INTER-AMERICAN DIVISION OF THE GENERAL CONFERENCE TRUST SERVICES. Responsibilities for the here and now -- and the hereafter...

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1 INTER-AMERICAN DIVISION OF THE GENERAL CONFERENCE TRUST SERVICES Responsibilities for the here and now -- and the hereafter... Nearly 150 years ago, Ellen White gave the following counsel: "The Lord would have His followers dispense their means while they can do it themselves,". In the matter of wills, she said, it is our responsibility to exercise our intellect and "secure to the Lord His own." This provides a platform the Seventh-day Adventist tradition of redistributing resources through Wills, Trusts, Annuities and other Special Gifts that benefit individuals, families and the work of God. As a highly professional service at every level of the church, Trust Services expresses this tradition through sound administrative and investment policies, accountability and high ethical standards. All personnel who carry duties in Trust Services must be certified and complete annual continuing education requirements. Trust Services organizations are audited through the regularly auditing process of the church and must meet rigorous accreditation and fiduciary standards. Designed to meet changing needs throughout the life cycle, Trust Services not only provides useful financial, estate and gift planning information and services, but also discusses how to arrange care for children, elderly individuals, retirees, and individuals who are not able to make decisions for themselves. It does its work by placing these services in the context of Seventh-day Adventist beliefs and makes them available to all. Trust Services provides a unique opportunity for our church families to achieve their personal, financial and spiritual objectives.

2 Frequently Asked Questions (FAQ s) Regarding Trust Services What is Trust Services? Trust Services is a highly specialized department at every level of the Seventh-day Adventist Church, which helps church members and friends of the Church by providing them with estate planning information and services and giving them the opportunity to continue their support of God's work through wills, trusts, annuities and other special gifts. How did Trust Services get started? Seventh-day Adventists believe the concept of Trust Services originated with God. The scriptures tell us to "guard what was committed to your trust." This instruction, given to Timothy regarding spiritual matters, also teaches us that wealth comes from God and is to be used for His glory. What a tragedy if the goods we leave behind are squandered without meaning or direction! In this regard, Ellen G. White gave very pointed counsel regarding the responsibilities of Christians (See Counsels on Stewardship, pp ; Testimonies, Volume 1, pp ; Volume 3, pp ; Volume 4, pp , , Volume 5, pp ). Her own life set the example: Her will carefully provided not only for her immediate family and other loved ones, but established a trust to oversee publication and distribution of her writings -- work that continues today. Many other Seventh-day Adventist workers and members remembered the Church in their wills, primarily through annuities in the 1930s and through trusts beginning in the 1940s. In 1961 an Annual Council action gave new emphasis to the Trust Services area, and in 1965, Robert Osborn, an Associate Treasurer of the General Conference was elected Director of Trust Services. Under his leadership many of the policies and procedures were developed. In 1968, A.C. McKee became the first fulltime Director of Trust Services, and under his leadership, Trust Services expanded to many of the church's world divisions. How has Trust Services benefited the Church? At the end of 2003, the total gifts to the Church through

3 Trust Services passed the $1 billion US dollar mark! How can Trust Services help members develop a good estate plan? Trust Services personnel at the Church, Conference, Institution and Union levels along with organized professional bodies and individuals, assist member and individuals in integrating their goals and desires for family, other loved ones and God's cause in full harmony with good professional ethics. What does Trust Services charge? In almost all cases, Trust Services provides assistance without any charge. It is a Ministry in the church to members and those of the community who desire its service. Do I have to be rich to use Trust Services? No. Trust Services is designed to assist from the very poor with a simple will, to those who have much for estate planning. Is Trust Services available even if I don't give to the church? Trust Services is not concerned with the acquisition of support for the church organization, but also with the general wellbeing of the individual members and individual in this very vital area of estate planning and personal care. Certainly initial consultations are available to all regardless of resources or charitable intent. Can I have a part in finishing God's work even if I pass to my rest before His Second Coming? Yes. Ellen G. White, an authoritative source for the Seventh-day Adventist church stated "You may now, while alive, make diligent faithful work, that after your death gifts and offering may come into the treasury of the cause of God." The Gospel Herald, December 4, 1904 What is a Will? A will is a legal document that provides for the disposition of personal assets at death. Another important purpose is the naming of a guardian for your minor children. A properly dated, signed and witnessed will helps ensure that ones wishes are honored after death.

