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Endowment Fund

What is the Holy Cross Endowment Fund?

The Holy Cross Endowment Fund was established to strengthen and extend God's mission through Holy Cross Lutheran Church, reaching out in response to human need, by making grants for promoting Christian religion, Christian charity, and supporting education for Christian life and service. The endowment fund receives gifts and funds of various types, invests these gifts and funds for long-term growth and distributes income from those investments to current projects in support of the congregration's mission. We use the services of the Lutheran Community Foundation, based in Minneapolis, MN. The Foundation is dedicated to supporting the charitable, religious, and educational purposes of Lutheran congregrations, institutions and communities, and benefiting society in general. At the Foundation, our endowment fund is designed to preserve the principal and a portion of the earnings, and use the remainder of the earnings to fulfill our mission. Because only the earnings on our fund can be distributed, the Fund continues to grow, buffering the Fund against inflation and providing a permanent source of support to our mission. Therefore, gifts to the Endowment Fund are perpetual.

What kinds of assets can I give?

Cash - it is one of the simplest ways to give; most are familiar with giving cash as a charitable gift.

Publicly Traded Securities - charitable gifts of appreciated stocks and bonds, including mutual funds, can easily be made by transferring ownership of the assets to the Holy Cross Endowment Fund.

Real Estate - Real estate gift options include a number of types of properties, including land, a residence, vacation home or farm. For donors who wish to continue using the property they give, there is an option that allows you to make a deferred gift while retaining a life estate.

Retirement Assets - This gift option include tax-qualified plans such as IRAs, tax sheltered annuities and 401(k) and 403(b) plans.

Savings Bonds & Annuities - Gifts of annuities and US Savings Bonds are typically given upon one's death at beneficiary proceeds or through one's Will.

How do I gift to the Holy Cross Endowment Fund?

Direct Gifts - these gifts can be made using cash, publicly traded securities, or real estate. You receive an immediate charitable deduction. For gifts of securities or real estate owned for more than one year, you bypass capital gain taxes on the appreciated value.

Life Insurance - Through life insurance, you can make a significiantly larger charitable gift that might be possible using current assets. The benefit of the Holy Cross Endowment Fund occurs upon your death. You receive an immediate charitable deduction for premium payments. (The Fund becomes the owner of the policy.)

Bequest - Bequests can be made of the property and assets you own at the time of your death by naming the Holy Cross Endowment fund in your Will or Living Trust. You can leave a specified dollar amount, a percentage of your estate or specific assets to the Fund. You maintain flexibility and control of the gift asset while living. Your heirs avoid paying income and estate taxes on assets designated to the Fund.

Beneficiary Proceeds - The Holy Cross Endowment Fund can be named as beneficiary of your life insurance contract, annuities, retirement assets and other financial accounts. You maintain flexibility and control of the gift asset while living. Your heirs avoid paying income and estate taxes on assets designated to the Fund.

Gift Annuities - A gift annuity is a simple written agreement through which you make a gift of cash and/or securities to the Fund and receive, in turn, guaranteed payments for life. You receive an immediate charitable deduction and on securities, you bypass capital gain taxes on the appreciated value.

Charitable Remainder Trusts - Through a charitable remainder annuity trust or unitrust, your gift assets are converted to ongoin income payments. Income payments can be made for a lifetime or a term of up to 20 years, and at the end of the trust, the remainder goes to the Holy Cross Endowment Fund. Your receive an immediate charitable deduction. With an annuity trust, you make a one-time gift and receive a set income for life or for a term of years. Your gift can be cash or publicly traded securities. With an unitrust, you can make multiple gifts of cash, publicly trade securities and/or real estate. your income payments are calculated annually using a set percentage rate and a value of your trust's assets. A testamentary trust is a type of charitable remainder trust that upon your death provides an income to a surviving spouse or other named person for life or a term of years, and then upon their death, benefits the Holy Cross Endowment Fund. By using retirement assets to fund the trust, you may be able to bypass income and estate taxes.

What is Planned Giving?

"Planned giving" means creating a specific plan for future gifts to benefit our church and other charities important to us. These gifts may be made during lifetime and at death. Many people first consider planned giving when preparing a Will or along with other estate planning, but planned giving can be made party of our financial plans at any time in our lives. Those who mkae planned giving arrangements are ususally motivated by a strong commitment to a particular project or mission of the church. Their planned gifts allowed them to acknowledge their gratefulness to God and fulfill their goal of supporting charitable work important to them, work that reflects their values and commitments. In addition, you may receive tax benefits and lifetime income through several types of tax-favored plans.

Planned giving takes many forms and can be tailored to the needs and goals of the giver. The individual goals and dreams of the donor make each gift unique and important. Planned giving is not only for the wealthy; each of us finds ourselves materially blessed in many ways. As Martin Luther stated, "The heart of the giver makes the gift dear and precious."

Planned gifts to the Holy Cross Endowment Fun will ensure that the mission of the church will continue into the future.

Do I need a Will?

