If you are nearing retirement or are looking for a dependable income stream, you may want to consider transitioning out of your appreciated assets.
Regardless of economic conditions, there have always been assets that have performed exceptionally well for a period, such as technology stocks in the 90s and the housing market prior to 2007. Even in today’s tough economy, there are assets pushing growth records that may indicate now is a good time to transition out of the asset.
Assets that may have a strong market value today—
- Farms or Land. These property values are at an all-time high due to commodity prices. An example of this is the increase of corn prices due in part to the growing corn-ethanol industry.
- Gold. In the face of a tough global financial market, mint-issued gold bullion, coins and bars have greatly appreciated over the past few years.
- Oil and Gas Rights. Mineral rights found on property can generate royalties for the property owner. With ongoing pressure from oil prices, companies are exploring new technologies, and opportunities abound.
If you are fortunate to have an asset that has appreciated over time, you may be faced with the challenge of how to best take advantage of selling the asset while the value is high. The potential tax liability is often a concern. You may want to consider planned giving to transition out of the asset while unlocking the potential income that could help you meet your financial goals.
Using planned giving to unlock appreciated assets—
- You can deduct the current fair market value of the asset depending on the asset used and your giving strategy.
- You may avoid paying the upfront capital gains tax on the appreciated value of the asset when it sells.
- You can often transition to an income-producing asset for you and possibly your children.
- You can bless the ministries of your choice.
Knowing when to transition, how to transition, and what to sell can be difficult. That’s why you need a financial partner who understands the market—and who shares your heart for ministry. Contact your AG Financial Solutions Planned Giving consultant at 866.453.7143 to discuss options that could create opportunities to generate tax savings and income while allowing you to bless ministries for a lifetime.
Pastors spend a lot of time worrying about money in relation to their church budget. Oftentimes, they feel alone when it comes to issues of resourcing the ministry. We want to help pastors develop a deeper culture of generosity within their church to support their God-given vision.
Here are a few ideas to help you get started:
- Designate a generosity team leader to lead your ministry’s growth in this area.
- Integrate materials on stewardship and generosity into a development plan.
- Incorporate generosity teaching points into your events and ministry planning.
- Look for resources that can help you be strategic in this area.
Interested in more ideas? We have launched a new resource designed to be a virtual stewardship pastor for your church. The Generosity Action Plan Membership will help you develop a resource strategy, gain insights from leaders across the country, prepare your team with stewardship education materials, and provide ready-to-use resources that will make sure you successfully implement the action plan throughout the year. If there are other resources you would like to see, please let us know.
Learn more about the Generosity Action Plan Membership.
In a recent incident, the individual members of a church board were personally sued for losses that occurred at their church. The lawsuit was a result of an incident that occurred at the church between a minor and an individual known to be a past sexual offender. Prior to this instance, the church did not have a policy concerning sexual offenders or predators, leaving the church and its board members unprotected.
Board members are a strong asset to your church as well as significant contributors. They volunteer time, offer guidance, and contribute talents that are invaluable. However, board decisions can potentially result in liability issues not only for the church, but for individual board members.
Some states provide charitable immunity for volunteers. The purpose of this law is to encourage volunteers to serve by reducing their liability exposure while serving on the board of the charitable organization. Volunteers are usually defined as people providing services for a charitable organization (such as a church) who do not receive any compensation for their service(s) in excess of reimbursements for expenses that they incur. Members of a church board are included in this definition and, therefore, covered by the charitable immunity laws. Check your state laws to see if they provide charitable immunity and if your state’s definition of “volunteer” covers members of a church board.
In most states, however, this immunity does not apply to any act or omission that is intentional, willfully negligent, or committed with disregard or indifference towards the safety of others.
In the opening example, the church and each of it’s board members were individually named because the church did not have a policy concerning sexual offenders. The plaintiff alleged that the church board failed to provide and enforce a sexual offender policy after knowing a sexual offender attended the church and that constituted gross negligence since the omission was without regard for the safety of others.
