Diocesan News

Planned Giving Creates a ‘Win-Win’ Charitable Trust Helps Utica Family Fund Catholic Programs, Avoid Higher Taxes

UTICA FAMILY - The Medow family, Kevin and Angie and children Katherine, Sarah, Clare and Christopher, are pictured on their farm near Utica. They operate a 1,000-acre corn and soybean operation as a family farm corporation with Kevin’s parents and set up a charitable trust for the family so they could both divide money among charities of their choosing, and avoid being in a higher tax bracket. (SNR photo)

UTICA (SNR) - After a few years of abundant harvest, the Medow family felt extremely blessed by God. But there was one annoyance: higher taxes.

Kevin and Angie Medow of St. Patrick Parish in Utica operate a 1,000-acre corn and soybean operation as a family farm corporation with Kevin’s parents. A few years ago, they realized that their success was pushing them closer and closer to a higher tax bracket.

All agreed that there must be a way to make better use of their bounty from God other than hand it over in taxes.

“Everything you receive is a gift from God, and we really have more than we need, so we’re just giving something back,” said Mr. Medow.

As devout Christians, naturally they thought of donating to their churches.

Mr. Medow joined his wife in the Catholic Church when he converted about 19 years ago. His parents, however, remain Missouri Synod Lutherans.

Fortunately, there is a similarity in values between the two faith traditions. It seemed plausible for the couples to divide the excesses of the farm and make charitable gifts to both churches.

About two years ago, the couples began investigating the possibilities. Mr. and Mrs. Medow contacted the Catholic Planned Giving Office at the Chancery, while his parents pursued options in their church.

A charitable trust made sense for the family. They would be able to use a portion of the farm’s abundance to fund the trust, thereby avoiding the higher tax bracket. Then, when the trust is dissolved, the money that had been accruing would be divided among charities of their own choosing.

As it turned out, Michael Henkenius, director of the Planned Giving Office and Les Mach, planned giving officer, were able to give advice, but don’t have the capacity for actually setting up a trust themselves.

On the other hand, the Lutheran Church-Missouri Synod Foundation (LCMSF) has a national organization that can provide comprehensive trust services. Mr. Medow’s parents discovered that they could set up a trust through that program, designating 51% to Lutheran charities and the other 49% to non-Lutheran charities, as long as the other beneficiaries met certain moral guidelines.

Happily, all of the charities that Mr. and Mrs. Medow wanted to support qualified.

After considering all the options, the Medows settled on a charitable remainder trust. The trust was set up as a legal entity, which is managed by the LCMSF, along with $640+ million in other trusts.

An account for the trust was set up at the local grain elevator. At every harvest, the Medows designate some of their grain for the trust account.

“Since we’re giving that grain away, we don’t have to pay taxes on it,” Mr. Medow explained.

The plan is flexible. The Medows can put as much or as little grain as they see fit into the trust account. In sparse years, they don’t have to put anything into it.

“You never know what you’re going to have from one year or the next, so that’s why it appealed to us,” said Mr. Medow.

The trust then sells the grain and uses the income for reinvestment. That way, the dollar amount of the trust continues to grow.

Every year, the Medows’ family farm corporation receives a 6.5% return from the trust. This is especially helpful because it can help tide the farm over during tough years.

The Medows decided to go with the maximum length for the trust: 20 years.

“We went with the maximum, knowing we could shorten it later if we wanted to,” Mr. Medow reasoned.

When the trust is dissolved, the money will be dispersed according to the Medows’ wishes. The 51% that must go to Lutheran charities was designated by Mr. Medow’s parents, while he and his wife were able to select Catholic charities for the remaining 49%.

“That was actually the fun part to sit down and look through our list and decide which ones were the most dear to us,” Mrs. Medow said.

They were able to name as many beneficiaries as they liked. They opted for programs that had the evangelical component that is important to them.

Among their selected charities are the new St. Gianna’s Women’s Homes, Fellowship of Catholic University Students (FOCUS), the Pope Paul VI Institute, KVSS Spirit Catholic Radio and their own parish.

Throughout the duration of the trust, they are free to change or add charities as they wish. For example, if a new Catholic outreach program is formed in a couple of years, they could add it to their list of beneficiaries, reconfiguring the percentage allocation as they see fit.

The Medows look at a charitable trust as another way for any Catholic farmer, rancher or business owner to do what all Catholics are called to do: give.

Mr. Medow recalled a conference on stewardship and end-of-life issues that they attended at St. Gregory the Great Seminary in Seward some time ago. Msgr. Liam Barr had spoken about the importance of giving, and his words struck a chord with the Medows.

“He said that giving is something we need to do for ourselves,” Mr. Medow said. “And I thought to myself, ‘How true.’ We need to give. Otherwise, we get miserly.”

“We’re just glad that we’re blessed to be able to do it,” Mrs. Medow said.

Planned Giving Office Helps Make Most of Financial Resources

(SNR) - While many people think of planned giving as a component in a will, there are other opportunities to help favorite Catholic charities and outreach programs before death.

As the Medows discovered, there are a variety of trusts and other options that can produce financial benefits while the giver is still living.

Formed in 1997, the Catholic Planned Giving Office was established to serve Catholic parishes and schools by helping individuals and businesses find the best way to contribute their financial resources to programs they believe in.

Both Michael Henkenius, director, and Les Mach, officer, are highly knowledgeable and capable of providing all the information needed for trusts, wills and other giving opportunities. They can also provide a list of attorneys, accountants and other financial professionals who are necessary in completing the process.

Mr. Henkenius and Mr. Mach frequently conduct seminars for parishes and deaneries to help educate individuals and business owners about the many ways to use planned giving to support the work of the Church.

For information about setting up a charitable trust, adding Catholic charities as beneficiaries to an existing trust or will, or hosting a planned giving seminar, contact Michael Henkenius at (402) 488-2142, ext 113, or Les Mach at (402) 443-6180.

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