Get Our Email Newsletter!
Leaving A Legacy of Values
From the moment a parent's eyes first meet the gaze of a newborn, an overwhelming desire to care and provide for their new baby has a way of becoming paramount. At times, that parental instinct is so basic that it drives lifestyle decisions and direction. Virtually every mother or father has a deep desire to provide not only an inheritance for children . . . but a lasting legacy, as well.
This is dedicated to the reality that legacy, and not necessarily inheritance is what really shapes the future.
Where character is taught, encouraged, and nurtured, a legacy of values will echo for generations.
Legacy of Values
In an era that will see history's largest transfer of wealth from one generation to the next, many parents want to insure that the inheritance they leave will be transferred in the most responsible way possible. While it is impossible for an estate plan to be the sole component in character development, it can be an effective tool in the nurturing of values.
When it comes to values, initiative and integrity are two of the ingredients most parents would love to instill in their children. For many parents, estate planning that injects additional time into the transfer process - even after the passing of both mother and father - is an attractive option.
Given ample time, maturity often overtakes the notions of youth.
A Four Tier Transfer
Learning how to deal with financial assets must, of course, begin long before adulthood. However, when dealing with what may amount to a bequest of significant wealth, many parents appreciate a plan that allows a child to learn to handle assets in increments. The easiest way to start this process is through lifetime gifts.
Lifetime gifts make it possible to begin transferring asset value while mother and father are still living. Often, these annual gifts are made in the form of stock, encouraging wise management for growth in value.
There is no magic age at which these gifts should begin; however many parents begin these transfers when children are in their thirties or forties.
The second stage of transfer comes at the time both mother and father pass away, and involves the transfer of estate principal. The utilized for this purpose.
Even as principal is transferred, the values and objectives of the parents are underscored with the third stage of the transfer - the creation of a stream of income. This income stream is often made possible by a charitable remainder trust. The trust pays income for a period of time - up to twenty years - and the principal, or remainder of the trust is then transferred to a charitable beneficiary (or beneficiaries) named by the parent(s).
Finally, in larger estates a fourth stage - the gift of deferred principal -- completes the transfer of inheritance. This maybe accomplished through the use of a Testamentary Lead Trust. The Lead Trust is funded at the time of the second death with an income producing asset. For a prescribed period of years, the income generated by the trust goes to charity. At the end of the term of years the asset is then returned to the family.
The Value of a Plan
Clear objectives and careful planning mean that your estate plan will echo your values.
No matter the size of the inheritance, everyone will leave a legacy. By utilizing the planning tools available, it is possible for that legacy to mirror values as well as transfer assets.
If you'd like more detailed information on how your estate plan can be tailored to meet your objectives . . . and leave a legacy of your values, we invite you to call or write. All communication is confidential.
Other Options To Meet Your Objectives
This brochure shows one example of how charitable tax planning offers philanthropic individuals and families a win-win proposition. .
Our Director of Estate Planning, Richard Dorsey, ACSE is available to visit with you to discuss this and other estate planning matters. He meets for no fee, no obligation and confidentially. Simply contact him by calling 616-696-5444 or e-mail him at rsbdorsey@aol.com. He is also available to speak in churches regarding the stewardship of estate planning.
This information is not intended as legal advice. Please contact your professional as necessary.
Will Your Will Be Known
"The Traveler never expects the journey will end before the destination is reached." -- E. F. Randolph
This must be one of the reasons for the startling fact that each year approximately seventy percent (70%) of the adult Americans who die leave no personally prepared statement of their will. Many who have prepared a will need to update it. We emphasize personally prepared, because a last will and testament is in place for those who do not choose to have their own unique document created: it was written by the law makers of the state, and is a one-size-fits-all document.
This raises the question, "Who needs a personal will?"
Many may presume, in the case of a modest estate, that a will represents unnecessary paperwork. This probably stems from the view that the sole function of this document is to outline property distribution. And while it is true that the will helps to avoid any potential confusion over specific ownership, the real purpose of a will should be seen in a much broader context.
Your will is really your final opportunity to communicate with those you care for most.
So, even in cases where there may be no property distribution issues, the will offers a forum for:
" naming an Executor for your estate " identifying your choice as the guardian for any minor children, in the event of the death of both parents " remembering individuals and families who would not otherwise be beneficiaries of your estate " remembering a favorite charity
Property Distribution
Even in the most modest estate, the distribution of specific items is often one of the most powerful forms of communicating. To begin with, a will allows you to name an Independent Executor -- one person, hand picked by you -- charged with the responsibility of gathering all that comprises your estate, and adhering to the terms specified in your will.
