The following article is reprinted with permission from the PEER Network newsletter:
In recent years, many people have stressed making wills and establishing bequests as the cornerstone of planned giving in the local church. In fact, the first Sunday of May is “Wills Emphasis Sunday” in the Presbyterian Church (USA), when many congregations hold estate planning seminars to educate their members on how and why to make wills and write bequests. Clearly, a bequest is one of the best ways to make a planned gift: it becomes the centerpiece in expressing one’s lifelong values and commitments as part of one’s will.
Nevertheless, encouraging bequests can be a challenge. Bequests, by definition, are part of a larger estate plan, which can be intimidating to many people. Focusing exclusively on bequests in a planned giving ministry may make some members feel they must finalize all their end-of-life plans in order to participate. Or, they may already have a strong estate plan in place and are reluctant to go through the process and costs of revising it in order to add a bequest to the church. Thus, it is important to know that there are simple, quick, and free alternatives for those who wish to remember the church through their estate but either are not prepared to go through a full-blown estate planning process or to change their current will.
One of the best and easiest ways to make a planned gift is to make the church the beneficiary of a retirement plan. IRAs, 401(k)s, and other qualified retirement plans can hold considerable assets that have been accumulated through a long discipline of investment and resulting tax-free growth. However, those retirement plan assets are taxable income to heirs and may also be subject to estate taxes, which means that a significant portion of them will never make it into the hands of one’s heirs. On the other hand, those assets pass through tax-free to the church if it is designated as the beneficiary, and they also reduce the value of the estate and thus its exposure to estate taxes. Even better, this kind of planned gift can be made as simply as requesting a beneficiary designation form from the plan and listing the church; there are no lawyers, no notaries, no fees. Some plans, such as TIAA-CREF, even allow you to make the change online!
Another set of excellent alternatives to bequests center on life insurance policies. The simplest choice is to make the church the full or partial beneficiary of an existing life insurance policy; this means that his or her estate will be credited with a charitable deduction for the amount that goes to the church at the time of death. Going a step further, the member can actually donate a “paid-up” policy (one on which no further premiums are being paid) to the church, making the church both the owner and the beneficiary. The church would then get the policy payments at the time of death, but the donor gets an income tax deduction equal to the value of the premiums paid or the replacement value of the policy, whichever is lesser.
With these options in mind, you should be able to attract a whole new circle of participants in the planned giving ministry of your church beyond those who have made the more familiar commitments of bequests or annuities. Perhaps “Wills Alternative Sunday” is too much, but start educating your congregation on these alternatives and see what fruit it bears!
The Reverend JC Austin is a PEER board member and Associate Pastor for Evangelism and Stewardship, Madison Avenue Presbyterian Church, New York NY.
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