Church Fund Management

fund managers

Earn More on your Church’s Investment with TBF Fund Management

By Rev. Bill Gruenewald

Right now, bank money market accounts are providing returns of only 0.25% – 0.5%. That means for every $1,000 your church has invested, you are receiving at best only $5 per year. 

On March 17, 2021, the Federal Reserve announced it’s keeping interest rates steady following its meeting, leaving the federal funds rate at a range of 0 to 0.25 percent. This follows the Fed’s decision to hold rates near zero until the economy has weathered the effects of COVID-19. 

While this is good news for borrowers, it is not good news for savers! So where does the church invest to get more interest on their funds so that it can be used to fund the ministry of the church? The Tennessee Baptist Foundation.

One of the most popular services we offer is the management of funds for churches, associations and institutions of the Tennessee Baptist Convention (TBC) in our Fixed Income Pool. The foundation is typically able to offer greater rates of return than those available through commercial institutions. Assets managed in this way are invested in socially screened, investment-grade securities that include government agency bonds, corporate bonds and corporate preferred stock. These are purchased at par and held to maturity or until they are called. 

These funds are not FDIC insured and do have a slight amount of risk, but the Fixed Pool has provided significantly greater returns than bank money market accounts over the past 10 years. To support our ministry to Tennessee Baptist churches, associations, institutions, and organizations/ministries, the Foundation charges a modest cost-recovery fee of 0.40% annually for this fund management service.

The goal of the Foundation’s asset management service is to earn a good rate of return for the church with minimal risk so that more funds go back into the ministry of the church. (The Foundation does not manage money or investments for individuals except within revocable or charitable trust arrangements.)

Types of funds the Foundation manages include:

  • Building Funds – A building fund may be in place a few months to several years before it is needed. During the accumulation phase, we help the church or association earn the best rate of return on its savings. 
  • Permanent Funds – Permanent funds include mission funds, reserve funds, and endowment funds. They are dedicated to various ministries and missions of the church, association, or institutions of the TBC. Their purpose is to produce income that can be used according to the policy of the church. Many churches are developing endowments to support missions or provide for the maintenance of facilities in the future. As an example, the Foundation manages the Cooperative Program Endowment Fund of the Tennessee Baptist Mission Board.

If you’d like to explore the possibility of a fund management relationship with the TBF and get a better return on your church’s investment, please contact us. We are ready to partner with you!


Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

Learn More

Should You Set Up a Charitable Remainder Trust?

Should You Set Up a Charitable Remainder Trust?

By Rev. Bill Gruenewald

If you are interested in supporting a charity or cause with your assets after you pass, there are several ways to do it, but a charitable remainder trust (CRT) can be uniquely beneficial. It takes a bit more complex planning than other trusts, but it has the distinct ability to not only support a charity (like a Baptist cause), but also guarantee income for you/your family for a season and earn a tax deduction all at once. 

What is a charitable remainder trust?

A CRT is an irrevocable trust created by a donor whereby the donor or other individuals (usually a spouse or other family members) receive income for a certain period of time from the trust, and when that time has passed, the trust terminates and the remaining funds in the trust create a memorial fund to provide income that is paid to a charity. 

Who should consider creating a charitable remainder trust?

If you’re interested in helping support a charitable cause and you have an appreciated asset or retirement asset that could be used to make a gift to the charity, a CRT might be a wise decision for you. 

How does a CRT help with taxes?

With the two types of assets mentioned above, if you were to sell or access them yourself, you could incur substantial tax obligations. A CRT helps address these taxation issues. First, the donor can shift the taxable consequences for selling the appreciated asset or accessing retirement funds to the CRT (which itself pays no taxes). 

For example, if you own an asset with a low-cost basis (such as stocks, bonds, mutual funds, real estate, etc.) and sell it outright, you would realize a capital gain in the year of the sale. However, the same low-basis asset can be gifted to a CRT. 

Even if the CRT sells the asset as soon as it is received, no capital gains are realized by the trust immediately. They are instead spread among a number of years to the people receiving income from the CRT. 

