Remember OC

A CAmpAign for the future ofoklAhomA ChristiAn university

Above: Dr. Bailey McBride teachingLiterary Crit icism in 1968.

Right: Students arriving at OKC campus in 1958.

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www.oc.edu/rememberoc

Section 1 contentS

2 Introduction to Remember OC

3 Investing Your Social Capital

4 The Heritage Society

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WhAt is rememBer oC?

Remember OC is an intensive university effort to secure Oklahoma Christian University’s excellence into the future. While it may seem ironic to talk of securing the future by Remembering OC, the reality is this campaign is the most future-focused endeavor in OC’s history. Remember OC reminds us of the eternal value of our mission to transform lives for Christian faith, scholarship and service, and brings to mind the impact of this mission in our own lives, in the lives of those we have known, and in the betterment of our world. Recalling these great accomplishments provides a sense of responsibility to provide the same opportunity for untold others until the Lord returns.

As Thomas Jefferson said to Richard Stevens in 1780, “instead of considering what is past ... we are to look forward and prepare for the future.” This is the purpose of Remember OC. All great institutions of higher learning prepare for the future by building strong endowment funds. Remember OC is designed to substantially increase the endowment fund at Oklahoma Christian over the next 15 to 30 years. OC has accomplished so much in its relatively brief history, but the best is yet to come. Through the generous support of numerous friends who will Remember OC through their planned and estate giving, the future is bright and secure.

While it is tempting to be content with the greatness OC has achieved, Remember OC calls us to newheights of excellence. The accomplishments of the past are our motivation for the future. The excellence to which we are called and to which our dreams compel us require our best planning and attention today. In the words of Thomas Jefferson, rather than “focus on the accomplishments of the past, we plan for the future.”

Through Remember OC, we are planning for the future. Our dreams and plans for changing our world through changed individuals are much larger than what we can accomplish today. Remember OC is a focused institution-wide effort to educate ourselves about the need for endowment funding and tax-favored ways for individuals to create endowment funds that will benefit themselves, their family members and the students of Oklahoma Christian.

Our timeless mission will never die. It is compelling and worthy of our best efforts to ensure its existence for generations to come.

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investing your soCiAl CApitAl

Good planned giving can meld multiple goals into a coherent plan that accomplishes multiple family or financial objectives through efficient use of tax advantages found in the Internal Revenue Code.

During the next 30 to 40 years, the United States will experience the largest intergenerational transfer of wealth in the history of the world. While many academic works have tried to determine the size of the wealth transfer, when it will start and when it will end, the reality is the greatest benefactor of the wealth transfer will be the Internal Revenue Service. Taxation of even modest-sized estates can trigger estate income tax, estate transfer taxes, generation skipping transfer taxes, and other state-specific income or death taxes. Proper planning prior to death can pass more family wealth to the next generation, benefit the donor during life, and provide for the perpetual funding of scholarships or programs at Oklahoma Christian University. Remember OC is our attempt to encourage donors, friends and alumni to consider remembering the university in their estate, financial and tax planning so they alone direct the recipient of their “social capital.”

Social Capital is that portion of every American’s property that will support religious, educational, healthcare or other societal needs. America’s entire tax system is built upon the concept that those who enjoy the benefits of the free enterprise system will, in one way or another, provide for the general welfare of society through taxation. The reality is that social capital will be paid through taxation or through philanthropy. The charitable deductions found in the U.S. tax code are a Congressional recognition of an American’s right to direct a portion of their social capital toward the charities or causes that they want to support. Planned giving maximizes this right through sound planning. At Oklahoma Christian, we recognize individuals who have directed a portion of their social capital toward OC as members of our prestigious Heritage Society.

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the heritAge soCiety

The Oklahoma Christian University Heritage Society exists to honor faithful alumni and cherished friends who have taken the special step of including OC in their long-term financial and estate plans. Whether through a bequest provision in a will, trust or life income gift, or by making OC a beneficiary of their retirement plan, these friends look into the future and generously provide for OC students beyond their own lives. The Heritage Society celebrates the rich tradition of philanthropy at Oklahoma Christian and specifically helps foster and acknowledge the deeply transformational act of selflessly stewarding one’s financial resources for the future benefit of others.

OC’s students are indebted to the members of the Heritage Society who provide scholarships, endowment funds and many other university priorities through their various creative tax and estate planning tools.

The following types of planned or estate gift commitments qualify individuals for membership in OC’s Heritage Society:

• A bequest provision in your will or revocable living trust

• A life income gift, such as an OC charitable gift annuity, or a charitable remainder or lead trust, that names Oklahoma Christian University as a remainder beneficiary

• A life insurance policy on which the university is the primary beneficiary and/or owner

• A gift of a portion of, or the naming of the university as a beneficiary, of a qualified retirement plan such as a §401(k) or §403(b) plan, or an individual retirement account (IRA)

• A gift of real estate or a remainder portion in your personal residence

• Any other planned or estate gift arrangement

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Section 2 contentS

6 What is planned giving?

7 What are the goals of planned giving?

8 Benefits for donors and families.

10 Types of gift plans.

20 Sample bequest language.

21 Charitable Gift Annuities.

36 Donor Advised Funds

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WhAt is plAnneD giving?

Good planned giving requires deeply examining your desires for your family and the world at large, then – through proper tax, estate and financial planning – distributing your assets in ways that further these desires. Planned giving is the art of balancing the desire to communicate your deepest core values through philanthropy with your current financial reality. While there are multiple planned giving techniques, the core element is always the donor’s desire to do something significant with their lifetime of accumulated wealth. Philanthropy is the heart of planned giving. The various tax, financial and estate planning techniques are the means by which the philanthropic plan is accomplished.

As Americans, we are blessed to live in a country where philanthropy is not only allowed, but encouraged. Our tax code, from its inception, has rewarded those who support nonprofit organizations through charitable gifting. Planned giving takes full advantage of these preferential aspects of the United States Internal Revenue Code, to maximize the benefits of charitable gifts to the donor, the donor’s family members and organizations furthering the causes they deeply love.

A properly-structured planned gift can provide several of the following benefits for donors, their surviving family members, and Oklahoma Christian students:

• Tax-favored income for life to the donor or a loved one • A generous income tax deduction • Estate and other “death tax” savings • Minimize Generation Skipping Transfer Tax while providing for grandchildren • Income tax savings for the donor’s family beneficiaries • Larger than otherwise possible charitable gift • Any combination of the above benefits • Changed lives of OC students • A changed world through the impact of a changed student taking his or her faith around the world

Most planned gifts are very simple and can be accomplished without significant legal or tax assistance, while other techniques can be sophisticated, requiring complex legal instruments. In any situation, Oklahoma Christian University has the experience, resources and legal advisors to assist you and your personal tax, accounting, financial and legal advisors in accomplishing your most important philanthropic dreams.

Planned gifts can take many forms and may be a combination of the techniques discussed later in this section. However, a well-crafted planned gift takes into account all of the donor’s assets and maximizes the benefit to the donor, the donor’s surviving beneficiaries, and Oklahoma Christian students by providing the most tax-efficient assets in the most tax-efficient manner.

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WhAt Are the goAls of estAte AnD plAnneD giving?

Ultimately, the purpose of an estate plan is to provide answers to some of life’s most difficult questions. Simply put, these questions are:

• Who will raise my minor children when I cannot? • Who will make medical decisions for me when I cannot? • Who will make financial decisions for me when I cannot? • Who decides when to stop life-sustaining treatment when I cannot? • What will happen to all of my possessions when I am gone?

A final question many individuals ask after completing an estate planning process is: What really matters most? There is something about planning for the distribution of property at death or the care of children that forces one to think deeply about one’s core life values.

An important, but often overlooked, aspect of good estate planning and philanthropy is passing along deeply-held convictions and core family values. To this end, Oklahoma Christian encourages the creation of an “ethical will” to accompany one’s traditional last will and testament or other estate-planning documents. An ethical will is a statement of what the will maker hopes for the receiving generation. It communicates deeply-held values and desires for generations to come. It is a document to be cherished by family members as a final statement of a lifetime of lessons learned.

Ask a parent or grandparent what the single most significant priority of an estate plan is, and the chances are the answer will differ greatly from that of a younger person. Most experts agree that the next decade or two will see the largest transfer of wealth to ever move from one generation to another. And in the midst of this transfer, there is a new desire that inheritance equates to more than simply a transfer of property.

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To be certain, the wise conservation of assets is an important objective of estate planning. Without it, the hard-earned value can disappear in a cloud of taxes. Measurable estates have been greatly diminished simply because adequate planning did not take place.

However, simply transferring wealth does not ensure happiness and cannot secure a legacy. In fact, it can result in something much more devastating than the indiscriminate bite of estate taxes. The realization of this fact is prompting more parents and experts to agree that the fundamental goal of estate planning should be facilitating the passage of important core family values such as integrity and initiative.

The challenge, of course, is that integrity and initiative are characteristics . And characteristics are not easily transferred through the process of estate planning. In truth, for many parents and grandparents currently engaged in estate planning, at least part of the reason there is anything to transfer in the first place is because of these parents’ values and characteristics: diligence, honesty, a respect for property, a view for the long-term, and an inherently conservative approach to an estate.

A key word in the discussion is maturity . While parents (and grandparents, of course) have had the time and opportunity to mature and learn, this may not be the case with an estate’s heirs. Fortunately, there are innovative ways in which time and opportunity can be built into an estate plan ... providing for a level of maturity that is accompanied by integrity and initiative.

Lifetime GiftsThe most common way parents are able to inject additional time into the inheritance equation is through estate planning that includes gifts of estate principal during life, additional gifts (distributions) over a period of years following death of the parent(s), and – in larger estates – deferred principal distribution.

The first question inherent in this planning strategy is: When should lifetime gifts to children begin? The easy answer is as soon as the children are financially responsible. But defining this age of responsibility is another matter. Most parents decide to start the gifting process when children are between the ages of 30 and 50.

As to the precise nature of the gift, there is research that shows that gifts of cash (up to the current $13,000 annual limit) are most frequently used to increase a lifestyle. So careful consideration should be given as to whether annual gifts are made in the form of cash or property. The best gifts are usually of stock or real estate.

