Mobilizing our Assets for Mission
Turning Burdens Into Blessings
The story is increasingly familiar. Mom has been in her home for years – the house she and Dad bought decades ago, when they were starting a family. The kids grew up there, then married and moved away. The family multiplied, and visits with kids and grandkids imprinted the home with more happy memories. Then, after Dad died, Mom found the big old place more and more of a burden, while the neighborhood filled with a new generation of growing families. Now that she needs round-the-clock care, that well-loved home is just too much to manage. And the kids can’t take care of her or the home by long distance.
And there’s another version of the story. Jim and Nancy have worked hard and lived frugally. Jim’s career brought lots of success, with promotions and raises. Without children, the couple built a tight network of friends and stayed in the old neighborhood, watching their nest egg grow and property values increase. They even bought a vacation home, and lovingly made it their get-away. They’ve managed to grow old together and have decided to move to a retirement community. Whether they sell or retain the properties, the taxes on their beloved homes are a major consideration. And they could use some assistance in funding their life in their new community.
In both cases, homeowners are entering a new stage of life, one where assets that had brought great joy and fulfilled an important purpose for years, have become more of a burden than a blessing.
No matter what generation you represent – older homeowners, their friends and relatives, or their children – you’ve likely encountered such stories. Many people, especially those who wish to include a charitable donation in their planning, do not realize that these scenarios offer opportunities to multiply assets and to benefit people and communities far beyond the ownership circle.
From dilemma to creative solution
The Charitable Remainder Unitrust (called a “CRUT”) can provide an attractive solution. The CRUT is an irrevocable trust that generates a potential income stream for a beneficiary for a period of time, with the remaining balance then distributed to charity. The way many CRUTs are structured, the trust offers tax advantages to the donor at the time of the gift, provides an income stream for the donor’s lifetime, and then benefits one or more charities of the donor’s choice. Choosing to create a CRUT can turn a dilemma like the one in the first scenario above into a creative solution that benefits both the donor and the charities she chooses to support.
Jim Murphy with Episcopal Church Foundation (ECF) has assisted numerous donors in setting up a CRUT. “It’s a way of making property no longer a burden but a benefit both to yourself and to the charities you love and support,” Murphy said. He offered an example of a woman whose health was failing. Her expensive in-home care was depleting her resources. She created a CRUT, using her longtime residence to fund the trust. The home had appreciated considerably over her lifetime. The proceeds were sufficient to create an income that paid for her nursing home care until her death. At that time, the remainder of the funds paid substantial gifts to three charities she had named, one of which was her home parish.
Unlike some other charitable gift instruments, a CRUT can be funded using real property. Murphy cautions that the real estate – often a home or a second home – must be unencumbered. There can be no mortgage or lien or other encumbrance on the property. It must be free and clear to be transferred to the trust. That date of transfer is the determining date for any tax benefits from such a donation.
In addition, the allowable charitable deduction must be based on a certified independent appraisal of the property, and there can be no pre-arranged sale. The sale must occur after the property has transferred to the trust.
Josh Anderson, also with ECF, recalls helping a couple that was unaware of the distinct advantages of some charitable gift instruments. They mailed an information request form to ECF, and it landed on his desk. “We shepherded them through the process of understanding the options available to fulfill both their personal and philanthropic goals,” he says. “I was glad to be able to help them address their individual financial needs and also benefit charities they cared about.”
ECF, like many other non-profit organizations, offers to serve as trustee for donors who want to set up a CRUT. Potential donors are welcome to reach out to ECF for assistance. If a CRUT seems desirable, ECF can provide the initial trust document for review and revision by the donor and the donor’s attorney. Before making any charitable gift, donors should seek their own legal and tax advice.
Decisions about charitable gifts, especially legacy gifts, require time and repeated exposure to dependable information. You can offer inspiration and support to potential donors by keeping planned giving brochures available with other accessible, informational materials in your church. At least one of ECF’s larger charitable trusts was set in motion by a brochure on a tract rack. Keep your congregation – and your planned giving advocates – well supplied with the information that donors might be seeking.
Demi Prentiss is a Program Consultant in the Endowment Management Solutions division of Episcopal Church Foundation (ECF), offering support to dioceses and congregations in structuring and growing their endowments. Previously, she served five years as ministry developer for the Episcopal Diocese of Fort Worth as they reorganized, partnering with individuals and congregations to re-imagine how to be the church. She has served a brief stint on the Presiding Bishop’s staff as Program Officer for Lay Leadership, and spent many years as a ministry developer in congregations varying from family to resource size. She holds degrees from Seabury-Western and Harvard, and is author, with Fletcher Lowe, of Radical Sending: Go to Love and Serve. She lives in Denton, TX, where she has built a practice as a life and leadership coach for leaders in congregations and non-profit organizations.
- Making a Planned Gift to Your Parish an ECF webinar presented by Jim Murphy, December 1, 2015
- Closing the Planning Gap by David Farrand, Vestry Papers, January 2011
- What is the Best Gift for Me? an ECF webinar presented by Jim Murphy, Josh Anderson and Brad Roberts, April 9, 2019
- Planning for the End of Life an ECF Vital Practices tool
- Vital Practices Digest: Five Resources for Planned Giving by Brendon Hunter, ECF Vital Practices blog, August 19, 2015