4 What is a Trust? There are two major general types of trusts: 1) Revocable Trust 2) Irrevocable Trust. Revocable Trust A Revocable trust allows the individual (grantor) to withdraw any or all assets as well as to have full enjoyment of the property during his or her lifetime. At death, the assets flow efficiently to the beneficiaries, saving probate and administrative costs. Irrevocable Trust An Irrevocable trusts generally cannot be revoked or changed without express legal authorization. Certain types of irrevocable trusts such as charitable remainder trusts, wholly charitable trusts and some charitable lead trusts allow the donor to claim a charitable tax deduction for the estimated current value of the gift that will ultimately pass to the church or other charity, (National laws may vary). Will my death be hastened if I make a Will? Absolutely no!. In fact, making a will can give peace of mind that promotes your well being. "Death will not come one day sooner, brethren, because you have made your will." (Counsels on Stewardship, p. 328). What should Christians consider when making their wills? In planning for disposition of assets, Christians should have concern for their family and loved ones, as well as for God's work and those less fortunate than themselves. Why should Individuals have confidence in Trust Services? The Trust Services department is a fully accredited department of the General Conference of Seventh-day Adventists. This means the department complies with rigorous standards of the Church and is audited by the General Conference Auditing Service. Further, all employees who have discretionary duties are expected to complete a certification course, and finish a course of professional reading.

5 How can I contact a Trust Services representative? You can make direct contact with the Trust Services department of the church entity you wish to benefit the most in your estate plan. This could be the conference for the benefit of your local church or conference activities; your union to benefit union entities; or the General Conference to benefit the Inter American Division or worldwide activities. You can also contact directly any institution or other ministry of the church. The Trust Services Coordinator in the local church can assist you in contacting the relevant authorities. A Season for Everything, and a Time for Every Purpose... Life is about transitions, growing from child to adult to senior. It is about extending God's kingdom from generation to generation. Our faith in the Lord may be constant, but personal, family and financial challenges change almost daily. Trust Services can help. As unique mission of the Seventh-day Adventist Church, this department provides useful financial, estate and gift planning information -- with special sensitivity to the Seventh-day Adventist faith. Trust Services is not just for the wealthy, and it is not just for seniors. Throughout the life cycle, we discuss your changing needs to build financial security, protect loved ones and sustain the causes you love. Administered locally by people who worship right beside you, the services generally are free -- so every church member can effectively manage the resources God entrusts to them.

6 Here and Now Plans for Young Adults... Set an example for faith while you re young. 1Timothy 4:12 Flying solo means having your own car, bank account and apartment and taking full responsibility for your life and your faith. And even though family and friends are just a phone call away, when the bills come to your address, you re really on your own. But you don t have to go it alone. Trust Services can show you how careful planning pays off in a growing estate that provides for you and for the Lord and how the right documents can protect you if illness or injury prevents you from making decisions. Trust Services provides information about: Budgeting that promotes saving and fulfills your covenant with the Lord. Wills that pass your assets to people and causes you love. Powers of attorney that express your wishes and name people you trust to handle your personal business or make health care decisions if you cannot. Strategies that combine investments and philanthropy to save taxes, provide retirement income and invest in God s Kingdom. Once you establish a Trust Services relationship, we ll always be there for you with services that meet your changing needs as you move through the cycle of life.