Members of a church board should use common sense. In addition, the church should provide its board members protection with a Directors, Officers, and Trustees (DOT) insurance policy. Surprisingly, this is not an automatic coverage in most insurance policies. Double-check your current policy to ensure that you have this coverage. In addition to paying for claims that arise out of the scope and operation of a church board, this insurance covers the cost of legal fees if and when a claim arises. Furthermore, remember that board members can be sued individually. It is imperative that your church has enough DOT insurance to protect the assets of ALL the members of your board.
You need the talents of the best and brightest people on your board. Make sure you protect them by initiating proactive practices for all board proceedings and by providing them coverage with a proper Directors, Officers, and Trustees insurance policy. For more information regarding protecting your church against liability issues, contact AG Financial Insurance Solutions at 866.662.8210.
AG Financial Insurance Solutions is providing this risk management information to help protect your board. AG Financial Insurance Solutions does not practice law and does not give legal advice. The information contained in this article is not a substitute for the advice of an attorney. The law is different from jurisdiction to jurisdiction, and is also subject to interpretation by different courts. The law is a personal matter, and no general information like the kind AG Financial Insurance Solutions provides can fit every circumstance. Therefore, if you need legal advice for your specific circumstances, you should consult a licensed attorney in your area.
The year 2011 is past, and your financial plans for 2012 are probably well underway. But have you taken a look at your retirement accounts lately? There is still time to make contributions for 2011. And there are options and strategies that may make your retirement funds work harder.
Here are a couple of questions to consider.
1. Which type of IRA is the right one for me?
Traditional IRA. This IRA is a tax-advantaged account that allows earnings and deductible contributions to grow tax-deferred. This means you don’t pay income taxes on the earnings and deductible contributions until you begin taking distributions—usually after you retire and when your tax bracket is probably lower.
Roth IRA. With a Roth IRA, you can accumulate earnings on a tax-deferred basis and withdraw earnings tax-free for qualified distributions. Unlike a Traditional IRA, Roth contributions are not deductible on your federal tax return.
2. How much can I contribute?
You can contribute up to $5,000 ($6,000 for age 50+) for both you and your spouse as long as you meet the income requirements for funding an IRA. Contributions can be made to your IRA at any time during the year or by the due date for filing your tax return for that year, not including extensions. For most people, this means that contributions for 2011 must be made by April 17, 2012, and contributions for 2012 must be made by April 15, 2013.
3. Are my current retirement plans working effectively?
Managing multiple retirement accounts can be difficult. The hassle of tracking older 401(k)s, 403(b)s, and multiple IRAs can be time-consuming and costly—especially if you’re not paying attention to the fees the financial company may be charging. A great way to overcome the stress of multiple retirement accounts is to roll your funds into a single retirement account.
If you would like assistance in making the most out of your IRAs and other retirement accounts, contact AG Financial Solutions at 866.453.7143 for a free consultation.
Over the years, research conducted by the Barna Group has provided
pastors with real-world data that helped to refocus and, in many cases,
re-energize ministries. So, in the midst of our nation’s economic instability, AG Financial Solutions has commissioned the team at Barna to perform a national study of pastors and their views, activities, and convictions about giving and preaching on giving. AG Financial Solutions is honored to place the results of this survey into your hands.
Before you dive into this timely and, at times, startling data, let me highlight a couple of key statistics. First, nearly a quarter of the pastors surveyed had not preached on giving in the previous year. Of those who had not preached on giving, 60% didn’t feel it was necessary or didn’t want to preach on it. Second, of those who did preach on giving, only 6% saw a significant boost to the church’s income. That information definitely concerned me.
I recently had conversations with several pastors around the country who have been focusing on the topic of stewardship. They have seen an increase of giving by as much as 34%! In talking with these pastors, there were two key elements that were always present: positive leadership and compelling vision. As a leader you have to be strong in both.
What are your insights and experiences on this topic? Please send your comments—pro or con—to me at kregghood@agfinancial.org. We welcome the discussion and hope the Lord uses it to motivate us all to find positive, proactive ways to encourage God’s people to “excel in the grace of giving” (2 Cor. 8:7).
Thanks for reading—and let the dialog begin!
