If you meet a prospect who wants to create a tax-efficient income stream using sand and gravel equipment, it’s good to know you have an experienced partner in InFaith Community Foundation.
“They didn’t come into my office for a charitable trust,” Financial Consultant Jeff Olinger recalls, but it became the best solution to meet their retirement and charitable goals. Jeff had been referred to the prospects after they heard of Thrivent’s values-based mission.
The couple, in their mid-50s, planned to sell the family business and become missionaries overseas. With their youngest of nine kids headed to college, the empty nesters are ready for the next chapter in their lives.
The assets in their sand and gravel business consisted of equipment acquired over many years and blue sky value, including their local reputation and customer lists. Once that was sold to another area business, they were ready to address the potential tax consequences of selling fully depreciated equipment.
“I’ve helped clients be tax-efficient, but I didn’t know the impact taxes have on depreciated equipment,” Jeff explains. “I learned quite a bit with this case from the experts at InFaith.”
Through InFaith, the couple established a charitable remainder unitrust, or CRUT, giving the equipment to the trust instead of selling it themselves. InFaith then sold the equipment, and gift planners at the Foundation explained the importance of timing and intent. “It has to be a gift, not a pre-arranged sale, and InFaith took that risk,” Jeff says.
The tax-efficient approach creates an income stream for the donors in retirement. They can choose to receive payments for life, a term of up to 20 years or both. Annual payments are taxable and will fluctuate based on the trust balance, subject to market performance. What remains when the trust term ends will support charities Jeff’s clients have designated, including the mission organization they are joining. The couple also purchased life insurance as a legacy for their family.
Listen to Clients’ Stories
Jeff believes uncovering charitable intent is all about listening and discovery. “Ask enough questions to hear their story and how they want it to end,” he says. “If you want to build a balanced practice, you will have clients who are interested in both tax efficiency and charitable planning. Let InFaith be their resource.”
To consult about CRUTs or other charitable solutions, call InFaith’s gift planners at 800-365-4172 or visit our website to learn more.