7 Togetherness... Building a Future for Two... Two are better than one. Eccl. 4:9 Being single meant growing up. Life as a couple means growing together depending on each other for emotional and financial support, in good times and bad. With two people working, you can have more, save more and do more for yourself, your loved ones and your church. You can begin to build the resources that will sustain a family. But a lifestyle that depends on two incomes is easily jeopardized, and if one of you fall victim to illness or accident, the survivor may be left without the means to live comfortably. Trust Services can help, with information about: Wills that pass your assets on to your spouse and others you care about. Trusts that protect your estate from unnecessary taxes. Documents that enable your spouse to make decisions if you cannot. Sensible retirement options that diversify your assets and reduce taxes now and in the future. Careful estate planning is important throughout your life cycle and marriage is one of the critical landmarks. Trust Services can be there for you as your love for each other deepens, as your family and your faith grow with strategies that create a legacy for your spouse and for the work of the Lord who brought the two of you together. Plans that put families first...

8 Be careful that you do not forget the Lord. Deut. 6:12 Whether you re married or on your own, parenting raises some troubling questions: If you cannot be there for your children, who will raise them to love the Lord? Who will see to their Christian education and launch them as productive adults? That s why legal instruments are so critical for parents with minor children. Without documents that clearly express your wishes, your children s future could rest with a probate judge who neither knows your religious beliefs nor has the legal authority to honor them. Trust Services can help. A unique ministry of the Seventh-day Adventist Church, Trust Services provides information about: Attorneys and other professionals who can help you realize your dreams for your children in this life and eternity. Wills that protect your property for family and charity. Naming guardians to care for your children in the event of your death. Trusts that can fund your children s education and living

9 expenses. Strategies to provide your children with an inheritance, while remembering Gods larger family. We all want to watch our children grow. But if accident or illness intervenes, Trust Services can help you protect your family and keep the faith. Plans for Mature Lives and Spiritual Commitment... The Lord s counsel will stand. Proverbs 19:21 The joys and worries of child rearing are behind you. Without academy or college tuition to pay and with your income at its peak, you may have the opportunity and the resources to plan for retirement and for sharing the Lord s blessings with your family and God s. Trust Services is ready to help. We can share information about various estate and charitable gift planning strategies such as the gift annuity we helped arrange for the Gaynors that enhance retirement income, maximize the legacy you leave to loved ones and to the Lord s work, and minimize taxes that could erode that legacy. Trust Services can be there as you and your advisors: Assess anticipated retirement income and identify ways to diversify or stabilize that income. Consider early retirement, so you can enjoy grandchildren, participate more in your local church or volunteer to join overseas missions. Address the needs of elderly parents, disabled children or young grandchildren who depend on your support. Review existing estate plans and establish new wills, trusts, powers of attorney, and other critical documents that protect your future financial

10 security, transfer valuable assets to family, and express your love of the Lord. The nest is empty, but you have many years ahead to enjoy God s blessings and advance His work. Trust Services can help you make the most of this special time in the cycle of life. Caring for Family and the Lord's Work... The Lord blesses us with wealth and adds no trouble to it. Proverbs 10:22 You're a loving couple, confronting the practical challenges of aging - together. How can you live out your golden years in comfort and dignity, even if your health fails? If you need nursing home care, will there be sufficient resources to maintain you? If one of you passes away, can the survivor manage alone? Trust Services helps you tackle these questions and make preparations to age successfully. By learning about estate and charitable gift planning strategies - such as the irrevocable insurance trust, you can maximize your legacy to family and church, while minimizing taxes and probate costs that could erode that legacy. Trust Services can be there as you and your advisors: Update wills to ensure your assets are distributed according to your wishes. Develop trusts that manage your resources effectively and provide for an attentive and caring trustee relationship. Establish powers of attorney that consider your needs and protect your interests if you're incapacitated.

