 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
Gift Annuities Often Misunderstood
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
Sometimes, plain and simply, government gets it right. IRS code allowing charitable gift annuities is absolutely
one provision of our tax code that provides for an instrument that benefits both taxpayers and charity. Unfortunately
all too many of us understand little about gift annuities and consequently fail to take advantage of their tremendous
benefits. Just recently I was reminded of how wonderfully gift annuities function when I was able to issue a substantial
check to a local charitable organization on behalf of an annuitant who had recently passed away.
Here’s how charitable gift annuities work. A charitable gift annuity is an agreement between an individual and
a qualified charitable organization such as the Union County Foundation. Under the agreement a donor transfers
cash or other assets of value to the charitable organization and in return receives fixed quarterly income for
the rest of his or her lifetime. A charitable gift annuity may be payable to one annuitant for life or upon death
to a second (joint) annuitant for life. Typically a joint annuity would be structured for a husband and wife. Upon
the death of the husband and wife their specified charity(s) receive the remainder of the original gift. Usually
this is around 50% of the original gift. The Union County Foundation is unique in permitting the annuitant(s) to
name one or more local charities to be the eventual beneficiary. The beneficiary could be your church, fraternal
organization, YMCA, hospital, community foundation, etc. Allowing multiple beneficiaries is consistent with the
Union County Foundation’s goal of promoting charitable giving in Union County. An important additional benefit
is that charitable gift annuities are not part of your estate and therefore avoid estate taxes and probate costs.
The quarterly lifetime income paid to the annuitant is based on a fixed and permanent rate of interest established
according to the age of the donor. For example a single life gift annuity on a donor age 75 will receive lifetime
quarterly checks based on a rate of 7.1%. A donor age 80 will earn 8% for life and a donor age 84 will earn 9.2%.
An additional benefit of a gift annuity is that during the annuitant(s) projected life span a significant portion
of the quarterly income received is tax-free. Also a significant portion of the original gift annuity qualifies
as a charitable deduction. As you can see a charitable gift annuity not only pays a rate of return usually higher
then available on certificates of deposit but also it offers significant tax savings. Perhaps even more important
than the high returns and tax savings is the satisfaction felt in knowing that you are leaving a financial legacy
to the Union County charity(s) of your choice. If you are looking to maximize current income and desire to ultimately
leave a legacy to a charitable Union County organization then a charitable gift annuity is worthy of your consideration.
The Union County Foundation encourages you and your professional advisors to consider your present and future charitable
goals. The Foundation is equipped to help you achieve these goals by providing: planned giving and estate planning
resource information, charitable gift annuities/life income plans, and a broad array of charitable choices. Please
call us at 937-642-9618, email us, reference our website, or stop by our Marysville office at 126 N. Main St. We
are committed to helping you.... “preserve your footprint in time.” |
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