Thus, when the donor begins receiving income from the trust after the gift, he or she has effectively converted a taxable asset to an income stream for him/herself without having to pay the full capital gains tax bill in one year. 

Additionally, using retirement accounts (IRAs, 401(k)s, 403(b)s, etc.) to fund a CRT after a donor’s death can be a tax-efficient way of making the initial gift into the CRT. While an individual who receives money from a retirement account has to include all retirement distributions in their ordinary income in that tax year, a CRT does not realize the same tax obligation.

Thus, a retirement account can be fully paid out to a CRT in a lump sum without recognizing this usually large income tax bill. The beneficiaries then begin receiving income from the trust, only paying income tax on the distributions they receive in a particular tax year.

This strategy can be particularly effective when a donor wishes to provide income to family members after his or her death while still ensuring that the charity receives a benefit in the future from his or her retirement assets. 

Secondly, while it is true that the income paid from a CRT to a recipient is taxable, the exact taxation is calculated based on a tiered system. Without going into full detail on the system, the bottom line is that using the calculation usually softens the income tax impact on the individual receiving income because each dollar received is taxed according to the type of income to which it is attributed (i.e. capital gains, ordinary income, tax-free income, etc.).

Some income tax classes are taxed more favorably than others. The full impact of taxation on the beneficiary will depend on the assets used to fund the CRT, how assets within the trust are sold, and the type of income the CRT earns each year. For most, however, the tiered system gives a more favorable result when it comes to individual taxation. 

Finally, in the year of the gift, the donor gets the added benefit of a possible tax deduction. This can be especially useful if the donor has been blessed with higher income in a particular year.

What kinds of CRTs are there?

There are two main types of CRTs when it comes to structure: the Charitable Remainder Annuity Trust (CRAT) and the Charitable Remainder Unitrust (CRUT). The primary difference between these two CRTs is how the income distributed to the persons is calculated. 

In a CRAT, the beneficiaries receive a fixed amount each year, while with a CRUT, the beneficiaries receive a fixed percentage of the assets held in the trust. The best method for payout depends on the unique situation that the donor is trying to address. 

A CRT is a sophisticated strategy, and as you might imagine, there are particular rules that must be closely followed from beginning to end. However, for the right donor, the CRT may be a perfect solution, accomplishing many long-term benefits at the same time.


Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

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COVID-19 Protocols

COVID-19 Protocols

April 1, 2021


Dear TBF Friends & Clients,

The Tennessee Baptist Mission Board (TBMB) Church Support Center (CSC) in Franklin, Tennessee is open with normal business hours, which includes the Tennessee Baptist Foundation.

The TBMB has extended the following COVID protocols until May 31, 2021:

  • In-person meetings in the Church Support Center are limited to 10 people or fewer
  • In-person meetings will practice proper social distancing and safety protocols
  • While in the building all employees and guests are required to wear a face mask while moving throughout the building. Masks may be removed at employee workspaces or when socially distanced in meeting rooms.
  • TBMB and TBF staff may travel but are encouraged to conduct as much of their work online as possible.
  • TBMB and TBF staff are required to exercise proper safety precautions when meeting with Baptist organizations off-site.

Our staff will be doing part of our work remotely but will have someone in the office each day Monday through Friday.

We have found Zoom to be a great tool in communicating and we are even able to conduct seminars for your church via Zoom. The Foundation staff are prepared to connect with you virtually using Zoom or other videoconferencing technology, or by phone. 

You can make a virtual appointment or request an in-person meeting with one of our staff members by calling 615.371.2029 or by sending us a message on our contact page.

