St. Mark's United Methodist Church
Wednesday, February 22, 2012
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EndowmentsYou will find tools, information and stories related to financial planning and Christian giving.
The Articles on this page have been provided by members of St. Mark's Endowment Board
April 27, 2011
In a recent meeting of the St Mark's Endowment Board, we learned a little about charitable gift annuities. Basically, a CGA is an annuity set up through your church or its conference which allows a person (annuitant) to systematically liquidate a lump sum of money to provide a lifetime income.
However, unlike many commercial annuities which either end when the annuitant dies or pay remaining benefits to the annuitant's loved ones, a CGA pays the remaining benefits of the principal when the annuitant dies to his/her church or church conference. Interested?? Talk to one of your St Mark's Endowment Board members.
Mike Halpin for St. Mark’s Endowment Board
April 20, 2011
The terms per stirpes and per capita are used in making beneficiary designations in life insurance policies, wills, and trusts and produce significantly different outcomes.
The term per stirpes is used when it is desired that the share of a deceased beneficiary go to the beneficiary's children (in Latin it means "by the trunk," "by right of representation," or "by roots or stocks"). For example, assume John Smith desires to name his wife primary beneficiary of his life insurance policy with his children as contingent beneficiaries. However, should one of his children predecease him, John wants the children of that child (i.e., his grandchildren) to share equally their deceased parent's share. The following beneficiary wording might be used:
"Sally Smith, wife of the insured, if she survives the insured, otherwise in equal shares to the surviving children of the insured, and to the surviving children of any deceased children of the insured, per stirpes."
If Sally died before John and upon his subsequent death John had two children who were alive (A and B) and one child who had previously died leaving two children (deceased child C who left John's grandchildren D and E), then A and B would each take one-third of the proceeds and D and E would each take one-sixth of the proceeds (i.e., they would share their deceased parents one-third). In some jurisdictions the term "by representation" is used in lieu of per stirpes.
The term per capita is used when it is desired that the children of a deceased beneficiary share equally with the surviving members of the original
group of beneficiaries (in Latin it means "by the head," "according to the number of individuals," or "share and share alike"). Again, assume that John Smith desires to name his wife primary beneficiary of his life insurance policy with his children as contingent beneficiaries. However, should one of his children predecease him, John wants the children of that child (i.e., his grandchildren) to share equally with all other beneficiaries. The following beneficiary wording might be used:
"Sally Smith, wife of the insured, if she survives the insured, otherwise in equal shares to the surviving children of the insured, and to the surviving children of any deceased children of the insured, per capita."
Again, if Sally died before John and upon his subsequent death John had two children who were alive (A and B) and one child who had previously died leaving two children (deceased child C who left John's grandchildren D and E), then A, B, D and E would each take one-fourth of the proceeds (i.e., all beneficiaries would share equally.)
Marshall Barclay for St. Mark’s Endowment Board
March 30, 2011
Have you ever wondered what the key differences between term life and cash
value life insurance are? Which one is best? Well, as with most either/or decisions, the phrase “it depends” applies! For this short column, we’ll briefly discuss some good uses of term life insurance (which typically has no cash value associated with it).
Term is usually best for situations where a person wants to make sure that a hard financial commitment is satisfied in the event of that person’s untimely (that is, early) death so that the financial responsibility is not foisted upon his/her family at a very trying time (as when that person dies and the related income is now gone). A good example of the use of term life would be in the case of a home mortgage.
Typically, a young couple buying their first home might take out a $150,000, 30-year mortgage. For young healthy couples, both might also apply for a 30 year level term life insurance policy (ie, with a level death benefit of $150K) to make sure that the home mortgage is at least paid off in the event of the untimely death of one or the other. Premiums for such policies are very reasonable due to the young age and usual good health of such people. Each would name the other as the beneficiary, and as such, the surviving one of the couple could then use the money for any good purpose (like paying off a mortgage so that the survivor at least, has the home paid, free and clear).
There are other similar uses for term life, such as the term life policy you might sign up for at the time you purchase a new car. These types of term (usually known as “credit life” because they have to do with the extension of credit one receives from a bank or credit union when they buy a car) are often a part of the car’s monthly payment and are there to pay the car off if the primary borrower, again, dies untimely. Once the car is paid off (say in 5 years), the life insurance expires. And this is the problem with all term life! Eventually, it expires! Even with a 30 year term life policy (such as for the couple buying the home), the term (ie, the 30 years in this case) expires, and the couple is then faced with the very unpleasant prospect of renewing the policy, BUT at a much costlier premium!
In many cases, trying to renew term life insurance beyond a certain age (if the renewal is even allowed by the sponsoring insurance company) can be COST PROHIBITIVE! In the life insurance business, there is an old adage, “term life insurance is designed to expire before YOU do!” Statistics show that something less than 5% of all term life policies EVER pay a death benefit. And part of the reason for this is that renewal premiums are so hard to cope with at later ages that people have no choice but to let their policies go!
