Planned Gift Annuities
Discover the excellent benefits of making charitable gifts in the form of gift annuities. A gift annuity is an agreement between an individual and a charitable organization. The donor transfers assets to the organization and receives fixed payments for the rest of his/her lifetime and/or the lifetime of another person.
Participating in a gift annuity will provide you with a way to further support EAC and our caring programs, while benefitting from the following:
- Lifetime payments that may be partially tax free or taxed at lower rates than other income
- Management of assets
- Tax savings
- Favorable treatment of capital gains
Some frequently asked questions are:
Are there tax benefits?
Yes. Since a portion of your gift will be used for charitable purposes, you are entitled to a federal (and perhaps state) income tax deduction in the year you make your gift. Part of each payment is tax free for a period of years as well.
What determines the size of each payment?
A number of factors, including the amount you place in the gift annuity and your age at the time the annuity is created.
Why does my age affect the rate of payment I receive?
Part of the amount you transfer is returned to you over your life expectancy, and life expectancy changes with age. Generally, the older you are when your gift annuity begins, the higher your rate of payment.
Does that mean my payments change from year to year?
Not your rate of payment on a particular gift annuity agreement. The rate is set and fixed when your annuity begins. But if you give for additional gift annuities, as many people do, the rate will generally be higher for each agreement made in subsequent years.
Can I outlive my payments?
One of the attractive features of the gift annuity is that you normally cannot outlive its benefits. The charitable recipient is obligated to make payments for as long as the recipient of payments (annuitant) lives.
Are the payments affected by stock market fluctuations?
No. Payments cannot normally be lowered, canceled, delayed, or suspended, regardless of the stock market or the national economy. All the net assets of the charitable institution or organization stand behind your agreement.
How can I benefit another person through a gift annuity?
Annuity payments may be made for the lives of as many as two persons. You can designate a loved one to receive the payments with you, instead of you, or only following your death. This results in a double gift - one to the charity and another to a relative or special friend. The payment is not usually the same if more than one person receives payments. Since the period of their combined life expectancies is typically longer than one person's life expectancy, the rate of payment will be somewhat lower.
Can I give securities rather than cash to set up a gift annuity?
Yes. Because you may avoid the tax on a portion of the capital gain in the property, often the tax benefits are event greater if the securities have increased in value . If you donate a low-yielding asset, you may be able to increase your income, since a gift annuity may pay more and be taxed more favorably than other income.
Will my gift annuities be part of my estate?
No. If payments are made to you only, the gift portion goes directly to the charitable recipient, thus avoiding estate taxes and probate costs. Some estate tax may be due if payments are made to a survivor other than a spouse.
Do I have to wait until I retire for the payments from a gift annuity to begin?
No. Payments may begin at anytime.
How can I begin a gift annuity?
A gift annuity can be created with a minimum of effort. The first step is to contact us for a gift annuity application, and then speak with your tax consultant, financial advisor or attorney.
Creating a gift annuity is the perfect way to combine sound financial planning while ensuring that EAC continues to support the people we serve. By acting now, you can continue to have a lasting impact on your family and your community. What better legacy could you imagine?
Whatever you decide to do, EAC advises you to check with your personal Attorney, Financial Planner or Tax Consultant. If you or your attorney should have any questions, please contact: Jaclynne M. Jacobs via e-mail at firstname.lastname@example.org
, by telephone at (516) 539-0150 or mail at 50 Clinton Street, Suite 107, Hempstead, NY 11550.