I encourage you to hold close these words from Jesus found in John 10:27:

“Peace I leave with you; my peace I give to you. I do not give to you as the world gives. Do not let your hearts be troubled and do not be afraid.“

Serving Christ with you,

Rev. Bill Gruenewald, President-Treasurer

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

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Why Your Church Should Have a Legacy Ministry

top of church with cross and negative space with sky

Why Your Church Should Have a Legacy Ministry

By Rev. Bill Gruenewald

A legacy ministry is a powerful way to propel your church’s mission for years to come. It provides an additional stream of steady income for your church, allowing the congregation to continue its Kingdom work well into the future. Unfortunately, many churches miss out on this powerful opportunity to fuel their mission because they don’t know about it, don’t understand it, or think it’s too complicated.

The truth is, any church can set up a legacy ministry with much less work than you might think — and when you do, you’ll wonder why you didn’t do it sooner.

What is a legacy ministry?

A legacy ministry is a planned giving program that allows church members to designate a part of their estate to be given to the church after they die. It’s significant because even though church members often give cash assets regularly throughout their life, only five percent of a person’s assets are typically liquid, like cash. The remaining 95 percent is represented in nonliquid assets like real estate, stocks or mutual funds, and retirement accounts. Most of the time, the largest one-time charitable gift a person will make is through their will

By including the church in their estate plan, church members can make a one-time gift to the legacy ministry and use the gifts with which God has blessed them to carry out Kingdom purposes, well beyond their lifetime.

Unfortunately, for many congregations, legacy giving is often left out of the stewardship conversation — and in our experience most churches do not have legacy ministries established. With so much emphasis on the church’s operating budget and the weekly giving, congregations are unaware their assets can be used to impact the Kingdom after they have left this earth. 

By prioritizing legacy giving, church leadership will not only foster a culture of intentional stewardship in their congregation, they’ll set up their church for longevity as a ministry.

Why should Christians care about estate planning?

Estate plans are critically important to ensure your assets are managed the way you want without any ambiguity. But 70 percent of Americans die without one in place. Often it’s because they feel like it’s too complicated, or they simply don’t want to think about the end of their life. Estate plans can actually be quite simple to set up, and while everyone should have one, Christians in particular should be intentional about it.

As believers, we know that nothing we have is truly our own. God has blessed us with assets to steward well and use to show His love to others and bring Him glory. Without an estate plan, Christians miss out on an enormous opportunity for this kind of Kingdom impact — most likely the largest opportunity they’ll ever have to do so.

As followers of Christ, we also know that we do not have to fear death, because He has overcome it. If we are believers, we don’t have to feel uncomfortable talking about the end of this life, because it simply means we’re entering a better one, passing the torch to the next generation of believers. 

Through an estate plan, you get to explicitly state how you want your assets to be distributed, which means you can designate legacy gifts to causes and organizations you believe in. Without one, you leave that distribution up to the state laws, which will certainly not consider your church. If we want to be faithful stewards of what God has given us, we have to also plan for what will happen to those assets when we leave this earth.

An estate plan is an opportunity to not only bless the church when you pass, but well into the future — if they have a legacy ministry in place.

How does legacy giving work?

Once a member decides to include a legacy gift to your church in his or her estate plan, you can accept them via your legacy ministry. You can set up the ministry to reflect your church’s unique values and passions — an extension of your mission. The Legacy Fund will also generate interest income that can be used for ministries not in the budget, or for new initiatives the church feels called to do but isn’t able to fund.

A legacy ministry is also a steady support through any future tough times your congregation may face. Over the last year, many churches have struggled with weekly giving because we have not been able to gather in person due to the pandemic. Though regular giving will typically be the primary way we fund day-to-day ministry needs, a legacy ministry offers extra support to help carry through times like these.

How do I set up a legacy ministry?

If your church is interested in establishing a legacy ministry, the Tennessee Baptist Foundation is here to help. We are passionate about helping Tennessee Baptists steward well the material wealth God has given them and helping church members expand their commitment to stewardship beyond regular tithes and offerings. Legacy ministries are a great way to invite your congregation to be a part of this kind of long-term Kingdom impact.

Don’t miss out on this incredible opportunity for your church to invest in the next generation of believers and change the world with Kingdom work. 