11 Explore opportunities to give to Adventist causes today, enhance your future financial security, and preserve assets for your family and your church. You've committed your life to marriage, family and faith. As you enter these golden years, Trust Services can show you how those commitments can live on - sustaining your loved ones and building God's kingdom. Personal and Spiritual Security for Older Adults... Change is always hard. Whether you're recently widowed or an older single, aging alone requires adjustments. Changing circumstances may require an updated will, trust and power of attorney, or an estate plan that accommodates relocation -- to a retirement community, an independent living setting or a nursing home. Changing priorities may prompt you to use God's gifts to further His work or to honor your spouse's memory. Trust Services can walk beside you, showing you ways to reach your goals and providing the spiritual support you need to age gracefully in the light of the Lord. God will strengthen thee, uphold thee, with His righteousness. -- Isaiah 41:10 Maybe you remained single -- or maybe you enjoyed many years with a loving spouse. Maybe you had a career -- or devoted yourself full-time to family life. Now, you're confronting the challenges of aging on your own, with only the Lord for guidance. Trust Services can walk that path beside you. We've helped thousands of Seventh-day Adventists plan for the cycle of life. Trust Services can help you realize the dreams -- and relieve the anxieties. Together, we can address your concerns about financial security, health care and housing, and help you put in place the following: Powers of attorney that consider your wishes and protect your interests should you become incapacitated Trusts that manage your assets effectively and provide for an attentive and caring trustee relationship

12 Wills that distribute your resources to the people and causes most important to you Charitable giving strategies that provide payments during your lifetime, while preserving assets for the Lord's work Your life is always in God's hands. Trust Services can help you live that life with peace of mind and with the knowledge that your days on earth have created a valuable legacy -- for the next generation and for your church. Your Will is Important Procrastinating about making or updating a will occurs for many reasons. You may think it costs too much to make a will. Perhaps you are having a hard time deciding about how to leave your money. Or you may simply have an aversion to confronting your mortality. Many people wonder how the benefits of a will can outweigh the headaches mentioned above. The following questions are common ones. We've provided the answers to help you see that having a will is a privilege and responsibility you should not dismiss lightly. Why is My Will So Special? Your will is a way to be sure all your property will go to those relatives, friends and organizations you care about most. Without a will, the state will decide who gets what, without consulting anyone or considering the special needs and financial circumstances of your particular situation. What Should My Will Do for Me? To begin with, your will lets you give specific possessions and amounts of money to whomever you wish. You can give the balance of your estate in various proportions to your spouse, children, relatives, friends, and charitable organizations. Also, your will lets you choose an executor who is capable of settling your estate. And, it lets you choose who will raise and care for your dependent children. Are There Any Tax Advantages to Having a Will? Yes. There can be tax advantages to having a properly drafted will. Even though unlimited marital deductions may eliminate estate taxes when your estate passes to a surviving spouse, that may not be the best solution for other survivors, and

13 could result in much greater taxes when your surviving spouse dies. However, you can take full advantage of estate tax savings by creating trusts through a properly drafted will. (National laws vary) How Can I Set Up a Will That Benefits the Most People? We recommend that you obtain the professional counsel of your attorney. If you are considering a gift to the church, you may contact the Trust Services representative in your area. The attorney will THEN follow your wishes, taking into consideration financial circumstances and tax considerations for your benefit -- OFTEN at no charge to you. Remembering the Church in Your Will One of the simplest ways for you to make a future gift to the Church is through your will. In your will, simply state the organization you desire as a beneficiary in one of many ways: One possibility is a bequest of a fixed dollar amount. Another is to give a percentage of your estate, which allows you to keep the division of the estate residue in desired proportions, regardless of its size. Your gift can be contingent -- that is, the funds would go to a certain individual if that person survives you. If not, they would be paid to the Church. An alternative is to create a trust through your will, which would pay an income to the individual for life, with the remaining principal to be given to the Church thereafter. Usually a gift without restriction is the most useful, because it allows church leadership to apply the funds to the most pressing needs. But you also have the right to specify how the funds are to be used. If you wish to do this, you are urged to consult church leadership before you execute

