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Special Situations

Special Situations

Assignment of Trust Income

Perhaps you are the beneficiary of a trust. You have been receiving income from the trust on a regular basis, and you pay income tax on the amount you receive. Maybe you are giving part of the income each year to charity, but this does not reduce the tax burden very much.You decide how much of this annual income you want to give to ministry each year. You can assign this income portion to your Named Fund. You pay no tax at all on this income and, in addition, you may receive a substantial deduction at the time of the assignment. Both you and ministry benefit.

Gifts from an Estate or Trust

Being an Executor or Trustee under a Will is not an easy task. The Will says you are to allocate a certain amount of money to ministry or charity. What if the ministries and amounts are not listed and the task of carrying out the charitable provisions is too burdensome for your role as Executor or Trustee. We would be glad to help you facilitate this role.

During the Administration process, you obtain approval of the court to set up a Fund at the Florida Baptist Foundation in the name of the person who died. The charitable portion of the estate is then distributed to the Fund. This would honor the deceased and carryout the charitable provisions in the Will. 

Transferring a Private Foundation

Regulations, taxes, and reporting are burdensome and there are more and more rules about what you can and can't do. The IRS even taxes part of the income and require detailed expensive reports. You are concerned about personal liability and none of the trustees are getting any younger. Sooner or later a backup plan has to be worked out.

Here is an excellent option for your consideration. You can establish a Named Fund through the Florida Baptist Foundation, in the name of the private foundation. We will work with you to transfer all the remaining assets of the private foundation to the Florida Baptist Foundation Fund and you would then dissolve the foundation. Ministry will now get easier. The original purpose continues as before, there is no more tax reporting and the ministries benefits. The Florida Baptist Foundation will assist you through the entire process. Investment challenges such as asset allocation and buy-sell decisions are handled by our investment managers. And there is a satisfaction in knowing that a permanent organization is in place to administer your Fund in the future. Although you no longer manage the Fund, you may advise and consult with us on its distributions. (See the section on Donor-Advised Funds).

Partial Transfer of Foundation Income

Here is another possibility. Perhaps you are the trustee of a private foundation but unfortunately not all of your fellow trustees can agree now on transferring all the foundation's assets to the Florida Baptist Foundation. There is a smaller step you could take to allow the board to try out the relationship and management with the Foundation while you think about it?

Our suggestion is to establish a Named Fund in the Florida Baptist Foundation with the name of the private foundation. You arrange for your foundation to contribute part or all the current year's income to the new Fund. The board of trustees will get to know our ministry and this arrangement can go on indefinitely until the board of trustees are ready to take full advantage of Florida Baptist Foundation's services. This is an excellent continuity plan for your board.

Options for Business Owners

Maybe you own a business and have built it to a very respectable size. On paper you and your wife are quite well off. You own most or all of the stock in your corporation; earnings are good, but unrealized capital gains on the stock are large. You would like to begin gifting some of the wealth to ministries.

At first, the idea of donating some of your closely held stock may sound a bit strange. After all, how could the Foundation, or any other charitable organization, benefit from such a gift?

Let's assume you're unable to make a substantial cash contribution out of your own pocket, but there is cash in the corporation from retained earnings. These have been taxed on the corporate level and, if distributed as dividends, would be taxed again on the individual level.

You cannot or will not sell the closely held stock to the public, but you decide to give some shares to your favorite Baptist cause. We may then present the stock to your corporation for redemption. This redemption can be accomplished by using retained earnings for the purchase, letting us receive much-needed funds.

Are there any problems with this plan? The Internal Revenue Service has ruled that you cannot legally bind a charitable organization to go through with the redemption at the time it receives the shares. There can be no prearranged contract or agreement for the corporation to buy the stock. But the IRS accepts a tax court holding that a charitable organization may independently offer the donated stock for redemption.

You can set up your Named Fund with us. If the stock is publicly traded, you transfer a block of it to the Fund. If the stock is not publicly traded, you discuss the matter in advance with us so that we can determine if the assets can be accepted. If so, the Named Fund becomes a permanent vehicle for carrying out your charitable desires.

Options for Churches or Organizations that are Closing

The Florida Baptist Foundation has worked with several churches to carry out this specific option. We understand exactly what you are going through. Maybe you are on the board of a church or charitable ministry with an issue. The church or ministry is no longer practical, the costs are outrunning income and there is little prospect for relief. It would be logical to close the church or agency, but there are still some assets, perhaps a building, or perhaps some restricted funds. Your board is still interested in providing for ministry or missions. This is exactly what we have done for others.

We work with your Board to create a Fund with the Florida Baptist Foundation, in the name of your church or organization. When you liquidate the assets, you transfer them to the Fund. The Fund will specify where the income will go or will be used only for missions or ministry. The mission of your church or organization is thereby continued in perpetuity.