a contingent beneficiary of an existing policy, i.e., name the church to receive the proceeds of the policy if the designated designated beneficiaries predecease the insured.
Also, you can use life insurance in conjunction with another planned gift. For example, you can purchase life insurance with the income received from a life income trust, thus replacing, and in some instances, surpassing, the principal removed from the estate by the gift.