Gifts of PrincipalThe bypass trust is the ideal instrument with which to pass on estate principal. At the point that mother or father pass away, the bypass trust equal to the exemption equivalent is established. Another effective and popular method of transferring principal is via the irrevocable insurance trust. Either is an effective way to manage distribution of principal with no estate tax.

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IncomeThe establishment of a testamentary charitable remainder unitrust for a term of years effectively saves on taxes and enables an asset to produce income for the benefit of children over the prescribed period of time.

Deferred PrincipalThanks to the charitable lead trust, it is possible for assets to be designated as charitable income producers for a period of years. Upon the conclusion of the prescribed number of years, the asset is then distributed to family. In especially large estates, this is one more way of insuring that the parents’ values and charitable interests are clear and that estate value is distributed to children over an extended period of time.

Impact of PlanningWhen it is all said and done, distribution of an estate can be spread over two to four levels, allowing children the necessary time and maturity to learn management skills. These factors, when accompanied by definitively stated goals on the part of the parent via the will, provide for much more than an inheritance. With this kind of thoughtful planning, the inheritance helps to ensure the development of initiative and integrity. What greater legacy could a parent or grandparent hope to leave!

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types of gift plAns

By definition, the philanthropic spirit always finds an appropriate form of expression.

We see this philanthropic spirit clearly each time we witness the desire of a child determined to give a gift to a parent or teacher. That determination will always find the perfect way to express itself. And whether it is another tie for Dad or an apple for a favorite teacher, the value of the gift is beyond measure.

Many often lament that many of our child-like characteristics seem to fade as we age. Thankfully, however, the philanthropic spirit that seems to reside somewhere in everyone’s heart does not dissipate with age.

As a nation, Americans continually set new records for charitable support. Our neighborhoods and cities thrive in part because of a pervading generosity. The list of organizations that depend wholly on the private support of individuals, families and businesses would number into the hundreds, even thousands, of pages.

Indeed, Oklahoma Christian University’s work depends on private individual expressions of support that come our way in countless forms. Each year, hundreds respond. For many, the response includes a generous gift of time and energy through volunteerism. Of course, many find material ways to express their support through gifts to our annual fund efforts and capital campaigns, as well as other specific opportunities to offer financial partnership in these efforts.

In fact, there are many ways you can make a gift to OC. The most common is the way thousands choose to express their support each year by simply writing a check or giving cash. Many of these same individuals and families plan today for a future gift that comes in the form of a bequest that is articulated in the last will and testament.

These two ways of giving represent either end of a charitable spectrum – the first providing immediate support and the latter representing a final communication of a philanthropic heart. But there are a number of other ways in which friends provide critical support for Oklahoma Christian University. Often, the way that a gift is made can have dramatic impact on helping meet the long-term and short-term objectives of the donor and family.

Almost every gift to Oklahoma Christian comes with certain tax benefits, thanks to our government’s ongoing encouragement of the private support of charities. In many situations, it is possible to receive more than just a charitable income tax deduction. Indeed, certain ways of giving make it possible to bypass capital gains taxes on appreciated assets, significantly reduce estate taxes, and even establish a whole new source of income for you and your family.

When it comes to expressing your philanthropic wishes, you may find that a dollar’s worth of value can be dramatically increased. The critical ingredient is careful planning. OC’s Office of Planned Giving can assist you and your professional advisors in creating the best possible philanthropic plan to meet your needs and desires.

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While there is no end to the combination of gift techniques and the types of assets that can be gifted, the following specific discussions concern the most common types of planned gift strategies and a few of the unique financial, tax and family benefits of each. One thing is certain, no matter what form your philanthropic expression may take, there is no way we can adequately express the value of your friendship and support of Oklahoma Christian. Thank you.

Since the earliest days of our history as a republic, America has embraced and encouraged the spirit of philanthropy. From the first president to a contemporary emphasis on a thousand points of light, there has been a strong sense that charity and the organizations spawned by a charitable nature are central to the building of strong communities.

As a country we continue to build incentives for charitable support into the fabric of our economy. These incentives are most evident in the charitable planning options central to our tax code. Amid complexities, the simplicity of charity is still encouraged.

In fact, certain aspects of the tax code actually serve to leverage the charitable spirit and even generate higher value to every contribution. This is seen in the tax benefits of planning today for a gift to charity sometime in the future, in the transfer of appreciated assets to charity, and even in the benefits that can accrue when cash is given today.

speCifiC WAys to rememBer oC

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simple gifts of CAsh

Uncle Sam Underwrites Gifts of CashDepending on the marginal tax bracket of the donor, the government actually underwrites a portion of every gift of cash to a qualified charity, up to 50% of adjusted gross income. The underwriting comes in the form of a charitable income tax deduction when IRS Form 1040 is filed. And a deduction translates to actual cash savings.

For example, a couple in the 28% tax bracket with an AGI of $60,000 may deduct gifts made to Oklahoma Christian this year, up to a total of $30,000. This means that when the couple decides to make an end-of-the-year gift of $1,000 to Oklahoma Christian University, Uncle Sam picks up part of the gift in the form of a charitable income tax deduction.

This $1,000 deduction is reported on Form 1040 when the income tax return for the year is filed. The most obvious end result is an actual tax savings of $280 for the couple. However, that is really only a part of the story. The philanthropic spirit of the couple is realized, Oklahoma Christian is able to provide scholarships to worthy students, and our world is changed for the better by the transformed life of a young man or woman on this campus.

Take Advantage of Every Opportunity To Leverage Your PhilanthropyPerhaps nothing is encouraged through our tax structure more than the active support of qualified charitable organizations like Oklahoma Christian. So important is the work of charity that lawmakers take great pains to ensure that the philanthropic spirit is encouraged and even underwritten. If we can assist you in examining the specific implications of a gift you are considering, do not hesitate to contact OC’s Office of Planned Giving.

Gift Amount1,000

Income Tax Rate28%

Value of Deduction280

OUTrIGHT GIFT OF CASH

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gift of stoCks or other seCurities

Getting The Most Value From Your Stock: The Tax Economics of A Current GiftThe stock market has had its ups and downs (more downs than ups recently), but the history of the market is that it has rewarded those who buckled in and held on for what at times seemed to be a wildly frantic ride. Those who acquired stock in companies that have experienced significant growth over the years now enjoy the rewards of highly-appreciated assets within their personal portfolios. Certainly, the market values have declined in recent months, but there are still significant numbers of investors with large capital gains in shares of corporate stock purchased decades ago.

For example, it is not at all unusual for shares of common stock or mutual funds acquired for $2,000 in the 1980s to have a fair market value today of $20,000 or more, after reinvestment of dividends and capital gains. However, while the value may have increased dramatically, many stocks deliver a relatively low annual yield when compared with the total value. Returns between 1.5% and 2.5% are often the norm. So, a block of stock worth $20,000 may deliver no more than $400 in annual income, a relatively modest return.

In an effort to realize a bit more of the value inherent in the stock, selling is often viewed as the only option. However, selling the $20,000 block of stock mentioned above would result in a capital gains tax on the appreciated value in many states of about $3,000. So after selling, the asset value would shrink to approximately $17,000.

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reduce Taxes and Leverage ValueThe good news for friends of Oklahoma Christian University is that there is a planning option that leverages the value of an appreciated asset like stock. The end result is that the tax bite is reduced, charitable objectives are realized and the spirit of philanthropy is rewarded.

The leverage comes from the incentives for philanthropy that continue to be embedded in the U.S. tax code. In short, the code rewards personal investments in qualified charitable organizations like Oklahoma Christian. And while most Americans are aware of the fact that the charitable income tax deduction is one of the byproducts of contributions, many are not aware of just how much leverage can be gained with some thoughtful planning.

To illustrate the leverage, let’s reconsider the $20,000 block of stock mentioned earlier. Rather than deciding to sell the asset to create liquidity and thereby ending up with less than $17,000 after the applicable capital gains tax, consider the impact of transferring the stock to Oklahoma Christian. The transfer, as an act of philanthropy, is rewarded in three significant ways.

• First, there is a bypass of capital gains tax that may save $3,000.• Second, the donor receives a charitable income tax deduction for gifting the full value of the stock ($20,000) to OC, saving perhaps $6,000 in taxes.• Third, OC now owns the block of stock and is able to sell and receive the full fair market value of $20,000.• Fourth, a worthy OC student experiences the life-transforming power of a truly Christ-centered education in a Christian community.

The Impact of LeverageBy utilizing the planning tools afforded through our tax code, the $2,000 investment of years ago results in a $20,000 gift to charity and more than $9,000 in tax savings to the philanthropically minded.

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Current gift of lAnD

Moving Mountains And Building Dreams: How To Leverage The Value Of LandSince the earliest days of our country, land has been recognized as a central asset to the American Dream. From a quest for wide-open spaces, to the highest levels of sophistication in development, leveraging land for the best possible value is a practice with which Americans are very familiar.

With the right plan, mountains are moved and dreams are realized. However, it is not at all unusual for a family’s portfolio to contain appreciated land acquired a number of years ago during an asset accumulation period. And while the land represents a valuable asset on the balance sheet, it may produce little or no return in real dollars.

In cases like this, sometimes the obstacle to realizing dreams is the land itself; finding a way to move the property can be easier said than done. Selling the land outright will trigger a capital gains tax on the appreciated value. So, in the case of a piece of land that was acquired for $20,000, and is worth $200,000 today, the tax bite will be more than $27,000.

Leveraging The Full ValueFriends of Oklahoma Christian University have discovered that some aspects of charitable tax planning provide tools that make it possible to leverage the role the land plays in a family’s portfolio.

Rather than selling the land and incurring significant shrinkage due to the capital gains tax, it is possible to:

• Bypass the capital gains tax of $27,000• Receive a charitable income tax deduction based on the full fair market value of $200,000,

saving more than $60,000 in income taxes• Make a significant gift to Oklahoma Christian• Provide the opportunity of a lifetime for a worthy student who will be transformed through the

concentrated Christian education found in a Christian community like OC

Since Oklahoma Christian is able to sell the land without tax consequences, the full $200,000 can go to work, realizing your philanthropic objectives. Our tax laws reward your generosity with a significant reduction in the taxes you owe, meaning that the land actually ends up generating nearly $260,000 in actual value. A very nice way to use the tools available for maximum leverage!

