Estate Planning Opportunities for Believers…

1. Estate Planning Opportunities for Believers… Salem Nazarene Foundation Presentation March 4, 2007

2. Five Reasons Not to Make a Will 1. The courts can do a better job deciding how to disburse your assets than you can. 2. The courts can choose a better personal representative to handle your estate during probate than you can. 3. The courts can choose a more caring guardian for your minor children than you can. 4. The government will use your estate tax dollars more efficiently than your church or favorite charity would use a charitable bequest. 5. Your grieving loved ones will be better off looking after your affairs without your will.

3. Salem Nazarene Foundation Incorporated September 1, 1983 The Foundation shares the vision statement of Salem First Church of the Nazarene to promote the long-term financial security and mission of the church.

4. 2007 Board Members

5. The Bible Memorial Fund

6. In 2006, The Foundation . . . • Gave an NIV Bible to each baptismal candidate for a total of 44 Bibles.

7. In 2006, The Foundation . . . • Helped Matt Porter’s college class go on a Work and Witness trip to New Orleans.

8. In 2006, The Foundation . . . • Helped Skyler Anderson fund his “Project Amazon” missionary trip.

9. In 2006, The Foundation . . . • Established The Firm Foundation Endowment Fund.

10. In 2006, The Foundation . . . • Hired Gene Christian to assist our congregation with estate planning. • Over 22 years experience in planned giving and development. • Leading regional authority in estate and charitable planning. • Consultant for Luis Palau and various churches and para-church organizations. K. Gene Christian, BA, MEA.

11. Why So Much Attention On Estate Planning These Days? • The Nation Is Aging Rapidly • Overall Taxation Remains High • Strength of Financial Markets • Four Affluent Generations Alive Simultaneously • Huge Transfer of Wealth Occurring • 40% of Americans Have A Retirement Plan

12. “GIVE IT TWICE” A Unique Strategy in Estate Planning…

13. Rational for “Give it Twice” New Minimum Distribution Rules for IRAs Adopted Four Years Ago…

14. Rational for “Give it Twice” The Old Rule 90/90/90

15. Rational for “Give it Twice”

16. Rational for “Give it Twice” The New Rule 90/90/180!

17. Rational for “Give it Twice”

18. Sample for “Give it Twice” PROPOSED ESTATE PLAN Stocks & Bonds Life Insurance Home Personal Effects Qualified Plan (IRA) REIT Shares 2nd Passing “Give it Twice” Trust (CRT) 8% income each year (Heirs) for 12 years 12 years pass A substantial gift to Charity!

19. Questions or Comments?

20. Why So Much Attention on Estate Planning These Days? • The Nation is Aging Rapidly • Overall Taxation Remains High • Strength of Financial Markets • Four Affluent Generations Alive Simultaneously • Huge Transfer of Wealth Occurring • 40% of Americans Have Retirement Plan • Real Estate Values Have Risen Tremendously

21. A CASE ILLUSTRATION REAL ESTATE SALE WITH A CHARITABLE TWIST…

22. CASE PROFILE… • Bob (age 59) and Alice (age 58) Auburn • He owns/manages a small residential construction company • She is an independent contractor currently consulting for ODOT

23. CASE PROFILE - cont. • Nearing retirement - they want to travel more • Don’t want to dramatically affect children’s inheritance - close family

24. CASE PROFILE - cont. • They have a $1,365,000 estate: • $200,000 life insurance on him • $125,000 life insurance on her • $328,000 his SEP-IRA • $210,000 her 401(k) & IRAs from past employers • $12,000 in ROTH IRAs • $170,000 home paid off • $320,000 rental properties (two homes)

25. Rental properties A VISUAL LOOK AT THE AUBURN’S ESTATE... Life Insurance His SEP IRA Home ROTHS Her 401(k) & IRAs

26. I. Analysis of Increased Income… Sale vs. CRT Value of Rentals $320,000 $320,000 Closing Costs ($ 22,400) ($ 22,400) Taxable Value $297,600 $297,600 Sale vs. Unitrust

27. I. Analysis of Increased Income Continued… Sale vs. CRT Taxable Value $297,600 $297,600 Or. Cost Basis $ 88,000 N/A Cap. Gain Tax ($ 48,200) $ -0- Dep. Cost Basis $ 5,000 N/A Cap. Gain Tax ($ 26,500) $ -0- Sale vs. Unitrust

28. I. Analysis of Increased Income Continued… Sale vs. CRT Legal/App. Fees $ ? ($ 2,500) Investable Funds $ 223,000 $ 297,600 Pre-Tax Income $13,400 $ 17,900 31.1-YR Exp. $795,000 $1,065,500 PV of Income $269,000 $ 365,500 Sale vs. Unitrust

29. TRADITIONAL WEALTH ACCUMULATION… TODAY 31.1 years pass NICE & BIG PERSONAL ESTATE 2037 AD

30. Adding the Charitable Dimension... TODAY CRT Rentals 2037 AD …………………………………………………………………………. NICE & BIG ESTATE Even LARGER Overall Estate! BIG CRT = X

31. Charitable Retirement Planning Through... Gift Annuities

32. Low Interest Rate Environment Continues… • One-year CD rates under 3% • Money market funds – 1% • Ten-year Treasuries – 4% • Thirty-year Treasuries – 4.5% • Long-term Corporate Bonds – 4-5%

33. Challenge In Light of the Low Interest Rate Environment What Can You do?

34. Consider a Gift Annuity! Definition: “…A simple contract between an individual(s) and a charity which provides three favorable outcomes by virtue of one financial transaction…”

35. Gift Annuity Rates… Single Person Current Rates AGE 60 5.7% 65 6.0% 70 6.5% 75 7.1% 80 8.0% 85 9.5% 90+ 11.3%

36. Reasons People Do Gift Annuities… • Good Source of Retirement Income • Replace Decreasing Bond or CD Income • To Purchase Long-Term Care Insurance • Supplemental Income for Parent or Grandparent

39. Estate and Planned Giving Services… K. Gene Christian, BA, MEA The Salem Nazarene Foundation

40. Services Include… • Free Will and Trust Planning Guide • Free Estate Inventory Form • Free Personal Planning Assistance

41. Questions or Comments?

42. Thank You for Coming to Sunday School Today!