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Tax-Wise Planning to Grow Your Income and Ensure a Legacy
Presented by:
Michael Occhipinti, MBT
Gift Planning Advisor Wycliffe Foundation
&
Scott Talbot, CFP®, CAP®
Director of Planned Giving The Great Commission Foundation
The JESUS Film Project
1. Paying the Bills
2. Caring for Loved Ones
3. Donating to Worthy Causes
4. Paying Our Taxes
5. Outliving Our Assets
Managing One’s Finances Can Be a Challenge.
Increased Income
Increased Donations
Reduced Taxes
Double-Duty Dollars
Strategic Planning can Provide Solutions
Charitable Gift Annuity
Charitable Remainder Trust
Giving Plans that Pay You Income
Charitable Gift Annuity What Is It?
A charitable gift annuity (CGA) is an agreement between a
donor and charity. In exchange for the donor’s irrevocable
gift, the charity is contractually obligated to pay a fixed
lifetime income to one or two annuitants.
Charitable Gift Annuity How Does It Work?
Income for Life
Gift
Cash, Stock, other appreciated assets
Charitable Gift Annuity
Ministry
Gift $ (at death)
Benefits:
Receive income for life (One Life or Two Lives)
Take an income tax deduction
Receive fixed income partially tax-free
Gift portion paid to ministry after death
Why Consider a Charitable Gift Annuity?
Income: Continued low interest rates hits seniors and
retirees particularly hard. CGA’s offer very attractive rates
Tax-free income component
Security
Cannot outlive a CGA
Income is fixed
General obligation of charity
Partially avoid capital gains taxes
Charitable legacy
Sample Age & Rate Chart
Case Study #1: Cash Mary Needmore
Mary is 78 and is in the 15% tax bracket.
Mary has $50,000 in a CD paying 1%.
She wants a higher return without risk.
She wants to help spread the gospel in Africa.
Case Study #1: Cash Mary Needmore
Charitable Gift Annuity vs. Certificate of Deposit
CD Gift Annuity †
Rate 1% 6.40%
Before Tax Income $500 $3,200
After Tax Income $425 $3,133
Donation $0 $50,000
Tax Ded / Savings $0 $22,188 / $3,328
† $2,755 Received Income-Tax-Free † Yields the Same as a Fully-Taxable 7.9%
Case Study #2: Stock George & Barbara
George & Barbara are age 82.
They own $100,000 of stock which they bought for $30,000.
They are receiving 1.5% in dividends.
They need more income and less risk.
They are concerned about paying capital gains taxes ($15,000).
They want to leave a legacy gift to further God’s kingdom.
Case Study #2: Stock George & Barbara
Charitable Gift Annuity vs. Stock
Stock Gift Annuity †
Rate 1.5% 6.10%
Before Tax Income $1,500 $6,100
After Tax Income $1,080 $5,109
Gift $0 $100,000
Tax Ded / Savings $0 $41,556 / $11,635
† $1,535 Received Income-Tax-Free † Yields the Same as a Fully-Taxable 8.0% † Partial Bypass of Capital Gains Tax; Remainder Spread Out Over Life Expectancy
1. Stock, Land, Rental Property, Vacation Home, Business
2. Capital Gains Tax: Fed (15% - 23.8%) + State (0% - 12%)
3. Depreciation Recapture: 25%
4. Donate the asset, give away the tax liability!
Appreciated Assets
Donate the Entire Asset Prior to Sale
Donate a Portion of the Asset (Gift/Sale)
Donate the Asset to a Charitable Remainder Trust
• Avoid all Long Term Capital Gains Tax
• Take an income tax deduction
• Receive income for life
• Make a charitable donation after death
Ways to Avoid Capital Gains Tax
The Charitable Remainder Trust A
t Death
Income
Asset Transfer CRT
Benefits: Income Tax Deduction
Capital Gains Tax Avoidance
Ministry
Data Property Value $100,000 Cost Basis 20,000 Gain 80,000 Age 65 Life Expectancy 20 years Tax Brackets: Income 35% Capital Gains 22%
Assumptions
Sale of Property
Tax Comparison
Investment Comparison
Tax on Gain Charitable Deduction Tax Savings
To Invest Return @ 5%
$17,600 -0- -0-
-0- $14,000
$5,000
$82,400 4,120
$105,000 5,250
No Trust With Trust
CONCERNS:
Preparing to sell the farm and retire
Needed income for retirement
Wanted to make a large donation
Knew they were going to get hit with capital gains taxes
SOLUTION:
Charitable Remainder Trust
Donor Advised Fund
Marty and Loudean Martin
OUTCOME:
Avoidance of Long Term Capital Gains Tax
An income tax deduction
About 40% more income for life for the Martins
A significant immediate charitable donation
Another donation earmarked for ministry after death
Marty and Loudean Martin
Charitable Gift Annuity Charitable Remainder Trust Summary
Tax Deduction Gift Portion Present Value of Remainder Roughly the Same
Capital Gains Tax Avoided / Spread out Avoided CRT reduces Cap Gains tax
Ideal Age Better for Ages 65+ Works well for most ages Retirees may prefer CGA
Returns Fixed, Secure
Return of Principal
Flexible, Customizable
Can Vary
Depends on Risk/Reward
Tolerance
Administration Handled by
Charity
Attorney Creates, Trustee
Manages, CPA Tax Returns CGA is simpler, no cost
Charitable Beneficiary Issuing Charity One or multiple charities
Can change
CRT greater flexibility
for multiple charities
Strengths Simplicity & Consistency Flexibility & Complete
Cap Gains Tax Avoidance
Depends on goals, desires,
comfort level of donor
Comparison of CGA & CRT
Our services are designed for you, our partners. This is our ministry to you.
Your information is kept confidential, and there is never any cost or obligation to give.
We can interact with your trusted advisors, as desired.
You may have multiple charitable interests. We believe it is the Holy Spirit’s job to tell you where to give.
How Can We Help You?
Why Include Us on Your Team?
No cost, no pressure, no hidden agenda
Help from friends you know and trust
Understand all of your options
You will reap the benefits of wise stewardship
Please feel free to contact Michael or Scott. We look forward to the opportunity to be of service to you and pledge our finest efforts and complete confidentiality.
Scott Talbot, CLU®, ChFC®, CFP®, CAP®
Director of Planned Giving Phone: (877) 281-2006 stalbot@gcfccc.org www.gcfccc.org
Michael J. Occhipinti, MBT Gift Planning Advisor Phone: (800) 681-5103 michael_occhipinti@wycliffe.org www.wycliffefoundation.org
May we be of service to you?
Michael J. Occhipinti, MBT Gift Planning Advisor
Phone: (800) 681-5103 michael_occhipinti@wycliffe.org www.wycliffefoundation.org
Scott Talbot, CLU®, ChFC®, CFP®, CAP®
Director of Planned Giving
Phone: (877) 281-2006 stalbot@gcfccc.org www.jesusfilm.org/donate/planned-giving
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