UM Legacy Partners of The North Carolina Conference 1 Legacy Giving in the Local Church United Methodist Legacy Partners of the North Carolina Conference

UM Legacy Partners of The North Carolina Conference

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Legacy Giving in the

Local Church

United Methodist Legacy Partnersof the

North Carolina Conference


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• Background & Introduction • Planned Gift Overview• The Local Church Process• Workshop and Discussion• How to Get Help

CONTENTS


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Background & Introduction


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“If those who ‘gain all they can’ and ‘save all they can,’ will likewise ‘give all they can,’ the more they gain, the more they will grow in grace, and the more treasure they will lay up in heaven.”

— John Wesley


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UM Legacy Partners Courtesy Motion Approved Unanimously

at Annual ConferenceJune 2006


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Nurture the Christian concept of stewardship of all the gifts God has given us—time, talents, and resources, including accumulated, inherited, and appreciated financial assets.

Legacy Partners


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Support the future mission and work of our local churches and the wider work and service of the United Methodist Church through planned giving, including wills, bequests, and trusts.

Legacy Partners


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Inform, encourage, and assist the local church in effective use of planned giving.

Legacy Partners


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Utilize the planned giving expertise of the agencies and institutions of our Annual Conference.

Legacy Partners


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Asbury HomesCamp and Retreat Ministries

Duke Divinity School Louisburg College

MERCI Methodist University

Methodist Home for ChildrenNC Conference of the UMC

NC Wesleyan CollegeUM Foundation, Inc.

UM Retirement Homes

Legacy Partners


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• Office of the Bishop

• Conference Commission on Stewardship

• Conference Office of Congregational Development

• Conference Director of Communications

• Conference Connectional Ministries

Legacy Partners


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Provide planned giving information, training, and inspiration to congregations:

• Encourage and support special ministries and enlarged outreach services

• Include the mission and ministries of the United Methodist Church and its agencies and institutions.

Legacy Partners


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Encourage each congregation to have a Legacy Leader:

• Learn about planned giving options

• Develop an ongoing endowment & planned giving initiative within the congregation.

Legacy Partners


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Congregations that already have an active endowment & planned giving program: • Name a Legacy Leader for ongoing local leadership • Share experiences and best practices with other congregations

Legacy Partners


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UM Legacy Partners: • Conduct special training and information sessions through District workshops and other special regional gatherings

• Distribute supportive materials, videos, and online information.

Legacy Partners


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Encourage congregations to elect a Legacy Leader as soon as possible.

Legacy Partners


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Utilize the second Sunday in September as an annual Legacy Building Sunday:• Inspire and educate congregation members to make use of wills, bequests, life insurance and other planned gifts • Expand the mission and ministries of our church - locally, in our Conference, and worldwide.

Legacy Partners


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Planned Gift Examples


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Example 1: One of your church members approaches your pastor and wants to include your church in his or her will. The gift will be a parcel of land currently worth $250,000.

Question: What should the pastor do?


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Example 2: One of your members approaches your pastor and wants to make an income-producing gift of an appreciated asset to the church. The $100,000 asset currently produces very little income. How can the donor receive additional income and make a gift?



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Consideration: Does the church have the structure in place that allows the pastor to address these prospective donor questions?

If so, how can leaders help to ensure that the proposed Legacy gift fulfills both the requirements of the donor and of the church?


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If not, where can the pastor and church leaders get help?

What can the pastor and church leaders do to be prepared for inquiries from prospective Legacy donors?


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Planned Gift Overview


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For Planned (Deferred) Gifts, Donors Receive:

Satisfaction From Supporting a Favorite Church or Charity

Tax Advantages

Life Income

Income for Others


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Some Assets to Use for Gifts Cash Securities Real Property Personal Property IRA’s and Retirement Plans Life Insurance Savings Bonds Business Assets


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Some Types of Planned Gift Life Income Plans

Bequests

Life Insurance

Retirement Plans

Life-estate Agreements

Revocable Living Reserved


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Some Life Income Plans

Charitable Gift Annuity

Charitable Remainder Unitrust


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Give Through a Charitable Gift Annuity