14 your will to make certain the conditions are ones the Church is able to meet. One of the nicest things you can do is to make your gift in memory or honor of someone you've loved or admired. GIVE AND RECEIVE WITH A CHARITABLE GIFT ANNUITY Many of our friends who have been discouraged, or even hurt, by low earnings on their cash investments are discovering that they can help the Seventh-day Adventist Church and help themselves by the same means a charitable gift annuity contract. How a Gift Annuity Works The concept of a gift annuity is simple. A person wishing to support the church, makes a gift of cash or marketable property to the Church. We reinvest the assets and guarantee to pay the donor a fixed income for life (and, if desired, for another beneficiary s lifetime). Upon the death of the last beneficiary, the funds are available for the use of the church. The transaction is partly a charitable gift and partly a purchase of the income interest. The annuity rate is the dollar amount returned to you annually, a percentage of the value of your gift. And these rates are related to the ages of the recipients. What You Get Out of It You have the benefit of a lifetime income for yourself and possibly another person, but there are numerous tax advantages, as well: The portion of the transaction that is considered a gift qualifies as a charitable deduction.

15 Part of the annual income is considered a tax-free return of capital, excluding it from gross income until you reach your life expectancy. If you contribute appreciated securities, you ll need to pay some capital gains taxes for the sale portion of the transaction, but it s payable over your life expectancy not in one year. Additionally, there are possible savings in investment charges, probate attorney fees and settlement cost if you allow the Church to manage the assets. THE PREDICTABILITY OF ANNUITY TRUST Are you uncomfortable letting your future retirement dollars ride the up and down of the stock and bond market? Do you consider short-term money market rates too unstable and less than appealing? You can make a gift supporting the Seventh-day Adventist Church through an annuity trust an realize many financial an tax benefits. Here s How It Works This plan will pay you a fixed dollar amount every year for the rest of your life, with no investment worries or responsibilities. Then after your lifetime (and the lifetime of a surviving beneficiary, if desired), the trust remainder is available for the Church. At the outset, you decide the amount to be paid to you each year from the trust. Then you irrevocably transfer assets to fund your annuity trust. You ll receive income from the investment of the assets, and it will be the same amount for the rest of your life, regardless of changing interest rates and stock market fluctuations. Look at the tax advantages: You can take an income and gift tax charitable deduction in the year you establish your trust. And a gift of appreciated security can assure even more valuable tax savings because you avoid any immediate tax on the capital gain. Weigh the Benefits You Can Enjoy Consider these attractive features an annuity trust offers you: A fixed and certain dollar income for your life.

16 A sizable income and gift tax charitable deduction. A way to increase income from a low-yield holding. Freedom from investment responsibilities. Avoidance of immediate capital gains tax on appreciated assets used to fund the trust. An annuity trust is especially appropriate for older donors who are not as concerned about inflation as they are about investment stability. SIMPLIFY YOUR GIVING WITH A DONOR ADVISED FUND Do you want to have some say in how your funds are used for the work of the church or institution you have chosen to support? Through a Donor Advised Fund you can realize many of the benefits of a private foundation without the costs and complications typically associated with private foundations. What is a Donor Advised Fund? A Donor Advised Fund is an estate planning tool which allows you to make taxdeductible gifts now, and make recommendations as to how those gifts should be used at a later date. Simply stated, A Donor Advised Fund is an account you set up with your local Conference or educational institution. This account makes it possible for your to make recommendations for the use of your gift as you would be able to do with a private foundation -- without the foundation startup and ongoing administrative costs. You make tax-deductible gifts now, and later advise which organizations will benefit from your fund. With a donor advised fund you receive both the tax benefits of giving and the joy of God's blessing. How does it work? When you establish a Donor Advised Fund with your local conference or institution, you make a tax-deductible gift of cash or other assets. The gift placed in the Donor Advised Fund is invested and managed by the conference or institution. You are eligible to receive a charitable tax-deduction for the year that you make your gift. Later on, you advise the institution how you would like those funds to be used. It is important to note that your gift to set up a donor advised fund is irrevocable. The charitable organization has legal discretionary ownership and control of the fund, but typically considers positively your recommendations for charitable distribution. You have no right to the income or principal of your Donor Advised Fund. The value of your fund will fluctuate.