Dr. Kregg Hood
Senior Vice President, Stewardship Consulting
As 2011 came to a close, most indicators pointed to an inevitable rise in insurance prices. National disasters—including the tornado in Joplin, Missouri—increased claims payouts to unsustainable levels. In response, the price of reinsurance to insurance companies has now risen significantly. And sooner or later the companies and individuals who buy the insurance will pay a higher price.
So what can you do to keep your church insurance low? If you have a good “loss history” going back over 3 to 5 years, ask your insurance company for additional credit due to your stellar past record. Next, take a look at your deductible and think about increasing it for additional credit—which can result in lower premiums.
Third, demonstrate your use of good risk management techniques. Risk management principles in action—such as safety procedures, staff security training, and safe hiring practices—show you are a lower hazard and should qualify for additional credit.
Finally, don’t reduce your coverage because times are hard. Try the strategies discussed here, and work with your insurance agent to use his or her knowledge to get you the savings you deserve.
At AG Financial Insurance Solutions we can help make your church a better risk for an insurance company, assure you have the proper limits and coverage, and help you get you the best pricing. For a free personal consultation, call us today at 1-866-662-8210.
With December 31 fast approaching, now is the time to think about year-end tax planning options. For many, year-end tax planning is about as much fun as going to the doctor for an annual physical. But just as a yearly checkup is important for monitoring health, an annual financial assessment is an ideal way to check up on financial health and make adjustments before the December 31 deadline.
Take the time to sit down and analyze your financial situation. Then implement a plan to make sure you’re on target with stewardship goals. Here are several options to consider.
Charitable Gifts. Timing is especially important when considering a charitable gift. A cash gift may be completed quickly right up to year-end. Gifts of appreciated stock and real estate usually take more time to complete properly, but are well worth considering because of their tremendous tax benefits. The wise steward will begin the process of making these types of gifts now.
Family Gifts. If circumstances allow you to start transferring some of your wealth to children and grandchildren, consider making annual exemption gifts. You are entitled to give $13,000 per person to any number of individuals free from any gift tax.
Adjust Capital Gains and Losses. The end of the year may be the perfect time to unload some of those under-performing investments in your portfolio. You may reduce or eliminate any tax liability by matching your gains with your losses. You will generally obtain the best tax result by generating short-term capital losses to offset any short-term capital gains you may have received throughout the year.
Charitable IRA Distribution. In 2011, it is allowable to make a charitable distribution up to $100,000 from your IRA to a qualified 501(3) charity. This option may satisfy your required minimum distribution (RMD) amount and realize a tax savings.
Remember, to make a gift and receive your full tax benefits for 2011, you must complete the gift by midnight, December 31, 2011. If you are interested in making a charitable gift or exploring your options, please contact one of our consultants today.
Bob Lamb, Senior Vice President
Planned Giving and Investments
blamb@agfinancial.org
Finances are tight these days, even in growing churches. However, in the words of pioneer missionary Hudson Taylor, “God’s work, done in God’s way, will never lack God’s supplies.” So when the time comes to build a new facility to reach more people for Christ, we should anticipate receiving both God’s provision and His wisdom.
One of the most important ways God gives insight is through prayerful planning. The value of partnering with God in planning is woven throughout Scripture. In fact, more than 90 passages refer to planning. In this 3-part blog series, we'll highlight the blessings that come from the good planning for your future facility.
Planning helps clarify your thinking. Before you hire an architect or contractor, know what you can afford to pay right now for a building. Do not fall into the trap of, “If we build it they will come.” This may work in the movies. But when it comes to church buildings the reality is, “If we build it, they will visit.”
To determine what you can afford, start with how much cash you have saved. Then add the extra funds you can set aside, raise through a capital campaign, or save by holding down nonessential expenses. Then, and only then, calculate how much money you can safely afford to borrow to complete the entire project.
Do this before you put up a picture in the foyer or turn a shovel of dirt. Be sure that any loan amount you consider can be made with payments you can afford right now. One of the biggest reasons for our national economic crisis was millions of people making borrowing decisions that assumed real estate values and incomes would always go up. Bad thinking = Bad planning. Even in a ministry context that kind of assumption is not faith, it’s presumption. Your plan has a very high probablitity of succeeding if you plan with wisdom.
