|A Case Study|
John Jeffers and his son, Mark, dreamed of going into business as father and son. When Mark was in high school, an ideal piece of property became available on the edge of town. John bought it, anticipating putting in a small manufacturing plant when Mark returned from college.
When Mark went away to college, circumstances changed. Mark met a girl from across the country, changed his major, and never returned to his hometown to live. Meanwhile, John faithfully paid the taxes and kept the prospective plant site available.
Now, as John and his wife, Virginia near retirement time, they began looking for ways to enhance their income. The one-time plant site had greatly increased in value, but was not generating any income for John and Virginia. If they were to sell the property, a significant portion of the gain would be eaten up in taxes.
The Jeffers learned about the advantages of a charitable trust with Evangelical Friends Mission. If they were to give the property to the mission, they could avoid the capital gains tax, while the trust would be based upon the full fair market value of the land.
John: “If we were to sell the land, we would lose a significant portion of the appreciation to taxes. All that land has ever done is cost me taxes and upkeep, and now it isn’t helping us with our plans to retire.”
Virginia: “We have been supporters of EFM for years. When we learned that we could use the land to fund a charitable trust and receive an income for doing so, it makes sense to me.”
John: “Instead of the land continuing to cost us money, it will now help generate supplement to our retirement that we always hoped it would.”
Mark: “I’ve always been a little sad the dream of a business together did not pan out. While I am glad that Mom and Dad will be able to finally get some good from that land, there goes my inheritance!”
John: “Not so fast. With some of the charitable deduction for creating the trust, and some of the income it will provide us, we are buying some life insurance to replace the present value of the land in our estate. Mark will be able to benefit as well.”
While the story regarding the Jeffers is not true, it is an illustration of one of the many ways that a charitable trust could be used. There are a number of other possibilities. If you would like to learn more about charitable trusts and how they might benefit you, please contact our office. This is just one of many uses for a charitable trust, that become a “win/win” situation. Advantages for donors like the Jeffers, and advantages for the charity, like Evangelical Friends Mission. Contact our office