The Charitable Gift Annuity—Immediate Payment

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To establish a charitable gift annuity, you make a gift to and in exchange receive a fixed annual dollar amount for life. The principal remaining at your death will then benefit any program that you choose.

While gift annuities can be funded at a younger age, this type of gift might be especially attractive if you are aged 70 or above, you want to support , and you would like to secure an immediate stream of income for yourself or for yourself and your spouse. The amount of the payments is based on the age(s) of the income beneficiary(ies). The older one is, the higher the payout rate one receives. In addition to the stream of fixed payments, the gift will also generate an immediate charitable income-tax deduction. If you are younger and you wish to begin receiving payments at a future date, a deferred-payment gift annuity might be a more suitable gift arrangement.

For example, Anne Bateman, aged 78, gives $25,000 in cash to in exchange for a gift annuity. She receives an income-tax deduction of $11,922, based on her age. She will begin receiving income checks of approximately $1,800 each calendar year for the rest of her life. When she passes away, the remaining principal will benefit .

Pointer: The charitable gift annuity is especially rewarding if funded with appreciated long-term securities generating little or no income. If you transfer such securities to in exchange for a charitable gift annuity, you will avoid a significant amount of capital-gain taxation and any remaining capital gain will be reported in prorated amounts over the life (or lives) of the beneficiary(ies).

Please note: Because the federal estate tax has been repealed for 2010, there is no current estate tax in 2010 for the gifts described on this page. However, the consensus opinion among professionals is that Congress will enact an estate-tax law that may be retroactive to January 1, 2010. It is very important that you seek the advice of your estate-planning attorney to determine what changes, if any, need to be made to your existing estate plans, and then again if Congress reinstates the estate tax sometime later this year.
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