Whether your wish is that your musician son receive the family piano, or that a special piece of jewelry be bequeathed to a favorite niece, the personally prepared will is the easiest way to ensure that your wishes are known -- and respected.
In the absence of a personal will, the settlement of an estate can be unnecessarily costly, and each state has its own set formula for property distribution.
For example, when an individual dies without a will (dies intestate), and is survived by a spouse and two children, the law specifies distribution -- without respect to special needs or circumstances. In addition, if the children are minors the law may require that a guardian be appointed. And while this is almost always the surviving spouse, the absence of a will means that a bond could have to be posted.
Rarely does the "one-size-fits-all" will prepared by the state accurately reflect all the wishes of a decedent. And there is no provision for charity.
The Charitable Bequest -- A Powerful Planned Gift
For centuries history reflects that individuals have used the last will and testament as a forum for expressing their philanthropic wishes. And the charitable bequest has become the easiest and most common method used by Americans to support the charity (or charities) of their choice.
A bequest may be as general or as specific as the donor wishes. The will may designate a dollar amount, specific property, a percentage of the estate, or the bequest may be contingent on other events outlined in the will. And, should the donor desire, the purpose for which the bequest is to be used may also be expressed.
In most cases, the estate has assets that have never been tithed upon. These may include life insurance (death benefits), retirement or tax deferred funds, appreciation on stocks and land, appreciation in your home, etc. The bequest may be an excellent way to remember that the Lord gave you all you have with an appropriate percentage dedicated to His work.
A Charitable Bequest May Reduce Estate Taxes
When a bequest is made to a qualified charity like Lake Ann Baptist Camp, it results in an estate tax deduction when the will is probated, and effectively reduces any estate tax owed. Depending on the size of the estate and the value of the bequest, this deduction can have a dramatic impact on the shrinkage due to estate taxes.
Probate
What is it?
Most simply, it is a legal process whereby the deceased individual is assured to have their estate and dependents cared for in a legal and appropriate manner.
Is probate a bad thing?
Not necessarily. It came into effect to ensure the who, what, when and where of an estate were carried out properly. In some cases, whether accidentally or intentionally, mistakes were made and the deceased person's estate did not accomplish what was intended. A few attorneys have also given the probate process a bad taste. They misused probate to receive unnecessary fees and expenses from an estate.
Will a properly drawn Will avoid probate?
No
What if there is no Will?
The estate will go through the probate process.
1. If there is no surviving parent, the assignments for the care of any children under 18 will be made by the court. In this situation the guardian may not be whom the deceased individual may have wanted to raise their children.
2. The distribution of all assets will be done according to legal statutes. Laws of "Dissent and Distribution" would be incorporated to have the estate given to the closest relatives. Charity (your church, Lake Ann Baptist Camp, missionaries and other agencies) will not be considered to receive any of the estate by the courts.
3. The law will not consider what others may think should have been done.
4. Each minor child will receive their share of the estate at the age of 18.
Is probate costly?
There is a process in many states that requires little or no court involvement. The legal fees involved would primarily be the fees the lawyer charges. Those fees would probably range from about $1,000 to several thousands of dollars. In large estates the fees could be in the $10's of thousands. An ethical, morally good attorney is important to assure only necessary, reasonable fees are charged. Courts become involved when the distribution of the estate is challenged or there are complications. Then there are additional court costs.
Does probate take much time?
Generally, it takes approximately 6 months or more.
Will others be required to pay probate costs of a deceased individual?
No. The costs come from the estate of the deceased individual.
Can I avoid the probate process?
Yes! There are creative ways to have the estate transferred according to your desires without the involvement, costs and potential time delays of probate.
Revocable Living Trusts
Establishing a Living Trust is perhaps the most effective way to avoid probate, keep control of your assets, and pass them on to beneficiaries with tax advantages. It is relatively easy to create and can be extremely cost effective.
If you have a Will, is a Living Trust necessary?
The basic of any estate plan is the Will. You name the person responsible for your funeral and the guardian to raise any minor children you may have.
What does a Living Trust do?
The primary reason for the Living Trust is to avoid probate with its costs and time.
If I have a Will, don't I avoid probate?
No.
How does the Living Trust avoid probate?
