About The Lutheran Foundation

What is a deferred gift?

A deferred gift is one which is established during your lifetime but which does not transfer to the charity until death. This type of planned giving is popular with individuals who need access to their existing funds during their lifetime, but who want to make a difference to ministries after they are gone. Deferred giving works in conjunction with the ongoing capital campaigns of our sponsoring organizations.

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Do I lose control of assets I put into my Living/Management Trust?

Absolutely not. You and/or your spouse can name yourself as trustee(s) of the trust if you so elect, or be co-trustees with LFSW (or name the Foundation as a successor trustee). You buy, sell, trade, manage or otherwise control all assets in the trust just as you have before you placed them into the trust. The Foundation actually manages these assets only when you appoint us to or when you are incapacitated.

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Can my spouse and I change or revoke our Living/Management Trust as we desire?

Yes, until one of you dies or becomes incapacitated. The portion of the Trust relating to the incapacitated or deceased spouse then becomes irrevocable since one of its main advantages is its ability to assure that your wishes -- set forth when you were mentally capable -- are carried out. The survivor is still free to make changes in his/her portion as circumstances warrant.

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How much will it cost me to set up and fund a Living Trust?

All advisory services of Lutheran Foundation of the Southwest cost you nothing; that is our ministry. Your own attorney will actually prepare the trust documents; professional fees vary. We will supply sample documents for the attorney to follow and will guide you through the initial planning steps. We recommend that titles of key assets then be transferred into the trust in an orderly fashion. Living Trusts can initially be funded with as little as $5,000 and fully funded later, although this delay negates many of the possible tax benefits and management advantages of the trust.

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Can I later access the principal of the funds I use to set up a Charitable Gift Annuity?

You are guaranteed certain quarterly or annual payments as determined at the outset. The principal amount itself is an irrevocable gift to the Foundation for its ministries, for which the donor receives certain tax benefits at the time of donation and on portions of the payouts; it cannot be accessed. However, keep in mind that a Charitable Gift Annuity is a contract between the donor and the Foundation, and the payments continue according to the annuity's terms regardless of the fluctuation in the original principal amount.

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How can I start getting income from the ranch I own without accruing exorbitant capital gains tax liabilities?

Donate your property to the Foundation to fund a Charitable Remainder Unitrust. You immediately eliminate any capital gains taxes otherwise due on the difference between what you initially paid for the land and its current appraised value, which you would have to pay if you sold the land outright. You and your spouse will start receiving monthly income when the asset is sold, for the rest of your lives and/or a pre-determined number of years.

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What are some of the main differences between a Living/Management Trust and a will?

Both direct distribution of your assets after your death, but a Living Trust offers many additional key advantages:

a.    All assets in the Living Trust at the time of your death avoid the probate process in the courts

b.    Living Trusts often speed distribution of assets to your heirs

c.    Living Trusts can reduce or eliminate estate taxes for many families by assuring that all possible exemptions and by-pass credit shelter trusts are used

d.    A will becomes effective only after its owner passes away, and includes only instructions about asset distribution. A Living Trust, on the other hand, also includes instructions about your care and/or the management of your assets while you are still alive and can take effect when you become incapacitated, not just after you pass away.

e.    For more specific comparison charts, see Will vs. Trust under the Living Trusts section of this web site.

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Is there any way I can benefit charities through my management trust without sacrificing assets I had planned to leave to my heirs?

Yes, by electing to distribute your assets upon your death through a Charitable Family Trust. Using this option, your heirs receive all of the assets in your estate but over a set number of years, i.e. fifteen, instead of as one lump sum payment upon your death. The Foundation invests this principal and makes annual payments to your beneficiaries; the income the invested funds earn until the payout is completed will be used to set up endowments in your name for the Lutheran ministries and other charities you designate in advance.

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I already have an annuity. How is it different from a Charitable Gift Annuity offered by Lutheran Foundation of the Southwest (LFSW)?

More than likely you have a tax-deferred annuity offered by a bank, insurance company or other such institution. Since it was funded with pre-tax dollars, income taxes will be due on the amounts paid out - whether to you or to other designated beneficiaries, unless they are charitable organizations. LFSW's Charitable Gift Annuities alternately offer certain tax benefits both when they are originally funded and when payouts are made, and financially benefit both you and designated ministries.

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More from another source that I like, unique ones should be added to LFSW list:

Estate planning FAQs

What types of gifts are subject to the gift tax?

What amount of assets can I pass at my death without incurring a federal estate tax?

Under what situations should I set up a personal living trust?