There are a number of issues that should be considered, of course. The above example assumes there are no mortgages or liens on the property, that the property is free of environmental issues, and that there has not been a previously arranged sale. At times, other issues can have an impact on the ultimate value. However, for individuals and families possessing a strong philanthropic spirit, this is often an attractive planning option.

Variations on the plan discussed here even make it possible to give a portion of the property, engage in a joint sale of the property with Oklahoma Christian, and generate personal revenue from the sale for you. This technique is highlighted on the next page.

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Leveraging Assets For Current Impact; The Benefits of a Part Gift–Part Sale StrategyThe various type of gift plans discussed in this section involve a number of planning options built into our tax code that make it possible to leverage assets for maximum value, including delivering significant benefit to Oklahoma Christian. This specific discussion explores a strategy that may be one of the most attractive leveraging tools available: a combination Part Gift–Part Sale plan.

In simple terms, the phrase “part gift–part sale” tells the story. Embedded within charitable tax planning is a strategy that makes it possible to gift a portion of an asset to charity while collecting the proceeds from the sale of the remaining portion. The plan is designed to leverage all of the value of an appreciated asset like stock or land. Here’s how it works:

Consider the realities of this example. A family owns an asset with a fair market value today of $100,000. However, though the asset has doubled the original investment of $50,000, it produces a relatively low annual return, averaging 2%. The couple would like to find a way to make this portion of their portfolio more productive. However, an outright sale of the asset would trigger a long-term capital gains tax on the appreciated value of $50,000, resulting in a $7,500 tax bill at the time of the sale. But there is another option.

Fair Market Value 100,000

Tax Cost Basis 50,000

Capital Gain 50,000

Capital Gain Rate 15%

Capital Gain Tax Due 7,500

Net After Tax 92,500

OUTrIGHT SALE OF PrOPErTY

Instead of an outright sale, it is possible to give a portion of the asset to Oklahoma Christian while retaining ownership of the balance. Using our example, let’s assume that 10% of the asset is given to Oklahoma Christian. Upon the sale of the asset, OC receives 10% of the proceeds – $10,000 – and the family receives $90,000, along with a capital gains tax bill of $6,750. At the same time, the family receives a charitable income tax deduction for the $10,000 gift to OC, offsetting $3,000 of the capital gains tax.

ComBinAtion gift AnD sAle

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Fair Market Value Retained 90,000Portion Given to OC 10,000Retained Tax Cost Basis 45,000Capital Gain 45,000Capital Gain Rate 15%Capital Gain Tax Due 6,750Charitable Income Tax Deduction 10,000Marginal Income Tax Rate 30%Value of Deduction 3,000Total Net-Tax Due 3,750Total Family Value 86,250Total OC Value 10,000Total Economic Value from Sale and Gift 96,250

PArT GIFT PArT SALE OF PrOPErTY

So, when the asset is sold, Oklahoma Christian receives $10,000, and the family nets $86,250, for a combined value of $96,250, as opposed to the $92,500 in net proceeds from an outright sale.

A Zero Tax AlternativeThis “part gift–part sale” strategy can provide even greater leverage with a bit more planning. Where consistent with charitable objectives, it is possible to design this plan so that the charitable income tax deduction actually offsets 100% of the capital gains tax, resulting in zero tax shrinkage in the asset. In our example, here’s what the picture would look like.

By giving $20,000 in asset value to OC (thus retaining $80,000 in asset value), the family would receive a charitable income tax deduction of $20,000, which offsets the capital gain due on the portion of the asset retained by the family. So, the family will receive the full $80,000 upon the sale.

Combine the family’s proceeds with the $20,000 received by the charity, and the full $100,000 asset has been leveraged.

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We all want to leave a lasting and significant impression on those people that are most dear to us. Planning for the future and considering the legacy you will leave are among the most effective ways to ensure a lasting impact on the world in which you live.

For many people considering their legacy, ensuring that their family members will be sufficiently cared for is of paramount importance. Making a charitable bequest is one of the easiest ways to guarantee that your legacy endures and that your loved ones will be well cared for in the future.

A charitable bequest is a written statement in your will or trust directing a gift be made to a qualified charity as part of the disposition of your estate. A charitable bequest is one of the most flexible estate planning tools because it can be changed at any time. This ability to remain in complete control of your property during life also makes a charitable bequest one of the most popular methods of giving available.

A charitable bequest may save estate taxes. Provided that the charitable bequest is properly drafted and is given to a qualified organization like Oklahoma Christian, there is an unlimited estate tax charitable deduction. The additional tax advantage of a charitable bequest is that there are no percentage limitations similar to those affecting the income tax charitable deduction.

Though making a charitable bequest is a flexible and easy way to ensure the impact of your legacy, there are some important things to consider before incorporating a charitable bequest into your estate plan. The property passing by bequest through your will is subject to probate. Also, the amount of your bequest and the type of your bequest will depend on the value of your estate and the specific assets in your estate.

There are several types of charitable bequests. Depending on your needs and objectives, one type may be better suited for your estate plan than another.

• Gift of a specific dollar amount • Gift of a percentage of your estate • Gift of a specific asset • Gift of the residue of your estate (the assets that remain in your estate after other bequests, tax

and administrative costs have been satisfied)

ChAritABle BeQuests

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Certain types of assets are not subject to the probate process and pass outside the will by beneficiary designation. Non-probate assets are excellent candidates for charitable bequests and may save income and estate taxes. Some common non-probate assets include:

• A life insurance policy• An annuity contract • Property held in joint tenancy with rights of survivorship• Property held with a transfer on death designation, including land in some states, like Oklahoma• An Individual Retirement Account or other pension or retirement accounts

It is possible to bequeath this type of asset, but you will need to do so by completing a beneficiary designation form. A provision in your will is not sufficient to alter the disposition of those assets at your death.

The search for significance and the desire to plan for your family’s future may lead you to consider a charitable bequest. This type of gift can help shape the legacy you leave for your loved ones for many years to come.

Types of bequests: A bequest can either be made in specific or in percentage terms. Specific bequests can either be for a specific amount of money, say $25,000, or for a specific asset, such as “100 shares of IBM Common Stock” or “My antique clock.” A percentage bequest can be either a percentage of the residue of your estate or a percentage of a specific asset. Gifts of a specific asset may present problems in a probated estate if the asset is distributed before the testator’s death. As a result of this potential confusion, most advisors recommend giving either specific dollar amounts or percentages of the residue instead of specific assets. There are particular tax advantages with various bequests depending on the asset or percentage gifted to Oklahoma Christian. If you would like to visit about these issues or brainstorm about the best way possible to make such gifts, do not hesitate to contact OC’s Office of Planned Giving.

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To make these bequests to Oklahoma Christian, your attorney may choose to use language similar to the following:

Specific Gift of an Amount of Money:I , _______________________ the undersigned testator, give $XX,XXX (insert your own dollar amount) to Oklahoma Christian University, an Oklahoma nonprofit corporation with principal offices located at 2501 E. Memorial Road, P.O. Box 11000, Oklahoma City, Oklahoma 73136, whose federal tax identification number is 73-0555460.

Specific Gift of a Specific Asset:I , _______________________ the undersigned testator, give ___________________________________ (insert a very specific description of the specific asset) to Oklahoma Christian University, an Oklahoma nonprofit corporation with principal offices located at 2501 E. Memorial Road, P.O. Box 11000, Oklahoma City, Oklahoma 73136, whose federal tax identification number is 73-0555460.

Percentage Bequest of the residue:I , _______________________ the undersigned testator, give XX% (insert the percentage) of the residue of my estate to Oklahoma Christian University, an Oklahoma nonprofit corporation with principal offices located at 2501 E. Memorial Road, P.O. Box 11000, Oklahoma City, Oklahoma 73136, whose federal tax identification number is 73-0555460.

Percentage of a Specific AssetI , _______________________ the undersigned testator, give XX% (insert the percentage) of my __________ (insert the specific description of the specific asset) to Oklahoma Christian University, an Oklahoma nonprofit corporation with principal offices located at 2501 E. Memorial Road, P.O. Box 11000, Oklahoma City, Oklahoma 73136, whose federal tax identification number is 73-0555460.

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The truth is, most people are surprised by the benefits of charitable tax planning. This is likely due, at least in part, to the fact that charitable tax planning strategies often make it possible to realize multiple objectives. In addition, we have been conditioned to view some of these objectives as mutually exclusive.

Careful planning actually makes it possible to enjoy personal (or family) benefits and realize philanthropic goals and dreams by taking full advantage of incentives that encourage charitable planning. The Charitable Gift Annuity is a perfect example of this reality.

An OC CGA is both an annuity and a gift. Typically, these two things are viewed as virtually opposite actions. Annuity refers to the creation of an annual income stream while a gift gives it away. But an OC Charitable Gift Annuity combines these two ideas. In practical terms, the gift annuity is an agreement between Oklahoma Christian University and an individual donor or donor couple. The agreement provides fixed payments to a donor (or donors) for life, with the remainder passing to Oklahoma Christian at death.

How the CGA works:Mr. Sample, a lifelong contributor to OC’s scholarship fund, creates a $50,000 gift annuity with Oklahoma Christian. OC provides annuity payments for as long as Mr. Sample lives. Rates on one-l ife charitable gift annuities range as high as 10.0% and are based on the age of the annuitant. For purposes of our illustration, let’s assume that Mr. Sample is 76 years of age. The $50,000 gift annuity guarantees Mr. Sample annual payments of 6.4% or $3,200 for life.