So what happens to this same couple if they still have very burdensome financial responsibilities at a later age, and therefore, they still need their life insurance coverage? This is where a pro-active discussion earlier in one’s life with an insurance advisor can be very helpful. Such a discussion might include the use of cash value life insurance. But that discussion HERE will have to wait until the next time I’m at bat in this column!
Mike Halpin for St. Mark's Endowment Board
March 9, 2011
An annuity is a systematic way of liquidating a lump sum of money. Most insurance companies can do an annuity for you. What's nice about an annuity is that it can guarantee you a monthly income for the rest of your life — and then some!
Many people down through the years have chosen to annuitize savings, IRA accounts, 401K accounts, Tax Sheltered accounts — you name it! But what's truly nice about them is the guarantee of an income that will always be there for you, no matter how long you live. Many insurance companies also sponsor annuities which will pay a joint income for life, meaning they pay until both you and your spouse have passed away! This can be very reassuring for couples who want to insure that they'll both have a steady stream of income regardless of who passes away first.
Another good thing to know about annuities is that the amount of monthly income you get from the insurance company is dependent primarily on two things:
1) the amount of the lump sum you have to annuitize, and
2) your age at the time of annuitization.
The more money you have to annuitize and the older you are when you do it, the more your monthly income will be! Generally, then, it's best to wait as long as you can before you annuitize so that you'll make the most in monthly income.
For more information on annuities, talk to your insurance agent, or ask any member of your St. Mark’s Endowment Board!
Mike Halpin for St. Mark’s Endowment Board
return to top of page February 16, 2011
An endowment is a financial asset donation made to a non-profit group or institution in the form of investment funds or other property that has a stated purpose at the bequest of the donor. Most endowments are designed to keep the principal amount intact while using the investment income from dividends for charitable efforts. 1 Definitions, Investopedia.com
Instead of relinquishing all control of your asset, as a possibility, you can receive a lifetime income while giving an endowment to St. Marks. A gift annuity works like this - it could pay you interest for your lifetime as follows:
If you have questions or would like to discuss the possibilities for your specific situation, please contact St. Mark’s Endowment Board at endowment@loveroad.org.
M. RAY WADLE for St. Mark’s Endowment Board
February 9, 2011
People give to St. Mark’s for a variety of reasons. Some of the reasons are:
1. Because they have compassion for the less fortunate.
2. From a belief that they owe something back to society.
3. To support our mission and cause.
4. For the recognition attained by making substantial charitable donations.
5. To benefit from the financial incentives our tax system provides for charitable gifts.
How Can Charitable Gifts Be Structured?
Outright Gifts Today
Some people prefer to make outright gifts of cash or other assets to St. Mark’s. In many situations, an immediate charitable contribution makes sense — St. Mark’s receives the cash or property at once, the donor receives immediate tax benefits and the transaction is complete.
Retirement Plan Gifts
St. Mark’s can be named as beneficiary of the funds in an IRA or employer-sponsored retirement plan, which provides a double tax benefit. The charitable gift can be deducted for estate tax purposes and St. Mark’s will owe no income tax on the funds it receives.
Outright Gifts at Death
Other people wish to make sizeable charitable contributions, but are hesitant to do so during their lifetime. They may depend on the income produced by their assets, want a family member to receive some benefit from the property, or simply be concerned about what the future will bring in terms of their financial needs. As a result, they decide to wait and make charitable gifts at their death, through a will or trust.
Split-Interest Gifts
If you want to make a charitable gift, especially a substantial one, there are charitable giving techniques available that allow you to make the gift today, while retaining an interest in the property and receiving both immediate and longer-term tax benefits.
Regardless of your reasons for giving, a careful review of the various ways to structure charitable gifts can help make your gifts more meaningful, both to you and to St. Mark’s. If you have questions, please contact St. Mark's Endowment Board at endow@loveroad.org.
Marshall Barclay for St. Mark's Endowment Board
February 2, 2011
Did you know that St Mark's UMC has an Endowment Board? Did you also know that the Endowment Board oversees the St Mark's Endowment Funds? An Endowment Fund is:
"an investment fund set up by an institution in which regular withdrawals from the invested capital are used for ongoing operations or other specified purposes. Endowment funds are often used by nonprofits, universities, hospitals and churches. They are funded by donations, which are tax deductible and can be a key part of estate planning for donors." —Investpedia
Our Endowment Board bylaws direct that our own funds can be used for any number of worthwhile, church-related projects such as music, missions, and financial awareness programs.
So now that you know, perhaps you may want to find out more about how to make a tax-deductible donation to one of the endowment funds or start your own! This is a great way for donors to ensure that their gifts are used for purposes within the church which they truly advocate.
For additional information on our endowment funds, please contact our Endowment Board at endowment@loveroad.org.
Mike Halpin for St. Mark’s Endowment Board
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