17 Potential donors should consult their qualified professional legal and/or tax advisors. Here's how a Donor Advised Fund can benefit you. A reduction in your income tax will be realized if you itemize, whether you donate cash or other assets. You will avoid capital gains taxes on long-term appreciated assets if you make the gift before you sell. Your gifted assets are removed from your estate so your estate won't be subject to estate tax. You can suggest that your legacy benefit the work dearest to your heart during your lifetime -- creating a family tradition of giving and a legacy that lives long after you. Your gift will grow, providing greater support to your favorite charities and/or ministries. The advantages of a private foundation are yours, but you avoid expensive startup and ongoing administrative costs. Your gift is also not subject to the lower charitable contribution limits set on gifts to a private foundation. If you're looking for a way to leave a legacy and haven't formulated a plan on what you want to accomplish, a Donor Advised Fund may just work for you. THE FLEXIBILITY OF A UNITRUST The unitrust is an irrevocable gift to the Church, but it s also much more. Because the unitrust is a deferred gift plan, it lets you make a major donation of securities or other property, but you get to keep the income from those assets. How a Unitrust Works The concept of this combination investment plan/gift is simple. You fund a unitrust with assets (appreciated property or stocks generate the greatest net savings for you). The amount you receive as a life income is a set percentage (you choose it at the start) of the current value of the unitrust, re-determined annually. After your life (and, if you wish, that of a survivor), the principal of your trust goes to the Church. You can receive the same percentage every year, even if the unitrust income is less than that percentage (any difference comes out of capital gains or principal). Or, you can choose a unitrust with a net income plus make-up option,

18 so that if the actual income amount is below the stated percentage, you receive only that amount (deficiencies are made up in later years when the unitrust income exceeds the stated percentage). You can also receive the lesser of net income or the stated percentage with no make-up option. A unitrust offers many advantages: Add Up the Benefits In the year you create and fund a unitrust, you get a sizable income and gift tax charitable deduction. If you use appreciated securities to fund a unitrust, you completely avoid immediate capital gains tax on the appreciation. And, your deduction is based on the current market value, not cost basis, if the asset has been held more than one year. You secure a life income (often greater than your previous yield.) You re provided with a hedge against inflation. Professional management of the assets frees you from investment worries. Most importantly, you make a personal commitment of a significant gift to the Church to hasten the work. YOU RE IN CONTROL... WITH A LIVING TRUST A living trust lets you provide for yourself and your family before and after your death. It has built-in flexibility, because it allows you to stay in control of your assets. Living trusts are fully revocable, so you can change or terminate them at any time during your life. With an irrevocable trust, you give up this power, often in order to save income and/or estate taxes. Even though you reserve the right to change your mind, the possibility of major estate tax savings remains with a living trust. Benefits of a Revocable Living Trust If you make yourself the initial beneficiary, you receive the income from the trust assets, plus:

19 You re in charge, so you have the right to set the investment objectives, add or withdraw principal, change the terms of the plan, or even change the ultimate beneficiary, at any time. You can turn over the responsibility of investment management to a professional trustee, freeing you from dayto-day financial worries. The beneficiaries you name to receive the trust remainder after your lifetime (such as your spouse, children, other individuals, or a charitable organization like the Seventh-day Adventist Church) can receive an outright distribution, or the assets can continue in trust. A living trust cuts probate costs, because none of the trust assets are included in your probate estate, probate costs and delays are reduced. The terms are private, so the details about the beneficiaries and assets of a living trust usually don t enter the public record. Learn More About Your Options During your lifetime, either a revocable living trust or an irrevocable plan is a superb way of arranging a gift to the Church. Some irrevocable trusts give you an income tax charitable deduction immediately, but if it s flexibility you desire, then a living trust may be right for you. PASS ASSETS INTACT WITH A LEAD TRUST Are you concerned about the possibility of the government taking a huge part of the assets you were planning to leave your heirs? There s a way to pass assets to your family with significant estate tax savings while at the same time making a gift to the Seventh-day Adventist Church. It s called a charitable lead trust. Give Without Forfeiting Assets This trust pays out income to the Church either for a number of years you specify or for the life of one or more individuals you name. The income can be the same amount each year or a percentage of the trust value. When the term is up, the principal goes to your family, with estate or gift taxes reduced or even eliminated. The lead trust is an exceptional way to transfer property to your children or other heirs at minimal tax cost. It s ideal if you re willing to forgo investment income on an asset but don t want to force your heirs to surrender the principal.