Dr. Kregg Hood, Senior Vice President
Loan & Stewardship Solutions
khood@agfinancial.org
We all want to be prepared and protected for the future. Now is the time to make certain you have your ministry facility protected against the onslaught of winter. Every year we see claims reported due to pipes freezing and bursting. These losses can be easily prevented with a few simple procedures.
Ensure outside walls are properly insulated. Without adequate insulation all other efforts will be a waste of time and money. Contact a local contractor to assess your needs and add insulation if necessary.
Set your thermostat to keep the entire building warm. In one circumstance, a well-intending church member turned off the thermostat with the goal of saving money on utility bills. The result was frozen pipes that burst and caused hundreds of thousands of dollars in damage. If your facility has different heating zones, make sure that all of them are set to an appropriate temperature.
Leave faucets on exterior walls dripping during intense cold. If you plan to be away for several days—or if you think you might not be able to reach the building due to a storm—you might consider turning off the water entirely. Also, disconnect all hoses from exterior spigots. Leaving a hose connected to an exterior spigot is a common source of frozen and, subsequently, broken pipes.
Check your building frequently. In the example mentioned above, no one stopped by the church for two days while the broken pipe spewed water. If your staff doesn’t keep regular business hours, make it a point to stop by regularly and inspect the building. Check the thermostat to ensure it is heating all of the building properly. Quickly walk around the inside to look and listen for water leaks.
AG Financial Insurance Solutions specializes in protecting churches and ministries. We understand the unique needs and challenges of ministry operations. That is why we work proactively to keep your organization safe from loss—and we commit to restoring you as efficiently as possible if an accident does occur. For more information about how we can help, please visit www.agfinancialinsurance.com or call 866.662.8210.
Eric Huie, Risk Manager
AG Financial Insurance Solutions
ehuie@agfinancialinsurance.com
As the economy remains stalled, it’s easy for ministry leaders to hesitate when they think about preaching, teaching, and leading the way in giving and generosity. If that’s a challenge you’re feeling, here are a few thoughts to help you reframe how you take a positive, grace-filled approach to this important topic:
Principle #1: Believe in Your Heart that Giving Should Feel Good
2 Corinthians 8:5 says: the Lord loves a “cheerful” giver. Did you know that the word cheerful in the Greek New Testament is hilaros, from which we get our English word, “hilarious”? Imagine that! God loves “hilarious givers.” Stewardship messages should stir our spirits, not quench them. Emphasize the opportunity and the blessing.
Principle #2: Emphasize God as THE Source of All Blessing
Recognizing the difference between source and means is a major battle today. Many Christians have drawn the false conclusion that the source of their income is their bank accounts, abilities, or intellects. Instead, consider this: God is the one who gives the ability to make wealth (Deuteronomy 8:17-18). This means money, ability, and intellect are not the sources of our income. They are simply the means by which God, the Source, provides blessing. To experience his abundance, we must first see him as the Source of every blessing.
Here’s a great example of this concept. In the following interview with Mark Batterson (pastor of National Community Church and author) and David Kinnaman (president of The Barna Group), take note of Mark’s strong statement, “If people are not tithing, they are not positioning themselves for blessing. And they are taking God out of the equation.” Could it be that we are teaching on tithing but forgetting to teach how to “keep God in the equation”?
Principle #3: Speak the Truth in Love
It is important for us who lead to be committed to give and to talk about giving! Several years ago I was helping our home church raise $3 million for a building expansion. During the campaign, one of our most generous givers suggested, "Don’t pray and see how much God wants you to give. Pray and see how much God wants to give through you.” I loved his liberating suggestion!
We have the privilege of being God’s ambassadors, inspiring confidence, fighting fear with faith, and sharing our own personal testimonies. Faith comes through loud and clear when we speak publicly or privately on finances. God will use our words to touch others.
We would love to hear your comments, ideas, and feedback on current ways to grow generous hearts. Click here to respond.
Dr. Kregg Hood, Senior Vice President
Loan & Stewardship Solutions
khood@agfinancial.org