A Gift Annuity is a simple combination of two concepts:

A Charitable Gift, and

A guaranteed income for life - called an Annuity


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Charitable Gift Annuity Give an asset and receive income for the

rest of your life

Receive current income tax deduction

Receive part of each payment tax free

Avoid some capital gains if funded using an appreciated asset

Avoid Probate Costs and Estate Taxes


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Current Gift Annuity RatesSource: American Council on Gift Annuities

Age Number of Lives

One Two

65 6.0% 5.6%

70 6.5 5.9

75 7.1 6.3

80 8.0 6.9

85 9.5 7.9

90 11.3 9.3


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Gift Annuity ExampleGift Annuity ExampleJohn Jones 76 (25% Tax Bracket)

7.2% AnnuityProperty$50,000 Cash

Income tax deduction of $20,465 may save $5,116.

Property$50,000

One Life

Annuity of $3,600 for life. Tax-free amount $2,502. Estimated one life payout of $45,720. Effective rate 9.9%.

Remainder to Charity

After one life,

property to charity.


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Living Unitrust Life IncomeLiving Unitrust Life IncomeJohn Jones 65 Mary Jones 60

Property$200,000

Trust Principal$200,000

6% Unitrust

Two Lives

Increased income from

trust $12,000. Effective

rate 6.52%.

Charity$321,687

Remainder to Charity.

Bypass of gain saves $32,000. Deduct $51,470.


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Give Through Your Will A fixed amount

Designated property

A percentage of your estate

A residual bequest

A testamentary trust

Each State has specific guidelines.


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Give Through Life Insurance A paid-up policy

A policy on which you are still paying premiums

A new policy to benefit the charity

An existing policy naming the charity as a beneficiary


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Give Through Retirement Plans IRA

401 (K), 403 (B)…

Profit Sharing Plan

Tax Sheltered Annuity

Other


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Give Through Life Estate Reserved Deed home, vacation home, or farm

to charity

Take income tax deduction

Use property for remainder of donor’s life

Property passes to charity – no probate cost


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Life Estate ReservedLife Estate ReservedJohn Jones 75 Mary Jones 70

Deed to CharityTrust Principal

$200,000

Two Lives

Income tax ded.

of $56,000.

Charity$200,000

After two lives,

property to charity.

Home or Farm$200,000

Deed to charity. Retain right to use property.


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Give Through a Revocable Living Trust Allows one to change mind, to

revoke a trust agreement

Can provide life income and serve gift intentions while in force

Provides flexibility with individuals and institutions during life

Takes precedence over will


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The Local Church Process


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What Does The Discipline Say?¶ 2532.5:

1. Board of Trustees receives and administers all bequests and trusts, and invests all trust funds

2. Charge Conference can give notice to Board of Trustees that it is delegating

responsibilities in 1. to the permanent endowment committee or to a local church foundation


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What Does The Discipline Say, cont’d?¶ 2533: A charge conference may establish a permanent endowment fund committee (PEFC) with responsibilities to:

1. Provide services described in ¶ 2532.5 as designated by donor or charge conference. Encourages use of a UM foundation.

2. Charge conference shall adopt PEFC guidelines on planned giving and/or permanent endowment fund (including administration).


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What Does The Discipline Say, cont’d?¶ 2533, cont’d:

3. Emphasize to the congregation the need for all adults to have a will and an estate plan

4. Stress the opportunities for church members and constituents to make provisions for giving through UM churches, institutions, agencies,and causes by means of wills, annuities, trusts, life insurance, memorials, and various types of property.


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5. Arrange for the dissemination of pre-retirement planning information: e.g., living will, living trust

6. Ensure PEFC members conform to charge conference actions, that members have no conflicts of interest, and that the permanent endowment document be changed to reflect any General Conference actions.


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7. Other responsibilities as determined by the charge conference

8. Resources for these tasks: UM foundations and development offices, National Association of UM Foundations, General Board of Discipleship, General Council on Finance and Administration, and other appropriate sources [e.g., UM Legacy Partners]


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What Does The Discipline Say, cont’d?¶ 2534: Local Church Foundations

Refer to Discipline text.