But the benefits don’t end with the attractive payout rate. Since, upon his death, the gift annuity remainder becomes a gift to charity, a number of charitable tax benefits accrue to Mr. Sample. An IRS formula calculates the value of the ultimate gift to charity and provides for an immediate charitable income tax deduction. And, when the gift annuity is funded with an appreciated asset, a portion of each annuity payment may be tax-free, further reducing tax liability.

oklAhomA ChristiAn ChAritABle gift Annuities (CgA)

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In the case of Mr. Sample, the gift annuity actually results in the following:

6.40%

OneGift property to charity. Donor receives contract for annuity payments. Income tax deduction of $21,668 may save

$5,417.

Annuity of $3,200for one life. Tax-free amount of $2,400. Estimated one life payout of $40,640.

At Mr. Sample’s death, the remainder passes

to OC for student scholarships.

Life

GIFT ANNUITYMr. Sample: 76 years old

Property$50,000

Property$50,000

OC$50,000

An OC Charitable Gift Annuity is flexible enough to help meet the objectives of almost any financial plan. It may be funded with cash, securities (a portion of each payment is considered tax-free return of principal), and certain types of property.

The contract for payments can run for one or two lives, with higher rates paid for one-life contracts with more senior persons. The payment can be deferred. For example, a 45-year-old might wish to wait until age 65 to begin receiving payments. In this case, rates become even more attractive and range as high as 30%, making a deferred payment charitable Gift Annuity an attractive part of retirement planning for many.

If you would like to see just how an OC Charitable Gift Annuity agreement might help you realize your objectives, OC’s Office of Planned Giving can offer a customized proposal for you. All you have to do to take advantage of this complimentary service is call, write or fax your birthdate, the amount of annuity you desire, and whether you would like payments to be made for one or two lives. There is no obligation for this educational service, and we’re happy to be able to offer it to friends of Oklahoma Christian University. You can also complete your own gift illustration by going online to www.oc.edu/plannedgiving and clicking on the gift calculator.

The benefits inherent in charitable tax planning are a result of our nation’s historical recognition of the value of individual philanthropic support. The tax benefits afforded are calculated incentives, designed to encourage each of us to participate in those charitable efforts that are in line with our personal values and objectives. To this end, we are pleased to be able to offer professional charitable tax planning information as a service to our friends. We welcome your confidential call or inquiry.

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Every year, Americans plan and dream for those “golden years” of retirement. And, thanks to the benefits offered by many planning tools, combined with some help from professional advisors, many families are waking to an attractive nest egg in those retirement years. In fact, after a little examination of tax implications at death, some children may end up feeling their parents were too successful!

This reality gives rise to an altogether pleasant planning challenge: How do you handle an IRA or Qualified Pension Plan when it comes to planning for the distribution of your estate?

While IRA accounts and pension plans provide for attractive tax benefits during your working years, they are subject to significant (if not colossal) tax consequences for your children when you die.

• Funds that reside in these plans at death are first reduced by any applicable death taxes – possibly both federal and state.

• Then, since contributions to a qualified plan during life represent untaxed ordinary income, they are subject to federal and state income tax, even when transferred to children at your death.

The result of these tiers of taxation can mean that the ultimate benefit of an IRA or pension plan that is realized by your family may end up being much less than anticipated, even minimal!

However, there is good news. As is the case with most facets of The American Dream, some careful planning can result in maximum impact for your family from your IRA or pension plans.

Statistics indicate that the majority of individuals who establish and contribute to a qualified retirement plan take only minimum withdrawals for a number of years after age 70½. As a result, many retirement fund balances do not diminish until retirees are well into their 80s. The result of the growth that takes place in these funds is that IRAs often end up representing sizable estate assets at death.

The most common way to transfer retirement fund assets is an outright bequest to children. And while this might seem on the surface to provide children with a nice inheritance, an outright bequest can result in the highest levels of taxation, dramatically shrinking the actual amount realized by family.

For example, a $1 million IRA could be subject to federal estate tax, state inheritance tax, and federal and state income tax. The net result of this taxation can easily approach 50%, leaving only one-half the value for your children, or $500,000 of the original $1 million plan balance.

retirement plAns

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A second bequest option – one which may make it possible to bypass both income and estate tax – is to transfer the IRA or pension plan to Oklahoma Christian University. For individuals planning to make a charitable bequest, this option is very attractive. Utilizing this strategy, ordinary income assets (like the IRA or pension plan) are transferred to charity without tax, and assets like stocks, bonds and real estate are transferred to family. A bequest to Oklahoma Christian may include all or a portion of the retirement plan assets.

Personal and family objectives should determine how you plan for the distribution of your retirement plan funds. Different options can help meet individual objectives. However, careful consideration of the tax implications, along with some expert advice from your personal financial, tax and legal professionals, can help ensure that the nest egg you’ve worked so hard to put together doesn’t fall prey to the external taxation that can greatly diminish its value.

There are a number of planning options that can help conserve the assets of IRAs and other qualified plans while still benefiting your loved ones. If OC’s Office of Planned Giving can be of assistance to you in planning for the most tax-efficient way to transfer assets to your children at death, do not hesitate to call for a confidential discussion.

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Give It Away ... Twice!Most of us are exposed early in life to the idea that there is something magic in giving. Whether we understood it or not, we saw it in those who seemed to take so much delight in bestowing treasures on us when we were young. Everyone has heard the Biblical concept that the Apostle Paul attributed to the Lord – “it is more blessed to give than to receive.” And virtually anyone who has seen the eyes of a child light up at the mere mention of a present understands how powerful the act of giving really is.

But did you know there is a proven strategy that makes it possible to actually give away a portion of your estate – not just once, but twice? There is! And it is a perfect example of how some careful planning can stretch the power of giving to new levels.

You Can Thank Uncle SamThis “give it away twice” strategy is based on Uncle Sam’s recognition of the importance of charitable contributions in our society, and the incentives for this kind of support that have been built into our tax laws for years.

Americans are likely most familiar with these incentives as evident in the income tax charitable deduction. By way of this deduction, our tax code actually encourages the private individual support of charitable organizations, allowing each individual citizen to choose where personal support should be given.

Thanks to the idea of private support for charitable interests, our nation has seen education, healthcare, social service and religious interests help provide strength and character to our neighborhoods and communities. Indeed, it is the private support of individuals and families that makes OC’s work possible.

Beyond The Income Tax Charitable DeductionA lesser-known fact is that our tax laws – even in the light of the most recent revisions – offer some powerful incentives that reach beyond the deduction you are allowed to take each year on your Form 1040. Careful, informed planning can often result in the actual multiplication of the impact and value of certain resources. And while many types of plans exist that can have immediate or short-term impact, the following simple planning strategy allows you, at death, to actually give a portion of your estate away twice.

This plan is very simple in terms of the estate planning strategy it employs. The language of the will establishes a trust at death (or, in the case of husband and wife, at the time of the second death).

trusts

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For purposes of our illustration, we assume that the entire estate is placed into the trust at the time of death. It should be noted that this particular plan is most attractive to those whose estates are medium in size.

The trust can be structured in one of two ways:

In Illustration 1, the $500,000 estate is transferred into the trust. The trust is established to make annual payments to Oklahoma Christian for a term of 10 years. Simultaneously, one-tenth of the value of the trust is distributed to family members each year. This trust structure is attractive because the income given to charity is tax-free, while the payments made to family from the principal of the trust are also tax-free.

At the conclusion of the 10-year term, OC has received income from the trust (albeit on a declining trust principal balance), while the original trust value of $500,000 has been transferred to family members. The estate has been given away ... twice!

1 500,000 35,000 50,000

2 450,000 31,500 50,000

3 400,000 28,000 50,000

4 350,000 24,500 50,000

5 300,000 21,000 50,000

6 250,000 17,500 50,000

7 200,000 14,000 50,000

8 150,000 10,500 50,000

9 100,000 7,000 50,000

10 50,000 3,500 50,000

192,500 500,000

Trust Year

Trust Balance

7% Income to Oklahoma Christian

Family Portion

GIVE IT AWAY TWICEILLUSTRATION 1

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I l lustration 2 is a variation on the same plan. In this case, the $500,000 estate is transferred into trust after the death of both mother and father. The trust then makes annual payments to the family until such time as $500,000 in income has been distributed. Under normal trust management scenarios, this will take 12 to 15 years. Once this is accomplished, the trust principal – approximately $500,000 – is transferred to Oklahoma Christian. (Under this version of the plan, payments to family do incur income tax obligation).

1 500,000 35,000

2 500,000 35,000

3 500,000 35,000

4 500,000 35,000

5 500,000 35,000

6 500,000 35,000

7 500,000 35,000

8 500,000 35,000

9 500,000 35,000

10 500,000 35,000

11 500,000 35,000

12 500,000 35,000

13 500,000 35,000

14 500,000 35,000

15 500,000 10,000 500,000

500,000 500,000

Trust Balance

7% Income to Family

Residue to Oklahoma Christian

GIVE IT AWAY TWICEILLUSTRATION 2

In either case, an estate valued at $500,000 is literally given away twice – once to family and once to Oklahoma Christian University. Many parents who very much want to realize both of these objectives find this plan, which employs partial payments to children, very appealing.

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Like many, you may own real estate or stock that has appreciated during the last few years or even decades. If you are considering selling your appreciated property, but are concerned about the capital gains tax – or if you have already sold your property and would like to offset the capital gains tax – then you may want to consider a charitable remainder trust. A charitable remainder trust allows you to make a gift of your appreciated property and receive payments for a life, two lives or a term of years.

Flexible Payout Options A charitable remainder trust pays either a fixed annuity amount or a percent of the trust value each year. The “percent of value” plan is called a unitrust. The “fixed annuity” plan is called an annuity trust and pays a specific dollar amount each year that is determined when the annuity trust is established. Although you may like the security of the annuity trust, because of the certainty that you will receive the same annual payment, if you opt for the unitrust, your income stream could increase over time with growth in the trust. Many friends enjoy the ability for the trust and their income to grow over time.

The unitrust offers four flexible payout options to meet your needs. One option permits the unitrust to be invested to increase or decrease your income depending on your needs. Another payout option often used for real estate allows you to initially receive the income from property gifted to the unitrust and potentially more income when the property sells. Whether you are interested in gifting appreciated stock or real estate, a unitrust can be tailored to suit your family’s individual needs.