The Living Trust is a contractual obligation. Probate deals with people and their assets. Probate does not deal with contracts. If you have transferred all your assets to the Living Trust, you don't own the assets, the Living Trust does.
If I transfer all my assets to the Living Trust, How may I utilize my assets for my benefits and desires?
According to law, you may still be in charge of the assets. You still determine how they are used.
How much does a Living Trust cost?
Figures vary according to the attorney you use. Costs for two Wills and the Living Trust will range from about $500 and up.
When is a Living Trust justifiable cost wise?
The character of the assets and individual situations vary. In most cases, the approximate value of assets other than life insurance should probably exceed $150,000 to consider the Living Trust along with the will(s). Then probate and its fees may be avoided. The savings are passed on to the beneficiaries.
It's a Win-Win Proposition
Ask anyone who has signed a legal agreement, and they will likely tell you that the ideal contract is one in which both parties win. That is exactly the case with the Charitable Gift Annuity.
The Gift Annuity is a legal agreement between you and a qualified charity like Lake Ann Baptist Camp. In simple terms, it is part gift and part annuity. The annuity portion provides you a high rate of return on cash or certain assets as long as you (and your spouse) live. And the gift comes into play when, upon your death(s), the value of the agreement becomes a charitable contribution.
Charitable Gift Annuity rates are based on your age, with annuity payments as high as 12% for older senior persons. Variations on the Gift Annuity make it extremely attractive as a part of supplementing your retirement planning.
This is one scenario of how it works:
CD's are maturing
Interest paid is only 3% to 4%
You would like more income
What can you do?
Consider a Gift Annuity!
Example: Phil Anthropy-age 72-Cash gift $10,000 Actual interest rate is 7.4%
Donor receives contract for annuity payments for life.
Receives immediate charitable deduction of $3, 796.
Receives yearly payments of $740. Tax-free portion of this income is $427.72!
Effective payout with tax-free portion is 8.6%.
Estimated payout based on actuarial tables is $10, 730.
Upon donor's death, the charity receives $10,000.
No Probate, No Estate Taxes
$3,796 Charitable deduction
10,730 Estimated payout to donor
$6,202 Tax-free portion
10,000 Estimated payout to charity
$24,526 Return on investment
What an exciting option of giving back to the Lord some of what He has given you! You don't have to wait until you're deceased to give through a bequest in your will. Take advantage of the Gift Annuity now while you're alive. The Gift Annuity will benefit you with a charitable deduction and lifetime income, with excellent rates, while you are alive and the residue, upon your death, will go to Lake Ann Baptist Camp.
Anyway You Look at It, It's a Win-Win Proposition!
Basics of the Charitable Remainder Trust
So Much For Math Class!
During those school days of long ago, most of us learned that subtraction would result in a Remainder, while addition would create a Sum.
Well it turns out that our trusted math teachers must not have known about a planning tool that can not only add to the benefits your family receives from certain assets, but can actually multiply the impact of assets in the future. Since the late 1960's families and individuals have been utilizing the Charitable Remainder Trust to make particular types of assets (especially highly appreciated, low yield instruments) have impact far beyond what conventional formulas might otherwise suggest.
In summary, when the decision is made to transfer a qualifying asset into a Charitable Remainder Trust (CRT for short), 100% of the applicable capital gains tax is bypassed; and a charitable income tax deduction is triggered.
These tax benefits are possible because this transfer represents an ultimate gift to charity. In recognition of this irrevocable charitable gift, our tax laws reward the donor. And the benefits begin to add up!
Once within the confines of a CRT, a portion of income generated by the Trust is passed to the individual (or family) -- often resulting in an increase in income.
For example, consider a $100,000 asset that has been producing a 2% return ($2,000 each year). Thanks to the CRT, the full $100,000 is repositioned to generate a higher return, providing a 6.3% income stream -- or $6,300 annually.
For a husband and wife, 75 and 73 years of age with a 17.3 year life expectancy, this adds up to an increase in income of more than $74,390 over the life of the donors (increase of $4,300 per year X 17.3 years).
The charitable nature of the CRT is realized when, upon the death of both husband and wife, the Trust is passed to Lake Ann Baptist Camp. Assuming wise management of the Trust principal over the years, this remainder can easily exceed the original value of the Trust.
So, when added up, the Charitable Remainder Trust can save current tax dollars, generate an increase in current income, and result in a substantial gift to charity. Not exactly the result of a process of subtraction . . . Right?
