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Gift & Estate Planning: Charitable Gift Annuity

Charitable Gift Annuity
September 2, 2019 Shawn Sweeney

Receive A Guaranteed Income for life with a Charitable Gift Annuity (CGA) and leave a legacy that you can share with the Jane Goodall Institute in empowering compassionate decisions that that inspire people to conserve the world we all share.

Receive A Guaranteed Income for life with a Charitable Gift Annuity (CGA) and leave a legacy that you can share with the Jane Goodall Institute in empowering compassionate decisions that that inspire people to conserve the world we all share.

A Charitable Gift Annuity (CGA) is the perfect way to make a sizeable gift to JGI, while receiving, in return, a guaranteed, fixed income that you can never outlive. With a CGA, one or two people (often a donor and spouse) will receive a steady fixed income payment right away, or you can delay payments to a future date resulting in even higher income (Deferred Annuity – see below).

A CGA is a very popular gift because its rate of return never changes after a gift is made, no matter what happens to interest rates or the stock market. Most important, it is income you can NEVER outlive. It’s simple and easy to set up and can be funded with cash, stock, real estate, mutual funds, and many other assets.

You must be 65 years of age or older to begin receiving payments.

CGA Benefits in a Nutshell

Donor Receives Fixed annual payments to donor and/or other beneficiary. Rate of payment based on age(s) of annuitant(s).
Tax Savings Income tax charitable deduction for part of funds transferred. Payments partially tax-free for a time.
Other Advantages to the Donor Donor or other annuitant receives supplement to income.
The Jane Goodall Institute Receives A portion of the amount used to fund a gift annuity which will be used to further the crucial work of JGI.

CGA’s are simple to create and can be funded with gifts of $10,000 or more. Additional, subsequent charitable gift annuities can be established with a gift each year.

HOW IT WORKS:

  1. You irrevocably transfer cash or other assets to JGI. This involves completion of a simple agreement and can normally be handled easily by mail.
  2. You’ll receive generous fixed payments regularly (most people choose quarterly payments) that will never vary in amount. The amount is based on the recipient’s age when the gift is made.
  3. You will be entitled to an immediate income tax charitable deduction. In addition, part of each payment is tax-free for your life expectancy.
  4. If desired, you can also choose to name another person (typically a spouse, parent or sibling) to receive payments with you, instead of you, or following your lifetime for the remainder of his or her life.
  5. The assets used to fund your gift annuity will generally be removed from your estate for tax purposes.
  6. You make a significant charitable gift.

Many choose to fund a new gift annuity agreement each year. Since payment rates increase with age, each gift annuity generally brings larger annual payments.

When appreciated property such as stock, mutual funds, or other securities is given for a gift annuity, part of the capital gains tax that would normally be due on its sale can be avoided at the time of the gift. Only part of the gain will need to be reported over the annuitant’s life expectancy. The charitable deduction is normally based on the current value of the gift.  Using such assets also allows you to enjoy a current charitable tax deduction and delay payment of capital gain taxes on a portion of each payment.

EXAMPLE:

Mary, 66, and John, 68, share the vision of Dr. Jane Goodall and the Jane Goodall Institute.  They have decided to make a financial contribution to the Institute but also want to ensure that they have dependable income during their retirement years.

  • Mary and John contact JGI’s Planned Giving Department and with their help, establish a $25,000 Charitable Gift Annuity.  Based Mary and John’s ages, they will receive a payment rate of 4.7 percent, which means they will receive $1,175 each year for the remainder of their lives.
  • They are also eligible for a federal income tax charitable deduction of $7,238.75* when they itemize.
  • Finally, they feel secure that after their lifetimes, they will be leaving an important legacy as the remaining amount will be used to support the Institute’s vision and mission.

*Deduction is based on annual payments and a 3.0 percent IRS discount rate.  Deductions and calculations will vary, depending on your personal circumstances.

DEFERRED GIFT ANNUITY

You can also enter into a Deferred Gift Annuity. Specially designed for younger donors, deferred gift annuities make fixed annual payments to you and/or a beneficiary for life, with payments commencing at a future date. A higher income rate can be offered because the payments are deferred to an older age. Additionally, it may qualify you for a larger charitable income tax distribution.

HOW IT WORKS:

  1. You irrevocably transfer cash, securities or other property to JGI.
  2. Beginning on a specified date in the future, JGI begins to pay you, or up to two beneficiaries, fixed annuity payments for life.
  3. The principal passes to JGI after the lifetime(s) of the beneficiaries.

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