Benefits of a Charitable remainder TrustAs you can see, a charitable remainder trust is a flexible planned giving vehicle that can be customized to fit your situation. There are other significant benefits to establishing a unitrust. First, if you contribute appreciated property to your unitrust, you will bypass the capital gains tax that would be owed if you sold the appreciated property. Second, you will receive a charitable deduction in the year you set up the unitrust. This deduction is deductible for up to 30% of your adjusted gross income and has a five-year carry forward. Third, you will receive the income payments from the unitrust based upon which payout option you chose. Last, when your trust ends, the remainder of the trust property will go to Oklahoma Christian and will change the lives of countless students for years to come. The income can continue for your lifetime or for a term of years.

ChAritABle remAinDer trusts

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Is a Charitable remainder Trust the Solution for You?If you hold appreciated property and are concerned with the high cost of capital gains tax upon the sale of your property, a charitable remainder trust may be a good solution for you. There is no requirement that the charitable remainder trust be set up for your lifetime. Depending on your estate, it may be appropriate and beneficial to set up a charitable remainder trust for a child, a spouse, a sibling or any combination of these. This plan can provide increased income for someone in your life that you want to provide for in the future.

Additionally, if you are entering retirement years, you may be considering ways to increase your income now or in the future. A charitable remainder trust is a wonderful planning tool that can provide a secure income to you during your retirement years. If you later decide that you do not need the additional income, it is possible to make another charitable gift by giving your income interest to charity.

Steps Involved in Creating Your Charitable remainder TrustWhether you are nearing retirement, have appreciated property, or both, you may be curious about the steps you will have to take to set up a charitable remainder trust. OC’s planned giving staff is well versed in the technical aspects of setting up a charitable remainder trust. We can explore the different options available to you and can prepare a detailed proposal for you that will outline the benefits of your trust. Once you decide which charitable remainder trust is a good fit for you, you will need to select a trustee. An attorney drafts the trust document; once the trust is created, you will transfer your appreciated property to your trust. As always, we ask that you contact your professional advisor before making any gift.

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ChAritABle remAinDer trusts

What To Do When The Bottom Line Doesn’t Add Up.Anyone who spends much time around the subject of economics knows there are multiple facets to almost any equation. Unless all factors are considered, economic-related discussions and projections just don’t seem to add up! But once all factors have been considered, a much more meaningful bottom line comes into view.

Personal investing and financial planning are not much different. Often an investment can multiply in value over time. The result of this asset growth is, of course, an increase in value. However, once tax implications are factored into the picture, a significant portion of that increase in value can seem to evaporate!

In recent years, a number of OC’s friends have experienced this reality firsthand. Many who invested in certain types of property, as well as many sectors of the stock market, during the past couple of decades have experienced significant growth in the value of their initial investment. It is not at all unusual for a $10,000 investment made decades ago to represent an asset valued at $50,000 today, despite the recent overall market losses. At the same time, these assets often produce little or no current income.

For those who are relatively young, the prospect of continued growth may offer reason enough to continue to hold the asset, in spite of minimal return. But for an individual or couple nearing retirement, this scenario doesn’t add up. Attention almost always turns to identifying possible ways to redefine the bottom line and generate current and future cash from the asset in question.

However, the prospect of selling such an investment comes with the reality of long-term capital gains tax ... and this reality can be harsh. Selling the stock or property in question will instantly reduce the asset’s worth by 15% of the increased value. In the case of a piece of property purchased for $10,000 years ago – and worth $100,000 today – the tax reduces the value of the gain by $13,500. However, there are charitable planning options that can reduce or even eliminate the amount of capital gain tax due.

A Charitable Tax Plan That Meets Your ObjectivesIf you find yourself in a situation similar to the one described above, there is good news! For those whose objectives include charitably benefitting Oklahoma Christian, considerations have been built into our tax laws that make it possible for you to literally redefine the bottom line – for yourself, for your family and for those you love.

One example of this is a plan that combines the sale of an appreciated asset with the versatility of a legal trust agreement known as a Charitable Remainder Unitrust (CRUT).

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This Sale and Unitrust plan makes it possible for you to:

• Increase the income stream represented by this asset• Create some immediate liquidity through the sale of a portion of the asset• Realize a philanthropic dream

If this sounds almost too good to be true, it’s important to note that the unitrust is what makes this plan work because it carries with it a number of benefits afforded those with philanthropic intent.

To be specific, when an individual transfers an asset or a portion of an asset into a CRUT, 100% of the capital gains tax otherwise applicable on the transfer is bypassed. Simply put, this means that an appreciated asset – or, in the case of this plan, a portion of the asset – can be transferred into a Charitable Unitrust, sold without the consequence of capital gains tax, and reinvested in a way that will generate a much better return.

Think about the impact of this benefit alone. Without any shrinkage due to capital gains tax, the full amount transferred into the unitrust is available for reinvesting.

In addition, because of the charitable nature of the CRUT, a charitable income tax deduction is available in the year the trust is established. This benefit becomes a critical part of our plan as we examine the second phase of the strategy – the sale of a portion of the asset.

Let’s backtrack a moment, and start at the beginning in order to get a clear picture of how this Sale & Unitrust Plan comes together.

Prior to the establishment of the CRUT, the asset is actually divided into two parts. One part is the value transferred into the CRUT and the other part represents the share of the asset that is retained by the original owner.

When the owner sells his portion of the asset, part (if not all) of the capital gains tax due on the sale is offset by the charitable income tax deduction received from the establishment of the CRUT. So, the sale creates new liquidity in the form of the proceeds to the sale.

But that is just the beginning of the benefits. A properly constructed CRUT will make annual income payments to the individual, providing a measurable increase over the income provided by the original asset. And, at the end of a period of time prescribed in the CRUT, any remaining balance is then transferred to Oklahoma Christian.

Immediate cash, increased annual income and a generous charitable contribution are all made possible by that same appreciated asset that had been producing little or no income. Now that’s redefining the bottom line. And it is all possible thanks to some careful charitable tax planning.

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selling the fAmily Business or fArm

When it’s time to sell The Corporation

For the past several years, publications in a wide variety of venues across America have drawn attention to the fact that, as the parents of the “baby-boom” generation die, this country will find itself in the midst of the largest single transfer of wealth in the history of the world. While the estimated size of the transfer varies depending on the publication, few dispute the impact of this never-before-witnessed economic transition.

Perhaps nowhere is the impact more visible than when it comes to considering and planning for the sale of a corporation. In fact, though the flurry of press and conversation revolving around this reality may have slowed a bit, the transition itself is already underway. But an important message remains to be told. What most articles and conversations fail to mention is that, unless Americans plan for the transfer at a level heretofore unseen, Uncle Sam will be on the receiving end of a significant majority of this economic boom.

The value of planning cannot be overemphasized. Almost since the inception of our tax code, lawmakers have taken calculated steps to encourage thoughtful planning when it comes to the distribution of assets and the private support of the charitable organizations that play such a vital role in the shaping of our communities.

So, since a significant measure of economic resources resides within the structure of the corporation, it is time to look at planning options that make it possible for you to sell a corporation, transfer the value to the desired recipient, and communicate objectives and values at the same time.

Avoiding The Incredible Shrinking CorporationThere are a number of legal types of corporations, but the largest number fall into what is known as a “C” Corporation. While this type of legal structure obviously holds some attractive benefits for owners, they are also taxed at one of the highest levels in our current tax code. Initially, a “C” Corporation pays a tax on its earnings, beginning at 15% for corporations earning under $50,000 per year, then climbing quickly to 35%. Once this tax corporate level tax is paid, dividends may be distributed to shareholders where each individual is taxed at their own individual income tax rate. The net result of this double-taxation structure is that the sum of these taxes on the earnings of a corporation can reach as high as 50%.

While most accept this as the price for the benefits of a corporate structure, the rate of taxation becomes a major concern when the prospect of liquidation, or succession planning, is being considered. The bottom line is that corporate value is the subject of a double tax. A “C” Corporation worth $10 million today may be worth as little as $4.5 million after its liquidation. And that is significant shrinkage when the objective is to pass value to family.

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Of course, liquidation isn’t always the only avenue. The transfer of the business is often an attractive possibility. But in almost any case where ownership is being transferred, some careful strategic planning can minimize the shrinkage, ensure objectives and expedite the transfer of value. There are multiple financial, tax and legal strategic considerations requiring excellent advice and counsel. The issues discussed below are a beginning point for your thinking and planning with the assistance of your personal counselors.

The Smart Transfer To ChildrenIn cases where a corporate founder would like to sell to a larger entity, the versatility of the Charitable Remainder Unitrust may be appropriate. By transferring the business into a CRT, both short-term and long-term objectives can be realized. However, in cases where the goal is to transfer the business to children or grandchildren, a variation on what is known as the Charitable Succession Plan presents some attractive benefits.

The Charitable Succession Plan has three basic steps.1. A portion of the business is given to children (or grandchildren) outright2. A portion of the value is transferred into a charitable remainder trust3. A portion of the income generated by the trust is used to fund an irrevocable insurance trust

The gift to children represented in step one above obviously initiates the movement of the business to the next generation. And it is worth noting that, when parents would like to begin the process while retaining control over the business, there are a number of planning techniques that provide for the movement of equity absent operational control.

Step two, the utilization of the charitable remainder trust, triggers two very important benefits. The charitable nature of the trust is that it represents an eventual gift to charity and results in a charitable income tax deduction that saves parents’ money on this year’s tax bill . The CRT makes it possible to sell the corporate stock and bypass all capital gains tax. The proceeds from this sale, 100% of the stock’s value, can then be invested to generate additional retirement income for the parents. Since the stock of most family businesses is not traded publicly, the most likely one to purchase the stock from the trust is the corporation.

Now we’re ready for the final piece of this three-part puzzle. With some of the new income from the stock sale, the parents fund an irrevocable insurance trust. Upon the death of both Mom and Dad, this trust provides the children with the liquidity necessary to purchase the remaining stock from the family estate.