Here is an example of how the CRT might look:
$100,000 Principal (market value of the asset).
20,000 Cost of the asset.
-0- Capital gain cost ($80,000 tax avoided).
$16,000 Capital gins tax saved (20%).
30,687 Charitable deduction usable NOW.
108,990 Estimated lifetime income.
100,000 To Lake Ann Baptist Camp upon both deaths (est.).
$255,677 Total Return on Investment
The Give It Twice Trust
Double Your Gift!
Most of us have a number of objectives when it comes to how we would like to see our estate distributed upon our death. And the desire to leave an inheritance for family members is usually at the top of the list.
In addition, statistics show that a large percentage of Americans share a deep philanthropic spirit -- the desire that our legacy include the continued efforts and outreach of specific charitable efforts.
In this article we explore a planning strategy that enables a family -- even with the most modest estate -- to fulfill both objectives.
How? By giving a gift away twice!
The Give It Twice Trust is designed specifically to help those whose estate assets are limited to realize the dual objective of leaving the estate to family and leaving a legacy of philanthropy to organizations like Lake Ann Baptist Camp.
While it may seem impossible to give an asset or an entire estate away twice, there is a very simple plan - one that can be incorporated into a Last Will & Testament with ease.
The strategy hinges on the estate value - in our example we have used the figure of $500,000 - being transferred into a Trust at the time of death. (In the event of a husband and wife, the transfer to Trust would take place at the time of the second death.)
The Trustee invests the principal for the wisest possible return. Over a period of ten years the Trust spins off income payments to Lake Ann Baptist Camp. At the same time, the Trust is making annual distributions to family members equal to one-tenth of the principal. (So, in each of the next ten years, the family receives a $50,000 distribution.)
After ten years, LABC will have received the income from the Trust, and the family will have received the $500,000 Trust principal.
Another variation (shown below) makes income payments to Lake Ann Baptist Camp, with the family receiving the principal at the conclusion of the term. (It should be noted that income payments to family are taxable.) At the end of this trust, the principal may be returned to the owner or another heir if desired. The advantage of this format is to protect the principal from taxation during the term of years the trust is in existence while getting further charitable deductions on the money the trust donates during that time.
$500,000 Principal
5% Rate of return to Lake Ann Baptist Camp
$110, 673 Initial charitable deduction
$125, 000 Charitable payments made to Lake Ann Baptist Camp
$500,000 Principal returned to donor after 5 years
Retirement Planning - A Whole New Perspective
Retirement planning is one of those things we tend to view from one perspective -- the years in advance of retirement. But over the past couple of decades many individuals and families have done such a good job of creating a nice nest egg for those "golden years" that a whole new window on the issue has opened up.
Our tax laws encourage, even facilitate, the building of retirement funds through a variety of "qualified plans." However, these funds (and the benefits associated with them) are not intended to be inheritance plans. So, when a retirement plan makes up a portion of the estate at death, it is subject to taxation specifically designed to make up for the tax-deferred benefits afforded while the fund was being built.
As a result, a retirement plan could be hit with taxes (excise, estate, and income taxes) equaling as much as 80%! A $1 million dollar fund passed to your heirs could shrink to $200,000 or less.
However, there are a number of options which make it possible to avoid this kind of tax-bite at death. As is often the case, for individuals whose planning includes a philanthropic thrust, some careful planning can insure that shrinkage is minimal.
All that is required is that you view your retirement plan from a new perspective. With the help of a professional well versed in the options, you can insure that every asset in your estate has maximum impact -- making it possible for your hopes and dreams for family, friends and charitable organizations to be realized.
So while it may be a considerably different window on the future, a little planning can mean that even those funds you've set aside for retirement can have impact far beyond your golden years. If you'd like information on some of the options open to you, call or write our office. There is no cost or obligation.
What To Expect From Our Director Of Estate Planning
Sometimes a gift to Lake Ann Baptist Camp requires a good bit of planning. Family needs and concerns, the size of the gift, the type of asset, the need for retirement income, the tax consequences, the coordination of the gift plan-these are a few of the questions and concerns a donor may face.
To help with the gift planning process, Lake Ann Baptist Camp provides a Stewardship officer. His name is Rich Dorsey and he is available to help you.
What can you expect from Mr. Dorsey as our Director of Estate Planning?