20 A Lead Trust in Your Will Instead of funding a lifetime lead trust, you can also create one in your will a testamentary lead trust. The major difference is that the Church begins to receive income only after your death. Which is better, a lifetime or a testamentary lead trust? If you fund a trust now, you satisfy your present needs, and you can observe the results. The lifetime lead trust is also a way to pass assets to your family, with greatly reduced or avoid estate and gift tax. Either type of lead trust offers you a good way to carry out your philanthropic plans over the coming years and save on taxes. Plus, you keep ultimate control of the trust assets within the family. HAVE IT BOTH WAYS WITH A RETAINED LIFE ESTATE Did you realize you can give the Seventh-day Adventist Church your home but enjoy its use for life? It s true. You can give us your home and receive a charitable deduction for it, even though you continue living there. This is called a retained life estate. Give Your Home But Enjoy Life Use Let s assume you like the tax advantages that a charitable gift of real estate would offer, but you want to continue living in your personal residence for your lifetime. You d like to retain the right to rent your house or make improvements. You may also want a survivor (perhaps your spouse) to enjoy life occupancy. But ultimately, you d like for the Church to get the property. By deeding your home to the Church now, subject to all these rights, you can still obtain valuable tax savings. Consider the Tax Implications A gift of your home, farm, vacation home or condominium, even with stipulations about occupancy, results in a charitable deduction on your income tax. But consider estate tax savings, as well. When you leave the home to your spouse through your will or some form of joint ownership, it s generally not subject to estate tax. However, if you want one your children or a relative or a

21 friend to live in the home after your lifetime, you may pay a substantial estate tax to leave the property to them. The retained life estate provides you with a way to let someone other than your spouse have life occupancy of your home with reduced estate taxes. Personal Satisfaction Added to Tax Benefits If you re considering leaving a home to the Church, ask about a retained life estate. Besides, the income and estate tax advantages you would enjoy, you ll have the personal satisfaction of creating a significant gift for the Church. THE ADVANTAGES OF GIFTING REAL ESTATE Are you thinking of selling your home? Beware of capital gains tax! You may have a smarter alternative. A gift of real estate whether it s your personal residence, a vacation home, a farm, commercial real estate, or vacant land will enable you to enjoy attractive personal benefits while at the same time supporting the mission of the church. Implications of a Sale Versus a Gift When you sell your home you may qualify for an exclusion of up to $250,000 ($500,000 if you re married) of gain, eliminating capital gains tax on anything up to that amount. This exemption applies if you ve used the home as your primary residence at least two of the past five years. However, this capital gains tax break doesn t apply for sales of any real estate other than your primary residence. Perhaps the easiest way to avoid capital gains tax on real estate is to give it to the Seventh-day Adventist Church. And, of course, none of your sale options can generate a charitable deduction like giving your real estate does. Review the Benefits Property that has been held long-term makes an excellent charitable gift and promises you several advantages. You avoid the hassle of selling the property. The sale frees cash that otherwise would have been used to pay for taxes and upkeep. You generally obtain an income tax charitable deduction equal to the property s full fair market value (if held long-term) instead of the lower cost basis.