Planning Is The Key To A Smart TransferNo two cases are exactly alike. But even though the particulars change for everyone, the message that careful planning maximizes value and minimizes shrinkage is consistent. OC’s Office of Planned Giving has professionals with the experience and training necessary to illustrate a plan specifically suited to your situation, designed to meet your objectives, and maximize value for you and your family.

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When it’s time to sell The farm

In increasing numbers, it seems couples that have built their life around the family farm in America are facing a new dilemma as they reach retirement age. In many cases, the farm is producing no more than 2 to 3% of its market value in an income stream. In today’s society, children often have little or no interest in carrying on the farming tradition of Mom and Dad. And the prospect of relying on this asset for significant retirement income – while having to pay someone else to run the farm – is not an attractive one.

Selling the farm outright is less than ideal for two reasons. First, the couple would like to continue to live in the farm residence. Second, the farm represents the vast majority of the couple’s estate and, therefore, their children’s inheritance. The tax consequences of a sale would drastically reduce the estate value around which they have built retirement plans, as well as the inheritance they wish to leave for children.

Is it possible for the couple to find a way to increase their retirement income (perhaps without even having to move out of the farm residence) and still provide an inheritance for their children?

Thankfully, the answer is yes. In fact, a number of options are available for the couple’s consideration. One such option is discussed below.

Sell The Land And Pay Zero TaxLet’s assume we’re dealing with farmland valued at $600,000 that belongs to John and Mary Jones (both age 65). Based on a formula that calculates projected tax consequences, it is determined that one-half of the land will be transferred into a Charitable Remainder Unitrust. Because the unitrust represents an ultimate gift to charity, there is no capital gains tax on the one-half of the land transferred to the unitrust, and the couple receives an immediate charitable income tax deduction of approximately $87,000.

The other half of the land is sold outright for the fair market value of $300,000, providing John and Mary with some much-needed liquidity. And thanks to the in-pocket tax savings generated by the one-half transferred to the unitrust, the net result is that the couple owes no capital gains tax.

In addition, for the remainder of their lives, the unitrust pays John and Mary approximately $18,000 each year, representing an increase over what the land had been generating. Upon their deaths, the value remaining in the unitrust (assuming annual growth of 2% over the life expectancy of the couple) results in a gift to charity of more than $480,000.

plAnneD giving 35


The “rawhide” TrustOf course, most farms consist of more than land. In our example, there is another $200,000 of value in cattle, crops and machinery. These assets are considered “ordinary income” assets and almost always have a zero-cost basis. Thus, an outright sale would result in a large ordinary income tax. For example, if John and Mary had a combined federal and state income tax rate of 30%, the sale of the cattle, crops and machinery would produce a tax of $60,000! But if they were to transfer these assets into a unitrust, there would be no tax on the sale, thereby leaving the full $200,000 to be invested by the trust. This trust will generate an additional $12,000 of income for John and Mary in the first year of their retirement. Upon their passing, the remaining value in this trust also passes to charity.

The right To Live In The residenceMany families find themselves in a position similar to that illustrated by the case of John and Mary Jones – that is, ready to retire from farming. But it is not unusual for many in this position to dread the idea of moving from the residence they’ve occupied for most of their adult lives. In fact, many couples are enthusiastic about a plan that allows them to deed the homestead to charity, receive an immediate charitable income tax deduction, and remain in the home for the rest of their lives.

For illustration purposes, let’s assume that the fair market value of the residence on the Jones’ farm is $150,000. First, they retain their homestead when the rest of their land is transferred to the sale and unitrust. Next, they deed the homestead to charity while retaining the right to use the residence for life. The couple will benefit from an immediate charitable income tax deduction of approximately $34,000.

A Springboard To The Golden YearsIn spite of the misgivings that surely come in the midst of a decision to sell the farm after investing a lifetime in its productivity, this can mark the beginning of an exciting new era. And thanks to a number of planning options that are at your fingertips, the value represented by the farm can represent significant value in the retirement years.

In this article, we’ve taken a look at three of the most popular planning strategies when the sale of the farm is eminent. U.S. tax laws provide for a wide variety of similar planning options designed to help individuals and families make specific plans that achieve specific objectives.

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Donor ADviseD funDs

The Benefits of the Private Foundation – And More! Exploring the Advantages of the Donor Advised FundHistorically, the private foundation has held tremendous appeal for individuals and families who want to leave a permanent philanthropic mark on society. Most of us grew up hearing the names of private family foundations that have made significant contributions to our communities and our nation.

In fact, foundations established by high visibility families have had such positive impact that they have become synonymous with the idea of charity. However, when it comes to realizing objectives for both family and charity, the private foundation is not the best option for most families.

An Oklahoma Christian Donor Advised Fund (DAF) is an attractive alternative. A donor advised fund is a philanthropic tool that is growing in popularity because it offers donors the benefits of a private foundation ... and more!

An OC Donor Advised FundThe name implies the single most important characteristic of the Donor Advised Fund, and the major difference between it and the private foundation. The DAF invites the advice of the donor with respect to the distribution of charitable contributions, while the donor maintains complete control of disbursements in the case of a private foundation.

On the surface, it may appear that the donor gives up some control when the DAF is chosen, but an examination of the benefits of the Donor Advised Fund demonstrates why this instrument is growing in popularity.

Income Tax DeductionsAn OC Donor Advised Fund offers significant income tax deductions, especially when compared to those of a private foundation. Since the legal right to administer and distribute charitable contributions rests with Oklahoma Christian (a qualified charity), a donor is entitled to standard charitable income tax deductions on cash gifts up to 50% of adjusted gross income. For gifts of appreciated property, the allowable deduction is up to 30% of adjusted gross income. (Tax deductions for private foundation gifts are limited to 30% on cash and 20% on gifts of appreciated assets).

Savings on Costs to AdministerChoosing an OC Donor Advised Fund rather than a private foundation will result in considerable savings for the donor when it comes to the costs related to administering the fund.

The reality is that since the DAF is managed completely by Oklahoma Christian, any annual administrative costs related to the fund are either drastically reduced or eliminated. Because Oklahoma Christian administers multiple funds, an individual DAF benefits from the economies of scale. That is, funds are often managed as one component of a much larger pie, thus sharing any administrative or legal costs with many other components.

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On the other hand, the costs of administering a private foundation can take a sizeable bite out of the fund’s principal. For starters, there is an excise tax on any foundation investment income. This usually adds up to 2% of net income, resulting in a major bite in the case of many private foundations.

A number of legal restrictions on private foundations also result in higher administration costs. Most notably, there can be no “self-dealing” or business arrangements of any kind between a donor and a private foundation. In practical terms, this means that a donor and his family (including grandchildren) are prohibited from buying, selling, leasing or in any way transacting business with the foundation. On top of this, there are restrictions that limit a donor’s holdings in anything directly related to the foundation.

A private foundation is subject to examinations related to “expenditure responsibility.” This means that the disbursement of funds to any entity other than a charity must be carefully monitored to ensure that the objectives of the foundation are being realized by the gift. Finally, a private foundation is much more likely to attract the attention of the IRS when it comes to questions of charitable intent, fund disbursements and management.

Add up all of the administrative savings when the DAF is chosen, and everyone comes out a winner – the donor, the family and OC students. (Not to mention the time and energy saved with fewer paperwork and administrative headaches).

The time and management headaches alone are reason enough for many to consider an OC Donor Advised Fund.

realization of Charitable IntentMost people feel that one of the major attractions of a private foundation is that it is flexible enough to remain true to the charitable intent of the donor. And while no one would argue that this ability to be true to charitable intent is present as long as a donor is living, things can change dramatically during the second, third and subsequent generations.

A look at the long-term history of a number of private foundations illustrates what frequently happens over time. Civic leaders become voting board members of a private foundation. By the third and fourth generation, the donor’s family may scarcely be visible in the decision-making structure – by attrition because descendants may have little interest in the original objectives of the foundation or because of feelings that the foundation is no longer in touch with original objectives. In any case, the result is often that, while doing good in a community, the foundation’s current objectives bear little resemblance to the original vision.

38 plAnneD giving


By comparison, a Donor Advised Fund can have the same field of charitable interest as the private foundation – that is, support a variety of charitable efforts. Since public charities tend to maintain consistent perspectives and goals over the long haul, a donor can feel confident that philanthropic objectives will be maintained.

A great example of this consistency of purpose is those charities involved in the arena of education. Some of our nation’s greatest charities are institutions of higher education such as Oklahoma Christian. While administrators come and go, funds used to endow Oklahoma Christian more than a half-century ago are still working toward the same noble mission of transforming lives for Christian faith, scholarship and service.

When it is all said and done, this track record of remaining true to the donor’s charitable intent is one of the reasons many donors find an OC Donor Advised Fund very attractive.

© 2010. The material contained in this section is protected by Crescendo, Inc. and Oklahoma Christian University. Some of the material is used under license from Crescendo, Inc. and some has been created by Oklahoma Christian University employees.

estAte plAnning WorkBook 1


overvieW of prepAring to meet With yourprofessionAl estAte plAnning ADvisor

1. Determine your assets: Make a list of all your assets (you can use this workbook or the electronic version on www.oc.edu/plannedgiving to assist you). NOTE: Do not permit this step to prevent you from continuing with the estate planning process.

2. Determine whom you would like to benefit through your estate plan. Consider family, friends, organizations, charities, church, etc. Use this workbook to make a list of desired beneficiaries.

3. Determine what you want to accomplish through your estate plan. Consider each beneficiary on your list and decide what benefit you want to give to each one. Decide what you would like to leave as a legacy.

4. Determine how you can accomplish your plans through your estate. Should you use a will, a living trust, standard trusts, etc.? This is the least important step, since you will proceed to step 6.

5. Decide upon an executor, trustee, or guardian, as appropriate. Who are the people or institutions that you trust to carry out your wishes?

6. See your estate planning professionals. Implement your plan to accomplish your goals. Execute the appropriate documents.