Call us at 615-371-2029 to talk about setting up a legacy ministry for your church today!


Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

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What is a Last Will and Testament?

close up image of last will and testament

The Tragedy of Dying Without a Will

With the new year comes a fresh start. (And has there ever been a year in which we’ve longed for a fresh start more strongly than this one?) As you consider the year before you — a blank slate, ready for you to make your mark upon — it’s the perfect time to make a commitment to crossing a few things off your perpetual to-do list, like creating a last will and testament

Did you know that two-thirds of people will die without a will in place? It’s a staggering and sobering statistic, especially when you consider how simple it can be to create one. Most people put it off because they don’t want to think about death or their family members having to live without them, but it’s crucial that we take courage and do it anyway. 

Even celebrities can miss this important step

You may remember that when Black Panther star Chadwick Boseman passed away earlier this year from colon cancer at 43, he did not have a last will and testament in place. As tragic as the actor’s untimely death was, it became even more tragic because of the heavy burden of managing his estate afterward. His wife had to ask the courts to name her administrator of the estate, but that still only gave her limited authority. 

While Boseman’s estate may have been worth much more than the average person’s, estate planning is not just for the wealthy. Everyone has an estate; not everyone has a plan.

What happens if you die without a will?

If you do not have a last will and testament in place when you pass away, the state gets to decide what happens to your assets according to the default designations laid out in the law. You won’t get a say in where your estate goes, which also means you won’t get to determine whether your estate is used to support a ministry you’re passionate about or another Kingdom-minded cause. There are also additional legal fees associated with dying without a will in place.

Even in the case of Boseman’s estate, the lack of a will made everything more complicated. As a baptized Christian who remained strong in his faith, he may have wanted to make a donation to his church or a ministry, but the lack of a will makes that impossible to confirm. Stating specifically what you would like to happen to your assets after you pass leaves no room for guesswork or disagreements between family members about what your intentions are, and it means you can be intentional about stewarding well the earthly gifts God has given you.

Without a will, an unnecessary burden is placed on your already grieving family members, and you lose the ability to put those assets toward Kingdom-focused work — work that will continue to impact the next generation for Christ long after your lifetime.

God calls us to care for and invest those blessings for His glory in 1 Corinthians 4:2: “Moreover it is required in stewards, that a man be found faithful.” (KJV) Having a will in place is just one of the practical ways we can live this out as followers of Christ.

The good news is, creating a last will and testament is actually not as complicated as you might think. Contact us today to get started. We’d love to help you steward your resources well for the glory of God.

Yours in Christ,

Rev. Bill Gruenwald


Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

Learn More

Your Guide to 2020 Year-End Charitable Giving

Woman holding cash

Your Guide to 2020 Year-End Charitable Giving

by Rev. Bill Gruenewald

The year 2020 will be remembered as the year of COVID-19. It has presented many challenges to all of us. But even so, we’ve been encouraged to see that believers across Tennessee have remained faithful in their giving to Baptist causes, even in the midst of the pandemic. Before we flip the calendar to 2021, it’s a great time to review some additional charitable giving ideas and consider whether they would make sense to implement, especially as you think of ways to support your church or other Baptist cause. 

For 2020: Above-the-Line Deduction for Cash Contributions

  • The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) enacted in March 2020 includes an incentive for charitable donations. For 2020 only, taxpayers who do not itemize their deductions may claim a charitable contribution deduction of up to $300 for the taxable year for cash contributions made to a public charity that is not a supporting organization or donor-advised fund. This new provision does not permit an above-the-line deduction for unused charitable contributions carried forward from a prior year.
  • The CARES Act does not explicitly address whether couples filing a joint return may claim $300 each. We are not likely to have an answer until the instructions for the 2020 Form 1040 are published.

For 2020: Modification of the Charitable Deduction Limit

  • The CARES Act also expanded the limit on the deductibility of cash contributions made by individuals to a public charity during 2020 from 60% of adjusted gross income to 100% of adjusted gross income. The limit for noncash contributions remains at 30% of adjusted gross income.
  • As with the above-the-line contribution deduction for non-itemizers, the change in the charitable deduction limit does not apply to cash contributions made to a supporting organization or donor-advised fund.