1. He will honor your confidences and desires. When making a gift out of your assets, whether it is now or through your estate assets, there may be sensitive concerns regarding personal wealth, personal desires, and family expectations. Sharing your goals and desires can arouse anxious feelings. Rich will be sensitive to your concerns and will respect privacy.
2. He will provide information. Rich has a wealth of information about various gift vehicles and the opportunities available to you here at Lake Ann Baptist Camp. He can also provide tailor-made illustrations, produced by an attorney, showing the workings and benefits of a particular planned gift.
3. He will meet with your advisors. Sometimes a gift plan can be confusing and difficult to explain. Rich is able to discuss the plan in detail with your advisors so they have a good grasp of what you desire to do. This can save you time and expense.
4. He will help coordinate your plan. Rich is good at fitting all the puzzle pieces together. He will help orchestrate the gift process with a checklist of steps and will encourage the various parties to meet your planning deadlines. He'll move the process along and make your gift planning giving more enjoyable for you.
5. He will provide ongoing contact. Once your gift is made, Rich will maintain contact with you to ensure that you are informed about the results of your gift….and to keep you in close touch with Lake Ann Baptist Camp. We value our planned gift donors and Rich will let you know this again and again.
While Rich can assist you in planning your gift, there are some things he will not do. He will not twist your arm to get a gift for Lake Ann Baptist Camp. He will not purposefully hide important information from you. Nor will he attempt to be your legal or financial counselor. In fact, for your protection, he will insist that you obtain independent counsel from your own professional advisors before you make your gift. We greatly appreciate our generous friends who carefully plan their gifts. You will enjoy getting to know him.
Richard Dorsey, ACSE
Rich comes to the Lake Ann Baptist Camp Staff as Ministry Representative. His primary focus will be on Estate Planning and Deferred Giving. He will serve in a capacity that will provide education, instruction and assistance to the individual, churches and other special groups in that area of stewardship responsibility. As a result of his ministry, churches have realized millions of dollars that are dedicated for their work while at the same time providing better helps and, sometimes, additional resources for the family and their stewardship needs.
Rich feels that stewardship is more than just managing money. It means caring for all the resources, living and material, God has entrusted to us. We cannot withhold any portion of our lives from God. In order to receive God's fullest blessing, we must commit them to Him and use them for His glory. He believes that it is scriptural first to make provisions for the family. Secondly, the church is to receive their portion of God's provision to His people. Beyond that, as God directs and there are funds available, offerings may be directed to other areas of God's work. His ministry at Lake Ann, as an arm of the church, will have the philosophy that will honor God as he helps people with their stewardship responsibilities. As a result, God will honor Lake Ann with their financial needs to help reach out to the unsaved and incorporate ownership of their Godly beliefs in the minds and hearts of the people with which Lake Ann has contact through their excellent programs and facilities. As a result, they will be more fully used of God. It is this non-pressure approach that makes it truly a helping ministry that Rich will have.
Rich will incorporate helps on the topics of Wills, Living Trusts, Probate, Joint Ownership, Tax Reduction and/or Elimination, Charitable Trusts, Supplemental Retirement Income and Endowments. This will be done through church presentations, seminars, special group presentations, and confidential, individual consultations. These will come at a no fee, no obligation. Contact him right away to schedule him. He will be a blessing to your people and your ministry.
Rich has been married for 30 years to his wife, Bonnie. She is a secretary for Spectrum Health in Grand Rapids, MI. He has three children. Kim, a graduate of Cedarville College, is a nurse and married to Dan, a financial consultant. Lisa, a graduate of Cornerstone University in teaching, is a full time Mom with one child and is married to Ben, who owns his own business as a full time painter for commercial and residential needs. Jonathan works in the landscape and snowplowing secotr with a side job with mortgages, selling their services.
Rich has served in recent ministries as Director of Stewardship Ministries with the G.A.R.B.C., Director of Estate Planning with Cornerstone University, and Business Administrator of Emmanuel Baptist Church and Schools, Toledo, Oh. He has been awarded "Outstanding Manager" for all divisions with Howard Johnson Co., "Staff Member of the Year" at Cornerstone University, and was a Sergeant in the infantry in Vietnam.
His designation as Advanced Certified Stewardship Executive is the highest certification awarded by the Christian Stewardship Association.
(This information is not intended as legal advice. Please contact your professional as necessary.)
2008 © Lake Ann Camp
Privacy Policy
(800) 223-5722