2 estAte plAnning WorkBook


personAl informAtion for the estAte of:

Full Name:

__________________________________________

Current Address:

__________________________________________

__________________________________________

__________________________________________

Phone Number:

__________________________________________

List Former Addresses:

Former Address #1:

__________________________________________

__________________________________________

__________________________________________

Dates of Residence at Address Listed Above:

__________________________________________

Former Address #2:

__________________________________________

__________________________________________

__________________________________________

Dates of Residence at Address Listed Above:

__________________________________________

Social Security Number:

___________ - ___________ - ___________________

Date of Birth:______________________________

Occupation: _______________________________

Father’s Name:

__________________________________________

Mother’s Maiden Name:

__________________________________________

Location of Birth Certificate:

__________________________________________

Marital Status:

Single Married Widowed

Divorced Separated

Spouse’s Name:

__________________________________________

Date of Birth:______________________________

Occupation: _______________________________

Social Security Number:

___________ - ___________ - ___________________

Citizenship (if other than U.S.A.):

Husband’s: ________________________________

Wife’s: ___________________________________

Location of Marriage Certificate:

__________________________________________

Any Former Marriages?

Husband: Yes No Wife: Yes No

Children (Including Adopted Children):

Name: ___________________________________

Birthdate: ________________________ Sex: ____

Married Children # ______ Ages: ____________

Name: ___________________________________

Birthdate: ________________________ Sex: ____


Name: ___________________________________

Birthdate: ________________________ Sex: ____


Name: ___________________________________

DAte prepAreD:



Birthdate: ________________________ Sex: ____


Do any of your children have permanent disabilities? If so please explain:

__________________________________________

__________________________________________

__________________________________________

__________________________________________

Deceased Children:

Name: ___________________________________

Birthdate: ________________________ Sex: ____


Name: ___________________________________

Birthdate: ________________________ Sex: ____


Do any of your deceased children have children? If so, please list their names and addresses:

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Other people to be considered in your estate plan:

Name: ___________________________________

Age: _____ Sex:___ Relationship: ______________

Name: ___________________________________


Name: ___________________________________


Name: ___________________________________


Charitable organizations you have supported or wish to support:

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Military Service

Service Serial Number: ______________________

Branch of Service: __________________________

Dates of Service: ___________________________

Veterans Administration Disability Number:

___________________________________________

Location of Discharge Papers:

___________________________________________



Business or employment

retired from: Employed by:

Name of company:

___________________________________________

___________________________________________

Address: _________________________________

___________________________________________

___________________________________________

Financial interest, if any: _____________________

__________________________________________

Other Business Interests (status as partner,

stockholder or sole proprietor):

___________________________________________

___________________________________________

Location of Papers: _________________________

__________________________________________

___________________________________________

funerAl reQuests

Local Congregation: ________________________

Address: _________________________________

___________________________________________

___________________________________________

Phone Number:

___________________________________________

Name of Funeral Home:

___________________________________________

Address: _________________________________

___________________________________________

___________________________________________

Phone Number:

___________________________________________

Prepaid burial costs: $_______________________

Funeral instructions, if any:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

Obituary wording:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________



Tombstone engraving:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

Cemetery Plot

Name of Cemetery:

___________________________________________

Address: _________________________________

___________________________________________

___________________________________________

Location of Deed:

___________________________________________

Persons to be notified at death

Name: ___________________________________

Phone Number: ____________________________

Name: ___________________________________

Phone Number: ____________________________

Name: ___________________________________

Phone Number: ____________________________

Name: ___________________________________

Phone Number: ____________________________

Name: ___________________________________

Phone Number: ____________________________

Name: ___________________________________

Phone Number: ____________________________

Current lAst Will AnD testAment or living trust, if Any

Location of Original Will or Trust:

___________________________________________

Date of Will or Trust: _______________________

Primary Executors or Trustees

Name: ___________________________________

Phone Number: ____________________________

Address: _________________________________

___________________________________________

___________________________________________

Name: ___________________________________

Phone Number: ____________________________

Address: _________________________________

___________________________________________

___________________________________________

Secondary Executors, or Trustees or Guardians

Name: ___________________________________

Phone Number: ____________________________

Address: _________________________________

___________________________________________

___________________________________________

Name: ___________________________________

Phone Number: ____________________________

Address: _________________________________

___________________________________________

___________________________________________

In case a trustee is appointed, the trust is to

terminate when the youngest child reaches age:

___________________________________________



Distribution of Estate (Specific Bequests)

Does all of your estate go to your spouse?

Yes No

Name of Beneficiary:

___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________

Item Designated to Beneficiary:

___________________________________________


___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________


___________________________________________


___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________


___________________________________________

Distribution of Estate (residue and remainder)List individuals or charitable organizations designated to receive the remainder of your estate after expenses have been paid and all specific bequests made:


___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________

Amount or % Designated to Beneficiary:

___________________________________________


___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________


___________________________________________


___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________


___________________________________________



Contingency Provision for Distribution of EstateHow assets will be distributed in the event above-named individuals are not living, or organizations are not in existence, at the time your will is probated:


___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________


___________________________________________


___________________________________________

Relationship: ______________________________

Address: _________________________________

___________________________________________

___________________________________________


___________________________________________

poWer of Attorney

Name: ___________________________________

Phone Number: ____________________________

Address: _________________________________

___________________________________________

___________________________________________

Email Address: ____________________________

lAWyer

Name: ___________________________________

Phone Number: ____________________________

Address: _________________________________

___________________________________________

___________________________________________

Email Address: ____________________________

ACCountAnt

Name: ___________________________________

Phone Number: ____________________________

Address: _________________________________

___________________________________________

___________________________________________

Email Address: ____________________________

tAX informAtionAnD returns

Copies of current tax information and recent returns can be found:

___________________________________________

___________________________________________



inventory of Assets

One of the most important functions of this workbook is to serve as a place for developing a full and complete list of all your assets. This will help you in your estate planning and will also help your personal representative in the administration of your estate.

When you make your asset list, be sure to indicate how each asset is held and whether it has a beneficiary already named. This is particularly helpful for real property. The four basic types of property ownership are:

1) individual ownership2) tenants in common (where your share of the

asset will continue as part of your estate)3) joint tenants with right of survivorship (where

the survivor will own the entire asset)4) community property (if you live in a

community property state)

When you complete your asset list, try to make your best estimate as to the value of each asset. This will help in determining whether special provisions will be required in your estate plan or will.

property

Safe Deposit Box

Name of Bank:

___________________________________________

Address: _________________________________

___________________________________________

___________________________________________

Box Number: ______________________________

Location of Key:

___________________________________________

Box held jointly with:

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Additional people who have access to the box:

Name: ___________________________________

Address: _________________________________

___________________________________________

___________________________________________

Stored Property

Name and Address of Storage Facility:

___________________________________________

___________________________________________

___________________________________________

Storage Unit #: ___________________________

Access Code: _____________________________

Other Property: ___________________________

Location: _________________________________

Location of Personal Safe:

___________________________________________

Safe Combination: __________________________

Credit Cards

Company: ________________________________

Card Number: _____________________________

Company: ________________________________

Card Number: _____________________________

Company: ________________________________

Card Number: _____________________________



BAnking informAtion

The following payments are being taken from my account:

Amount: $_________________________________

Account: _________________________________

Purpose: ________________________________

___________________________________________

Amount: $_________________________________

Account: _________________________________

Purpose: ________________________________

___________________________________________

Checking Account(s)Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on Account:

___________________________________________

___________________________________________

Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on Account:

___________________________________________

___________________________________________

Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on Account:

___________________________________________

___________________________________________

Savings Account(s)Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on Account:

___________________________________________

___________________________________________

Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on Account:

___________________________________________

___________________________________________



Investment or Money Market Account(s)Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on Account:

___________________________________________

___________________________________________

Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on Account:

___________________________________________

___________________________________________

Certificates of Deposit(s)Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on CD:

__________________________________________

__________________________________________

Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on CD:

__________________________________________

Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on CD:

__________________________________________

__________________________________________Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on CD:

__________________________________________

__________________________________________

Bank Name: _______________________________

Address: _________________________________

___________________________________________

___________________________________________

Account Number: __________________________

Name(s) on CD:

__________________________________________

__________________________________________

Credit Union Accounts

Name of Credit Union:

___________________________________________

Address: _________________________________

___________________________________________

___________________________________________

Name(s) on CD:

__________________________________________

__________________________________________



life insurAnCe

Company: ________________________________

Name of Insured:

___________________________________________

Owner: __________________________________

Primary Beneficiary:

___________________________________________

Contingent Beneficiary:

___________________________________________

Policy Number:

___________________________________________

Death Benefit: $____________________________

Company: ________________________________

Name of Insured:

___________________________________________

Owner: __________________________________


___________________________________________


___________________________________________

Policy Number:

___________________________________________

Death Benefit: $____________________________

Company: ________________________________

Name of Insured:

___________________________________________

Owner: __________________________________


___________________________________________


___________________________________________

Policy Number:

___________________________________________

Death Benefit: $____________________________

Company: ________________________________

Name of Insured:

___________________________________________

Owner: __________________________________


___________________________________________


___________________________________________

Policy Number:

___________________________________________

Death Benefit: $____________________________

Company: ________________________________

Name of Insured:

___________________________________________

Owner: __________________________________


___________________________________________


___________________________________________

Policy Number:

___________________________________________

Death Benefit: $____________________________

Others holding insurance on your life

Company: ________________________________

Name of Insured:

___________________________________________

Owner: __________________________________




___________________________________________


___________________________________________

Policy Number:

___________________________________________

Death Benefit: $____________________________

homeoWners’ insurAnCe

Primary residence:

Property Address:

___________________________________________

___________________________________________

Company: ________________________________

Policy Number: ____________________________

Location of Policy: _________________________

Secondary residence:

Property Address:

___________________________________________

___________________________________________

Company: ________________________________

Policy Number: ____________________________


Other:

Property Address:

___________________________________________

___________________________________________

Company: ________________________________

Policy Number: ____________________________


AutomoBile insurAnCe

Vehicle #1 (vehicle make and model):

___________________________________________

Company: ________________________________

Policy Number: ____________________________


Vehicle #2 (vehicle make and model):

_________________________________________

Company: ________________________________

Policy Number: ____________________________


other poliCies(Boat, trailer, Theft, liability, long-term Care, etc.)