Make a Regular Donation 

  • The easiest way to make a gift is to simply write a check or donate online (if your church has this capability). If your check is postmarked by December 31 or if your online donation is processed by December 31 (note that the time of day may be important), you may be able to take a charitable deduction for the gift, depending on your particular tax situation.

Batching Contributions

  • With the 2017 tax bill, Congress raised the standard deduction for individuals ($12,200) and couples ($24,400). Overall this is great for taxpayers, but it does make it a bit harder to take advantage of deducting charitable contributions if your total deductions do not exceed the standard deduction. 
  • One way around this issue is to “batch” your charitable contributions, meaning that you combine this year’s gifts with what you anticipate giving next year and make both contributions in 2020. You’re basically loading up two years of gifts in one tax year. Thus, you have a higher charitable amount to apply towards your deductions in 2020, which may result in a better result than simply taking the standard deduction.  

Give Gifts of Appreciated Assets 

  • With the improved financial markets, many people now find themselves holding stocks, bonds, mutual funds, or real estate that has significantly increased in value. Selling these assets may create substantial capital gains for the owner. 
  • However, rather than increasing your tax burden, you can donate the appreciated asset to your favorite Baptist cause. You get a deduction for the full market value of the asset and the charity recognizes no gains when it sells the asset. Win-win!

Required Minimum Distribution (RMD) / Qualified Charitable Distribution (QCD)

  • The CARES Act waived required minimum distributions for IRAs and retirement plans for 2020. However, you may still take the distribution if you want, or even have it paid to your church or other Baptist cause. Please note that not all charities are eligible to receive a QCD, so check with them before you make it. 

Remember, when the ball drops at midnight on December 31, you will lose the opportunity to take advantage of these strategies for 2020. If any of these ideas interest you, begin the process now to make sure you allow plenty of time for the process to be completed by year-end. 

From the Tennessee Baptist Foundation, we wish you the happiest of Christmas seasons as we celebrate Immanuel! 

Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

Learn More

Will Your Loved One’s Bank Accept Your Power of Attorney?

skyline of bank buildings

Will Your Loved One’s Bank Accept Your Power of Attorney?

by Rev. Bill Gruenewald

There are some things you just don’t want to learn the hard way — like the fact that the milk expired a week ago or that your car insurance doesn’t cover as much as you thought. Another one is finding out your power of attorney (POA) documents aren’t recognized by your loved one’s bank. You don’t want the first time you’re hearing about that issue to be when your parent is incapacitated and you need to access their accounts. By then, there’s little you can do to fix it without great effort and expense.

Unfortunately, this happens more often than you might think. In most states, banks are not required to recognize financial POAs that were not established using the bank’s own forms. So you could show up to the bank with your POA documents in hand and still be rejected. It’s understandable given the potential for fraud; banks don’t want to be held responsible for giving the wrong family member access to a checking account or enabling a scammer. But the extra precautions mean you have to fully understand the POA requirements before the time you actually need to utilize it. Otherwise, you could be up a creek.

There are a number of reasons POAs can be refused at the bank:

1. The POA isn’t “durable”

“Durable” powers of attorney are those that remain in effect even after the principal (the person for whom you’re making decisions) is incapacitated and unable to make decisions for themselves. If it is not durable, the POA is only applicable if the principal is of sound mind. Most caregivers and family members who are assigned as an agent will want to make sure the POA is durable.

2. The POA is “springing”

“Springing” powers of attorney only take effect when the principal is incapacitated. This might sound like a good option, but keep in mind that for the POA to apply, at least one doctor would have to verify that the principal is unable to make financial decisions for him or herself, and a bank would want to see that documentation as well as the POA and any other documentation that would verify these claims and satisfy their requirements.