Under what situations should I have a personal trust created upon my death?

What should I look for in a trustee?

What are the duties of a trustee?

What types of gifts are subject to the gift tax?

Any property or assets given as a gift, including money, are subject to the federal gift tax. However, there are many exceptions. Here are some ways you can transfer assets without incurring gift taxes:

 

·         Give any number of people up to $13,000 each per year ($26,000 if you're married). These gifts are called annual exclusion gifts.

·         Pay any amount toward another person's tuition or medical expenses, as long as you pay these amounts directly to the school or medical provider.

·         Give any amount to your spouse. (Special rules apply if your spouse is not a U.S. citizen.)

·         Give an unlimited amount to charity.

If you make contributions to a Section 529 college savings plan or prepaid tuition plan on behalf of another person, you can contribute up to five years of annual exclusion gifts, or $65,000, in a single year ($130,000 if you're married), provided that you don't make any additional annual exclusion gifts to the same person for the five-year period. If you die before the end of the five-year period, a prorated portion of your gift will be subject to estate tax.

Even if you make a taxable gift, you don't have to pay tax until you exhaust your gift tax credit amount. This credit currently allows for $5 million of taxable gifts to be made during your lifetime before a tax payment is required.

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What amount of assets can I pass at my death without incurring a federal estate tax?

Under current law, the amount of assets you can pass after your death without incurring estate tax (known as the estate tax exemption amount) varies depending upon the year of your death.

Estate Tax Exemption Amounts

 Calendar Year

 Estate Tax Exemption

2005

$1,500,000

2006

$2,000,000

2007

$2,000,000

2008

$2,000,000

2009

$3,500,000

2010

Tax repealed

2011

$5,000,000

2012

 $5,000,000

The estate tax exemption amount is reduced if you've used all or part of the $1 million gift tax credit during your lifetime.

Note that the repeal of the federal estate tax was effective only for the year 2010. Starting in 2013, the estate tax exemption amount will revert back to $1 million, unless the law is changed before then. Keep in mind that many states also impose estate and inheritance taxes.

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Under what situations should I set up a personal living trust?

There are many good reasons, unrelated to taxes, for setting up a trust while you're alive (such trusts are commonly referred to as "living trusts"):

·         You want to ensure continuous management of your assets in the event you become incapacitated.

·         You want a professional trustee to run your estate after you die, and you want to "test drive" the trustee.

·         You own property in more than one state, or you move often from state to state.

·         You want to avoid your state's probate process.

·         Your will is likely to be challenged in court or receive unwanted publicity.

Under what situations should I have a personal trust created upon my death?

There are many good reasons, unrelated to taxes, for having a trust created upon your death (these trusts are generally created through a will).

·         You have a child or children from a previous marriage.

·         You have a minor child or children with special needs.

·         You doubt your beneficiary can manage the assets or are concerned that your beneficiary's creditors may attempt to gain access to the assets.

·         You want to provide incentives for your beneficiary to get an education or achieve other goals.

·         You want to control how or when your beneficiary uses the assets.

·         You want the trust assets eventually to go to a charity or someone other than the initial beneficiary.

You should speak to an estate attorney or estate planner to help you make this decision.

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What should I look for in a trustee?

Your trustee should be sensitive to the needs of your beneficiaries and have the time and skills necessary to handle the job. Sometimes it's hard to find one person who can meet all the requirements. While a trusted friend or relative may be a good choice for a smaller trust or one that will last for a relatively short time, a corporate trustee might be needed for larger or longer-term trusts. A popular middle ground is to name an individual and a trust company as co-trustees.

What are the duties of a trustee?

The following are some of the responsibilities required of a trustee:

·        Manage the assets in your trust. This typically involves adhering to a prudent investment policy and evaluating how the investment strategies meet the needs of the trust beneficiaries and the terms of the trust. Many trusts hold different types of assets, like real estate and investment securities. The more varied the holdings, the more complicated they are to oversee.

·        Properly account for and continually revalue the assets in your trust. Principal and income often must be handled separately. In addition, outstanding bills must be settled and reconciled.

·        Follow all terms of the trust document and explain them properly to all interested parties. For example, a trustee must keep proper records, prepare account statements, and distribute income and assets as required by the trust document.

·        File federal and state tax returns.

·        Develop and implement tax planning strategies for trust assets and consider each beneficiary's needs.

·        Maintain strict neutrality even if beneficiaries have competing claims or if strained family relationships arise.

·        Assume legal liability for the performance of all the duties of a trustee. A trustee can be the target of lawsuits, whether merited or not.

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