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What
is A Charitable Gift Annuity?
A
charitable gift annuity is a life income plan that allows you to give
a gift to support the work of the Home of the Innocents while still receiving
an annuity income for your lifetime. A charitable gift annuity is a contract
between you and the Home of the Innocents. You are making a gift to the
Home of the Innocents, and you are purchasing a fixed income for life.
You irrevocably gift the amount to the Home, and the Home in return agrees
to pay you a fixed payment for life. The charity's promise to pay is backed
by all of the assets of the organization. Following your lifetime, the
remainder portion of your gift comes to the Home to help us fulfill our
mission.
How
Do You Determine the Amount of the Annuity Payment?
The
Uniform Gift Annuity Rates, which are recommended by the American Council
on Gift Annuities (a voluntary association of 25 members representing
over 700 Gift-Annuity-issuing agencies), have been computed with the intention
of producing, if possible, a remainder interest to the charity of approximately
50% of the original gift amount. For this reason, the rates are generally
lower than what you might find offered by an insurance company (where
there is no gift involved). The rates are based on actuarial studies of
the life expectancy of gift annuitants and on the expected rate of income
to be earned on invested reserve funds.
The
annuity payment is based on your age (and the age of any other annuitant
you might name) the day you make the gift, and on the amount of your gift.
Following your lifetime, the remainder of your gift becomes available
for the use of the Home of the Innocents. Payments may be made in annual,
semi-annual, quarterly or monthly installments. The timing of your installments
may affect the amount of your payment. CLICK
HERE FOR SAMPLE GIFT ANNUITY RATES
Why
Would I Want A Gift Annuity?
There
are many benefits to entering into a gift annuity contract with the Home
of the Innocents, not the least of which is potential favorable tax benefits
and the joy of making a gift that you know will provide support to the
mission of the Home following your lifetime. Charitable gift annuities
make it easier to make a substantial gift during your lifetime, because
you will be receiving a fixed income stream for life. Typically, part
of each payment that you receive will be tax-free, increasing each paymentís
after-tax value. You may qualify for a federal income tax charitable deduction
for the fair market value of your gift, minus the present value of the
annuity payments that you are estimated to receive over your lifetime.
Long-term
(held for more than a year) appreciated assets, such as stock, that are
not currently paying a dividend are an excellent choice for using to acquire
a gift annuity. You will avoid paying the capital gains tax on the transfer
of those assets, as they are being irrevocably gifted to charity, and
you will begin to receive an income stream in the form of annuity payments.
What
Else Should I Know?
You
must understand that your gift to the Home of the Innocents through a
charitable gift annuity is irrevocable - that is, you can't change your
mind once the gift is made.
Once you have entered into the gift annuity contract with the Home, the
amount of your payments will always remain the same. You can set up new
gift annuities at any time.
A
gift annuity contract can be written to pay you alone, or to pay you first,
and then your spouse, or it may pay any two persons you select. Payments
can be made either to one annuitant for their lifetime and then to a second
annuitant for their lifetime, or they can be made jointly to both annuitants
and then to the survivor. Due to the longer payment period, two-life annuity
rates are slightly lower than those for a single life. CLICK
HERE FOR ACGA ANNUITY RATES
PLEASE
BE AWARE . . .
This
information has not addressed all of the details about charitable gift
annuities. Any time that you are considering making a charitable gift,
you should talk with your professional advisor, attorney, financial planner,
or accountant to learn the specific issues about the gift you are considering
and the consequences to your particular financial situation. Remember
that, as a charitable giving vehicle, a charitable gift annuity is not
intended to achieve the same results your private investments.
The
Home can provide you with an illustration of a gift annuity based upon
your age and the amount of the gift. The illustration will provide the
amount of the annuity payment you will receive with the tax-free portion
indicated, as well as the charitable tax deduction that may be allowed.
You
may contact us for this information at 502.596.1025, or via email at mshumway@homeoftheinnocents.org
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