3. The POA is “stale”

A bank might see a POA as “stale” if it is too old, depending on their requirements. As a general rule, we recommend signing a new POA every five years to keep it recent.

4. The bank requires filling out their forms in every case

Even if you meet all the requirements — your POA is recent, “durable” and is not “springing” — they can still reject it if they have their own required POA forms. Whether you’re establishing a POA for yourself or being designated as an agent for a loved one, be sure to inquire with the principal’s banking institution about their requirements for POAs.


If the POA is rejected by the principal’s bank, there are a few courses of action, but none of them are simple. If the POA is not recognized and the principal is already incapacitated, there may be little recourse other than for the agent to take legal action against the bank or file with a court to become the legal guardian of the principal, which could be time-consuming and expensive, not to mention making a private matter rather public.

Some states have passed laws that allow for the creation of a statutory short form power of attorney (SSFPOA), which banks are required to accept, assuming it is valid on its face. It has a specific format that cannot be altered, so it allows consistency across all users and banks. 

Though there are ways to address the issue after the fact, the best plan of action to avoid complication, stress, and confusion is to simply think ahead. 

The last thing you want to be worried about when your loved one is unwell and you’re helping with their finances is proper documentation. So when you’re discussing this matter with them, it’s critical to contact their bank and find out what their requirements are for POAs. They may require you to fill out their own specific forms, and you might be required to fill them out in person or simply have them notarized. They may not require any special documentation, but it’s critical to know this ahead of time.

Ready to Get Started?

If you have any questions about POAs, we would love to help. The Tennessee Baptist Foundation is here to walk with you every step of the way, whether you’re establishing a POA, creating an estate plan, or setting up legacy giving at your church. You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

Learn More

The charitable remainder trust (CRT) is a multipurpose tool

multipurpose tool

The charitable remainder trust (CRT) is a multipurpose tool

by Christopher L. Kelly, Esq.

A charitable remainder trust (CRT) takes a bit more complex planning than other trusts, but for the right donor, it can be greatly beneficial. It has the unique ability to support a charity (like a Baptist cause), guarantee income for him/herself or family for a season, and earn a tax deduction all at once. 

A CRT is an irrevocable trust created by a donor whereby the donor or other individuals (usually a spouse or other family members) receive income for a certain period of time from the trust, and when that time has passed, the trust terminates and the remaining funds in the trust are paid to a charity. 

In addition to having a desire to help a charitable cause, donors more ideally suited to implementing this strategy usually have an appreciated asset or retirement assets that could be used to make the gift to the charity. With both of these types of assets, if the donor were to sell them or access the assets themselves, he/she could incur substantial tax obligations. 

A CRT helps address these taxation issues. First, by using the types of assets listed above, the donor can shift the taxable consequences for selling the appreciated asset or accessing retirement funds to the CRT (which itself pays no taxes). For example, if a donor owns an asset with a low-cost basis (such as stocks, bonds, mutual funds, real estate, etc.), if he or she sold it outright, he or she would realize a capital gain in the year of the sale. However, the same low-basis asset can be gifted to a CRT. Even if the CRT sells the asset as soon as it is received, no capital gains are realized by the trust immediately, but are instead spread among a number of years to those persons receiving income from the CRT. Thus, when the donor begins receiving income from the trust after the gift, he or she has effectively converted a taxable asset to an income stream for him/herself without having to pay the full capital gains tax bill in one year. 

Additionally, using retirement accounts (such as IRAs, 401(k)s, 403(b)s, etc.) to fund a CRT after a donor’s death can be a tax-efficient way of making the initial gift into the CRT. While an individual who receives money directly from a retirement account has to include the retirement distribution in his or her ordinary income in the year, a CRT does not realize the same tax obligation. Thus, a retirement account can be fully paid out to a CRT in a lump sum without recognizing this usually large income tax bill. The beneficiaries then begin receiving income from the trust, only paying income tax on the distributions they receive in a particular tax year (see the paragraph below about how the income tax obligation is calculated). This strategy can be particularly effective when a donor wishes to provide income to family members after his or her death while still ensuring that the charity receives a benefit in the future from his or her retirement assets. 