22 You avoid tax on the property s appreciation. The transfer isn t subject to the gift tax, and it reduces your taxable estate. Give your home or other real estate to the Church your personal satisfaction is complemented by valuable tax benefits. GIFT YOUR RETIREMENT PLAN ASSETS Did you know that your retirement plan assets are facing double taxation? If you leave retirement assets to your heirs, you ll generate income in respect of a decedent. So not only is the amount diminished by estate taxes, but the recipient also must pay income taxes on it! The assets may also be subject to generation skipping transfer taxes. Undoubtedly, your decision of who gets the remainder depends on your family members circumstances. Their needs come first. If you can make other provisions for them there s a better option for your retirement plan assets a charitable gift. Your Retirement Plan May Offer Tax Advantages If a participant dies before the entire account has been distributed, the remaining balance can be transferred to an heir or to a charitable organization like the Seventh-day Adventist Church. The principal advantage of donating retirement plan assets to the Church is that you avoid all income and estate taxes, whereas giving the assets to individual heirs may trigger a total effective marginal tax rate that is incredibly steep even exceeding 75% in some cases. Many Ways to Give

23 If you ve already provided for your relatives in your estate plan, simply name the Church as the primary beneficiary of your retirement assets. However, if you want to make sure you don t shortchange your family, you can: Name the Church as the beneficiary of part, or even all, of the balance remaining after your spouse s or another beneficiary s lifetime. To implement your wishes, advise the plan administrator of your decision and sign whatever form is required. RECEIVE THE ADVANTAGES OF THE POOLED INCOME FUND Perhaps your asset is smaller than what is required for a trust or other charitable giving instrument. And you want the advantage of the type of investments made with larger funds. A pooled income fund may have advantages for you. Here s How it Works With the pooled income fund your investment is added to gifts of others into a single pooled fund. The entire fund is invested by a trustee. Contributors to the fund receive a proportionate share of the income from the fund each year. The income received may vary from year to year based upon the net investment earnings of the fund. The beneficiary of your gift to the Pooled Income Fund may be yourself or other persons living at the time assets are transferred to the fund. Upon the death of the last surviving beneficiary, the shares are transferred to the institution you have named.. There are many ways you can give, with benefits depending upon your cycle of life. Here is a quick review... If your goal is to... Make a quick and easy gift Then you can: Simply write a check now Your benefits are: An income tax deduction and immediate impact for the Church

24 Avoid tax on capital gains Gift long-term appreciated stock or other securities A charitable deduction plus no capital gains tax Receive guaranteed, fixed income that is partially tax-free Share your enjoyment of a collection of other personal items Make a revocable gift during your lifetime Defer a gift until after your lifetime Make a large gift with little cost to yourself Create a charitable gift annuity Gift tangible personal property related to an exempt function of the Church Name the Church the beneficiary of assets in a living trust Put a bequest in your will (give the Church cash, specific property, or a share of the residue) Gift a life insurance policy you no longer need Current & future savings on income taxes, plus stable income A charitable deduction, often based on the full fair market value Full control of the trust terms for your lifetime Gifts fully exempt from estate tax Current & possibly future income tax deductions Avoid the twofold taxation on IRA or other employee benefit plans Avoid capital gains tax on the sale of a home or other real estate Gift your personal residence or farm but retain life use Name the Church as the beneficiary of the remainder of the assets after your lifetime Gift the property to the Church, or sell it to the Church at a bargain price Create a charitable gift of future interest, called a retained life estate You leave your family other assets that carry less tax liability An income tax deduction, plus reduction or elimination of capital gains tax Tax advantages plus use of the property Create a hedge against inflation over the long term Create a charitable remainder unitrust Payment of a variable income for life and tax benefits

25 Secure a fixed life income while avoiding market risks Create a charitable remainder annuity trust Tax benefits and often a higher rate of return Reduce gift and estate taxes on assets you pass to children or grandchildren Create a charitable lead trust that pays income to the Church for a specific term of years The gift and estate tax benefits of a gift, family keeps the property The laws in countries vary from on country to another. It is very important, therefore, that Trust Services Directors organize The Association of Adventist Attorneys in their local fields and get their assistance in establishing the relevant instruments necessary for the implementation of the functions of the Trust Services Department as outlined in this document.