Gift Annuities
A gift annuity is a contract under which you transfer cash or property to The Foundation in exchange for payments for life. The Foundation uses payment rates recommended by the American Council on Gift Annuities. Current payment rates may be found by calling The Foundation at (800) 737-8333. An income tax deduction is available for gift annuities and is based upon your age, the payment rate and applicable discount rates. If you use appreciated stocks, bonds or other property to fund the annuity, you may avoid capital gains taxation on a portion of the gain allocated to the charitable gift amount. The remainder of any capital gain is spread over the life expectancy of the annuitant as part of each payment.
Gift annuities offer a variety of terms. You may wish to have lifetime payments for both you and your spouse. Gift annuities can also be designed with payments beginning at a later date so that payments are higher at a time when you may be in need of more income. Gift annuities may be payable to parents or other beneficiaries as well.
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Mrs. Jones was a longtime supporter of The Foundation for Evangelism. While meeting with her attorney to revise her will after her husband’s death, Mrs. Jones expressed interest in leaving a bequest to The Foundation as part of her estate plan. She was also interested in giving a significant gift during her lifetime but was concerned because her income from Social Security and money market accounts had decreased in recent years.
Mrs. Jones’ lawyer suggested that she consider The Foundation’s gift annuity program. At her age, Mrs. Jones is entitled to receive payments of 8.8% per year for as long as she lives. She decides to place $100,000 from her money market accounts into a gift annuity. Mrs. Jones enjoys annual payments of $8,800 for life. She also receives a tax deduction of approximately $46,000 for the year she makes her gift. For the next 8 years (her life expectancy), Mrs. Jones will receive approximately 70% of the payments free of federal income tax each year. After 8 years, the payments will be subject to income tax.