Secondly, while it is true that the income paid from a CRT to a recipient is taxable, the exact taxation is calculated based on a tiered system. Without going into full detail on the system, the bottom line is that using the calculation usually softens the income tax impact on the individual receiving income because each dollar received is taxed according to the type of income to which it is attributed (i.e. capital gains, ordinary income, tax-free income, etc.)  Some income tax classes are taxed more favorably than others. The full impact of taxation on the beneficiary will depend on the assets used to fund the CRT, how assets within the trust are sold, and the type of income the CRT earns each year. For most, however, the tiered system gives a more favorable result when it comes to individual taxation. 

Finally, in the year of the gift, the donor gets the added benefit of a possible tax deduction. This can be especially useful if the donor has been blessed with higher income in a particular year. 

As to the structure of a CRT, there are two main types of CRTs: the Charitable Remainder Annuity Trust (CRAT) and the Charitable Remainder Unitrust (CRUT). The primary difference between these two CRTs is how the income distributed to the persons is calculated. In a CRAT, the beneficiaries receive a fixed amount each year, while with a CRUT, the beneficiaries receive a fixed percentage of the assets held in the trust. The best method for payout depends on the unique situation that the donor is trying to address. 

A CRT is a sophisticated strategy, and as you might imagine, there are particular rules that must be closely followed from beginning to end. However, for the right donor, the CRT may be a perfect solution, accomplishing many long-term benefits at the same time.

Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

Learn More

3 Ways to Build A Culture of Generosity in Your Church

thank you note

3 Ways to Build A Culture of Generosity in Your Church

by Rev. Bill Gruenewald

In their book “Contagious Generosity,” Chris Willard and Jim Sheppard write, “Generosity is at its core is a lifestyle, a lifestyle in which we share all that we have, are, and ever will become as a demonstration of God’s love and a response to God’s grace.” 

We serve a gracious and generous God. It should be only natural that every Christian would have an attitude of generosity in all areas of life. Unfortunately, though, this topic is not often talked about in our churches. So how can church leaders help bring about a culture of generosity in their church? 

We believe there are three primary ways to help a congregation cultivate generosity in the church:

1. TEACH IT

As Baptists, teaching is important in the life of our church, and it’s the main focus of Sunday school or Bible study. It is a part of our DNA; it helps us understand God’s Word and apply it to our daily lives. With more than 2000 verses dealing with money and finances, we need to teach what God’s Word says, so we can make life changes in how we handle money. This will allow us to become better stewards and give us the freedom to be more generous with the material blessings God has given each one of us.

2. TELL IT

They say a picture is worth a thousand words. I believe a story is better than 100 sermons! Stories come from our life experience, and when we share them, we encourage others in a more memorable, impactful way. We need to have members share their stories to show the impact of how generosity is making a Kingdom impact as well as how they have been blessed to be the instrument of God’s love and grace. Sharing stories gives other members an opportunity to relate and be inspired toward growth in their own lives.

3. PRAISE IT

As a church, we do not say “thank you” as often as we should. In fact, many secular nonprofits do a better job at donor relations than the church. We need to cultivate gratitude in addition to generosity. Sending notes, emails, and even—when warranted—a public expression of gratitude will foster more generosity in your congregation. In an age where value is often defined by “what’s in it for me?”, gratitude is one of the greatest spiritual characteristics leadership can model for our members.

Willard and Sheppard go on to write:

“Generosity, when motivated by genuine love for God, is contagious, drawing others to wonder why people would give of themselves while expecting nothing in return. In fact, a life and a church community that is characterized by generosity may be the most compelling, effective evangelism strategy we have as followers of Christ.”

That is the type of lifestyle that needs to be encouraged within all our Tennessee Baptist congregations. The TBF would like to work with you to build this type of generosity in your church through our Legacy Ministry program. Give us a call today at 615-371-2029. We are here to help.

Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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