Type: __________________________________

Company: ________________________________

Policy Number: ____________________________


Type: __________________________________

Company: ________________________________

Policy Number: ____________________________


Policies Owned on Other Persons

Name: ___________________________________

Company: ________________________________

Policy Number: ____________________________




Loans Against Any Insurance Policy

Company: ________________________________

Amount: $________________________________

Location of Records:

___________________________________________

mArketABle seCurities(stocks, Bonds, mutual funds)

Company: ________________________________

Type: ____________________________________

Owner: __________________________________

Number of Shares: _________________________

Original Cost: $____________________________

Current Value: $____________________________

Company: ________________________________

Type: ____________________________________

Owner: __________________________________

Number of Shares: _________________________

Original Cost: $____________________________

Current Value: $____________________________

Company: ________________________________

Type: ____________________________________

Owner: __________________________________

Number of Shares: _________________________

Original Cost: $____________________________

Current Value: $____________________________

Company: ________________________________

Type: ____________________________________

Owner: __________________________________

Number of Shares: _________________________

Original Cost: $____________________________

Current Value: $____________________________

Company: ________________________________

Type: ____________________________________

Owner: __________________________________

Number of Shares: _________________________

Original Cost: $____________________________

Current Value: $____________________________

retirement plAns/ employee Benefits

Individual retirement Account

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Individual retirement Account

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

401(k), 403(b) Plans

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Tax Deferred Annuity

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Qualified Pension, KEOGH or Profit Sharing Plan

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________



Split Dollar, Stock Option or Thrift Plans

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Deferred Compensation Agreement

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

roth IrA

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Insurance Policies

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Disability Policies

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Long Term Care Insurance Policies

Owner: __________________________________

Beneficiary: ______________________________

Value: $__________________________________

Describe any unique provisions:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

Business interest

Name of Business:

___________________________________________Business Activity:

___________________________________________(NOTE: If farm, include value of machinery, l ivestock, grain in storage. List value of land under real estate.)

Have minority interest or lack of marketability discounts been considered in value?

Yes No

Net Profit (Before owner’s earnings & taxes):

$______________________________________

Projected Future

Change: ___________________________________

$______________________________________

Business Life Insurance: Beneficiary

___________________________________________

Are any family members involved in business?

Yes No

If yes, list names:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

Form of Business:

Sole Proprietorship Partnership

C Corporation S Corporation

Professional Corporation

Personal Holding Company



Buy/Sell Agreement Yes No

Describe (or attach copy)

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

Owner/Key Employee:

Name: ___________________________________

Age: _______ % Owned or # Shares _________

Annual Income $ __________________________

Include in Buy/Sell? Yes No

Owner/Key Employee:

Name: ___________________________________


Annual Income $ __________________________


Owner/Key Employee:

Name: ___________________________________


Annual Income $ __________________________


Owner/Key Employee:

Name: ___________________________________


Annual Income $ __________________________


At death, business is to be:

Continued by Heirs

Liquidated

Sold to Surviving Owners

Sold to Key Employees

Other:

___________________________________________

Please describe any unique qualities of your business that you feel are pertinent to your estate design:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________



Annuities

Annuity 1 Issued by: ________________________

Address: _________________________________

___________________________________________

___________________________________________

Amount: $________________________________

Location of Papers:

___________________________________________

Annuity 2 Issued by: ________________________

Address: _________________________________

___________________________________________

___________________________________________

Amount: $________________________________

Location of Papers:

___________________________________________

reAl estAte

Type: ____________________________________

Location (State):

___________________________

Owner: __________________________________

Type of Ownership:

___________________________________________

Purchase Date: ____________________________

Cost Basis $______________________________

Mortgage Balance: $________________________

Market Value: $____________________________

Type: ____________________________________

Location (State): ___________________________

Owner: __________________________________

Type of Ownership:

___________________________________________

Purchase Date: ____________________________

Cost Basis $______________________________


Market Value: $____________________________

Type: ____________________________________

Location (State): ___________________________

Owner: __________________________________

Type of Ownership:

___________________________________________

Purchase Date: ____________________________

Cost Basis $______________________________


Market Value: $____________________________

Type: ____________________________________

Location (State): ___________________________

Owner: __________________________________

Type of Ownership:

___________________________________________

Purchase Date: ____________________________

Cost Basis $______________________________


Market Value: $____________________________

Type: ____________________________________

Location (State): ___________________________

Owner: __________________________________

Type of Ownership:

___________________________________________

Purchase Date: ____________________________

Cost Basis $______________________________


Market Value: $____________________________



personAl property

List automobiles, boats, jewelry, firearms, house-old items, art, antiques, collections, or other items of value and their location.

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

Item: ____________________________________

Location : ________________________________

DeBts

The following individuals owe me:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

liABilities

Current Bills:

Owed on what property?

___________________________________________

Amount: $________________________________


___________________________________________

Amount: $________________________________

Bank Loans:


___________________________________________

Amount: $________________________________

Notes Payable:


___________________________________________

Amount: $________________________________


___________________________________________

Amount: $________________________________




___________________________________________

Amount: $________________________________


___________________________________________

Amount: $________________________________

WhAt’s neXt

Once you have gathered your personal and family information, it is time to take the next step and actively put the information to work in your estate planning process.

Assess the documents you already have in place.Do you have:

a. a will Yes No

b. a trust Yes No

c. a living trust Yes No

d. a durable power of attorney Yes No

e. a health care proxy Yes No

f. a living will Yes No

h. any community property Yes No

i. any previous reportable gifts Yes No

Decide whether your current estate plan, if you have one, is satisfactory.

How would you like your estate distributed?(Be sure to designate any family heirlooms, jewelry, etc. Often the strongest disagreement among heirs arises from these items.)

Current Desires for DistriBution ofproperty

If married, at death of first spouse:

All to surviving spouse

Other desires

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

If single, or at death of surviving spouse:Gifts of specific items, heirlooms, etc.:

Recipient: ________________________________

Property: _________________________________

Recipient: ________________________________

Property: _________________________________

Recipient: ________________________________

Property: _________________________________

Recipient: ________________________________

Property: _________________________________

Recipient: ________________________________

Property: _________________________________

Recipient: ________________________________

Property: _________________________________



Gifts of fixed amounts of money:

Recipient: ________________________________

Amount $ _________________________________

Recipient: ________________________________

Amount $ _________________________________

Recipient: ________________________________

Amount $ _________________________________

Recipient: ________________________________

Amount $ _________________________________

Gifts of percentages of whole estate or of remainder of estate:

Recipient: ________________________________

Percentage: _____________________________%

Recipient: ________________________________

Percentage: _____________________________%

Recipient: ________________________________

Percentage: _____________________________%

Recipient: ________________________________

Percentage: _____________________________%

Care of pets:

$__________________ to __________________

for____________________________ for their lives.

Other desires:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

If any or your recipients or beneficiaries is under 18 or disabled, do you want his or her share to be placed in trust and, if so, for how long or until what age?

For whom? ______________________________

Until when? ______________________________

Other concerns to be addressed:

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________

___________________________________________



Who should serve as your executor or personal representative?

This should be someone you trust, who is young enough to be available (theoretically) when the estate will need to be probated and who understands the basics of administration and/or working with attorneys. Often a husband and wife will appoint each other, as available, and will appoint a backup in case the spouse is unable to serve.

Executor:

Name: ___________________________________________________________________________________

Address: _________________________________________________________________________________

______________________________________________________________________________________

Name: ___________________________________________________________________________________

Address: _________________________________________________________________________________

______________________________________________________________________________________

Who do you want to have serve as the guardian for your children(if applicable)?

Often young couples believe that they have so little that it is not necessary to have a will. However, one of the most important reasons for them to complete their estate plans is to appoint a guardian for their children. At a time when their lives would be in a terrible uproar, an appointed guardian can help bring a level of stability to the children.

The guardians should be willing to accept the responsibility of additional children. They should have a lifestyle that is compatible with yours and be young enough to appropriately care for the children.

Guardian:

Name: ___________________________________________________________________________________

Address: _________________________________________________________________________________

______________________________________________________________________________________

Backup Guardian:

Name: ___________________________________________________________________________________

Address: _________________________________________________________________________________

______________________________________________________________________________________



Who do you want to have as your trustee for any trusts that you create in your will or estate plan?

The Trustee will continue to care for any assets that you have left in trust for children or others. The Trustee should have knowledge about investing and administering assets and should be young enough to be available for the length of the trusts. In addition, the Trustee will work with the guardians to handle the assets for the children. The person to be appointed should feel comfortable with that role.

Trustee:

Name: ___________________________________________________________________________________

Address: _________________________________________________________________________________

______________________________________________________________________________________

Backup Trustee:

Name: ___________________________________________________________________________________

Address: _________________________________________________________________________________

______________________________________________________________________________________

Who should be given a durable power of attorney?

This should be someone you trust who has the expertise and concern to handle your affairs if you are incapacitated.

Person to be appointed: ____________________________________________________________________

Address: _________________________________________________________________________________

______________________________________________________________________________________

Does your current will or estate plan include these specifics?

If not, and/or if you do not have all of the documents to most effectively address your estate, you should contact your attorney or your estate planning professional to convert your wishes into legal documents. This completed workbook will provide the information necessary to complete your new or revised estate plan.



When shoulD you revise your estAte plAn?

1. When you change your mind about what you want to do or how you want to do it.

2. When your attorney or witnesses are no longer available or, generally, after about 10-15 years.

3. When there is a significant change in your life.

4. When there is a change in your family.

5. When the estate and tax laws change.

6. When there is a substantial change in your assets.

Completing your plAns

Completing this workbook is helpful in drafting your estate plans. However, do not let completion of the workbook keep you from acting on and completing an estate plan! Once you have the basic information, you can go to your attorney. While it is good to have as much completed as possible, you can always complete the entries later. Do no leave yourself and your heirs unprotected.

If you would like assistance in getting started, we invite you to call Dr. Stephen Eck at the Office for Planning & Estate Giving for Oklahoma Christian University. You can reach him at 405.425.5118 or by email at [email protected].

Remember OC

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