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Legacy Partners Proposed ProcessForm a small ad hoc committee with the Legacy Leader as chairperson. Include staff and lay people. Determine the status of Legacy Giving in the congregation.

• Are there one or more accounts holding legacy funds (from bequests, trusts, income producing gifts, etc.)?

• If so, is use of the funds designated or undesignated?

• How are the funds invested?

• Have the donors' wishes been met?


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Proposed Process, cont’d• If the church has an endowment or legacy gifts committee, have that committee chairperson or a member of the committee be elected the Legacy Leader.

•The named committee member would be responsible for interfacing with UMLP as he/she sees fit.

•Additional responsibilities of the existing committee would be to work with UMLP to share successes in their church, to be a possible resource for others, and to consider additional ideas and expertise brought to the table by UMLP.


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Proposed Process, cont’d• Become educated about legacy giving through resources available from the United Methodist Foundation and UM Legacy Partners.

• Draft a Legacy Program Charter for the church asking UMLP for help and using programs at other churches that have successful programs.


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Proposed Process, cont’d• Upon formulation of a final Legacy Program Charter proposal, take it to the appropriate approving bodies within the church (e. g., Finance Committee, Administrative Council, Charge Conference).

• Begin implementing the approved plan, educating church members, etc.

(Again, with the help of Legacy Partners, if needed).


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Workshop and Discussion


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Consideration: Does the church have the structure in place that allows the pastor to address these prospective donor questions?

If so, how can leaders help to ensure that the proposed legacy gift fulfills both the requirements of the donor and of the church?


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If not, where can the pastor and church leaders get help?

What can the pastor and church leaders do to be prepared for inquiries from prospective legacy donors?


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Example 1: One of your church members approaches your pastor and wants to include your church in his or her will. The gift will be a parcel of land currently worth $250,000.


What Are the Answers?Review


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The pastor requests preliminary information from the donor. What are donor’s objectives, e.g., to make an outright current gift, an incoming-producing planned gift, or a bequest? Identify prospective donor’s professional advisors, if any. Get prospective donor’s permission to meet with church’s gift planning advisors, e. g. United Methodist Foundation gift planners. Make sure that all due diligence regarding the real estate is complete before the gift is accepted.

Answer to Example 1


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Example 2: One of your members approaches your pastor and wants to make an income-producing gift of an appreciated asset to the church. The $100,000 asset currently produces very little income. How can the donor receive additional income and make a gift?


Review


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The pastor relates to the prospective donor that there are several kinds of income-producing gifts. Suggest that the prospective donor meet with the church’s pastor and a gift planning advisor, e.g. a representative of the United Methodist Foundation, to explore alternatives and donor objectives.

Answer to Example 2


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Discuss use of the gift remainder after death(s) of donor(s) and any other income beneficiaries. Use can be undesignated to use where needed most or designated for a particular purpose, e.g. a mission endowment.

For Example 1

and Example 2


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How to Get Help


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Get an appointment with a UM Foundation Planning Officer

Discuss gift planning needs

Ask planning officer to recommend one or more plans to meet needs

Planning Officer reviews results with pastor, prospective donor, and if appropriate others, e.g. Legacy Leader

How to Get Help


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6. Develop additional plans if needed

7. If prospective donor decides on a plan, review with his/her legal and financial advisors

8. Have legal and financial advisors develop plan details, if appropriate

How to Get Help, cont’d.


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11.If church, prospective donor, and the UM Foundation Planning Officer agree upon the plan, execute it with appropriate counsel.

How to Get Help, cont’d.


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Contact Information

UM FoundationUnited Methodist Legacy Partners

1307 Glenwood Ave.Suite 153

Raleigh, NC 27605 (919) 836-0029

www.umf-nc.org

www.umlegacypartners.org


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THANK YOU

For your interest in

The UM Foundation

&

Legacy Partners

All contributions are tax deductible to the extent allowable by law.

Documents

UM Legacy Partners of The North Carolina Conference 1 Legacy Giving in the Local Church United Methodist Legacy Partners of the North Carolina Conference