Without a will, state law dictates who will receive your assets and who will manage your estate. The state's plan for your assets may not include all of the persons that you would like to benefit and definitely will not include gifts to your church and other charities. A Will also allows you to appoint a guardian for your minor children, choose a representative to carry out your wishes, and decide the final destination of your estate assets.

Charitable bequests can be made of the property and assets you own at the time of your death by naming the Holy Cross Endowment Fund in your Will or Living Trust. You can leave a specified dollar amount, a percentage of your estate or specific assets to the Fund.

Through planned giving, you have the chance to act upon the values and causes close to your hearts. Without a Will, there is no mechanism in place to accomplish your objectives, so here are the steps you should take to make sure your wishes are granted:

How Can Life Insurance to Used to Benefit the Church?

You can give an existing or a new life insurance contract to the Holy Cross Endowment Fun, make the Endowment Fun the owner and the beneficiary of the contract. At your death, the Holy Cross Endowment Fund will receive the death benefit. You will receive a charitable deduction for your income taxes. If you give the Holy Cross Endowment Fund a new insurance contract, you can deduct the amount of the annual premiums you pay each year to keep the insurance in force. If you give the Endowment Fund an existing insurance contract, you can clain an immediate income tax deduction based on the lesser of (a) the cash value of the insurance contract or, (b) the aggregate amount of the paid premiums.

Alternatively, you can remain the owner of the insurance contract, but name the Holy Cross Endowment Fund as primary beneficiary. Although you will not receive an income tax deduction, your estate will be entitled to an estate tax deduction for the amount of the death benefit. You can also name the Endowment Fund as a contingent beneficiary, meaning that the Fund receives the death benefits only if the primary beneficiary dies before you do.

I would like to make a large gift to the church, but I also need an income during my lifetime. What can I do?

The charitable remainder trust enables you to gift an asset and receive the income from it over your lifetime. The charitable remainder trust works like this 1) you transfer an asset into the charitable remainder trust; 2) the trustee pays you and your spouse, if you wish, income from the trust for life from the trust investment; 3) at the time of your death, the remaining assets in the trust go into the Holy Cross Endowment Fund.

There are different types of charitable remainder trusts; one type pays you a fiexed income that will not vary from year to year; another type pays you a percentage of the value of the trust, which is recalculated each year.

If you have an asset, such as real estate, that has increased in value significantly, the income stream from a charitable remainder trust could be greater than the income you're now receiving from the asset and even can be greater than the income you would receive if you sold that asset outright, paid the capital gains tax and invested the balance for income. Because the church isn't required to pay capital gains taxes on the sale of appreciated assets, the full fair market value of the asset contributed to the trust provides income back to you. And when you make a gift of appreciated stock or real estate to a charitable remainder trust, you are entitled to a charitable income tax deduction equal to a portion of the fair market value of the contributed asset.

I would like to give my home to the church, but continue to live in it during my life. Is that possible?

Yes! You can deed your home, your farm, or your recreational home to the church now, reserving the right to live there for the rest of your life. You would have the comfort of knowing that some day the church will benefit from the value of your property without having to wait for a probate proceeding. You also would receive an income tax deduction right now. During your life, you would continue to enjoy the use of the property or rental income (if you choose to rent it out). you would continue to pay for the costs of maintenance, insurance and property taxes. At the time of your death, the property would be sold for the benefit of the Holy Cross Endowment Fund.

Can I receive a charitable income tax deduction for giving gifts of securities?

Yes, in fact, if your gift of stock or bonds has appreciated since you first bought it, and you have held those securities for more than one year, you can make a gift at a significant discount to you.

For example, assume that you paid $3000 for stock in Acme Company six years ago, and that stock is now worth $8000. If you sell the stock for $8000 you would net about $7000, if you are in a 20% capital gain tax bracket. If you then gave that money to the Holy Cross Endowment Fund, you would receive an income tax deduction of $7000.

However, if you transfer the stcok itself to the Holy Cross Endowment Fund and it is sold for $8000, the Endowment Fund receives the entire amount, because the church's Endowment Fund is exempt from capital gains tax. In addition, you would receive an income tax deduction of $8000, the full fair market value of the stock.

Can I leave the remaining balance of my qualified retirement plan to benefit Holy Cross?

Yes. In fact, if you leave your qualified plan balance to someone other than your surviving spouse or a charity, it could be subject to income and estate taxes. The amount of the tax depends on the balance in your qualified plan and the marginal income tax bracket of the beneficiary.

The recent changes to the IRA minimum distribution rules result in the more money begin left in plans after the owner's life. Under the new rules, plan owners are now required to withdraw smaller amounts. As a result, it is projected that 90% of the people at 90 years of age will have 150% of their plan balance left. If you have planned to leave your IRA balance to children or others, you might want to consider the tax implications. on alternative could be to bequeth the balance to the Holy Cross Endowment Fund, thereby avoiding income tax on that gift and providing a benefit to the church.

If you would like more information, please contact the church office.