A charitable gift annuity can be very effective planned giving tool. Our team is here to help you evaluate whether this type of transaction is right for you.
Here’s how it works:
Through a charitable gift annuity, a donor makes a transfer of assets to a charitable organization and in return receives a lifetime income stream and a partial tax deduction.
When the donor dies, the remaining funds are retained by the charity.
The charitable donation portion of the transaction is calculated based on Internal Revenue Service rules for determining the amount of the contribution that is in excess of the present value of the annuity.
A donor can fund a charitable gift annuity with a variety of assets, including marketable securities and cash.
Actuarial calculations are used to establish the payout amounts, paid in equal installment payments that are considered a partial tax-free return of the donor’s original gift.
Generally a large residual flows to the charity after the donor’s death.
The charity’s own assets, not just the donated assets themselves, back the annuity payouts. Because of this dynamic, charitable gift annuities are regulated by most states to ensure that the charity has enough reserves to meet obligations.
Keeping up with the rules and regulations for charitable gifts of all types is one of the many ways our team is here to serve you and help you support the community you love.