Open a Charitable Gift Annuity to ensure a fixed return for you and your family!
A charitable gift annuity pays you and/or a loved one a set dollar amount each year for the rest of your life. You may donate cash or appreciated securities (minimum $10,000). You must be at least 65 years old to receive payments, but if you are 60, you can open a deferred gift annuity now and receive payments later.
The concept of the charitable gift annuity in America dates back to 1843, when a merchant in Boston first donated a cash gift to the American Bible Society in exchange for a stream of income. Today, the concept includes valuable tax benefits for donors. But perhaps more valuable than the financial advantages is the satisfaction that donors gain by helping to continue the mission of the International Rescue Committee. The IRC's own gift annuity program has grown substantially since its inception in 1991 and has now well surpassed the $10 million mark, with over 400 generous participants!
Some of the benefits include:
- - Receiving a stable and secure stream of income regardless of tribulations in the economy.
- - Ability to convert securities that are not yielding significant amounts into a gift that provides a significant stream of payments.
- - Savings on income, capital gains, gift, and/or estate taxes.
- - Professional administration of your gift annuity by State Street Global Advisors at no cost to you or your beneficiary. State Street is one of the country's foremost providers of gift planning services.
Immediate Payment Charitable Gift Annuity
Annuity rates: Your annuity rate will depend on your age when you make your gift. Once you reach your half- birthday, you are considered a year older. The IRC uses the charitable gift annuity rates recommended by the American Council on Gift Annuities. The table below shows sample rates for single-life annuities.
Current Annuity Rates (Rates will decrease on July 1, 2008)
Age x Rate
65 - 5.7%
70 - 6.1%
75 - 6.7%
80 - 7.6%
85 - 8.9%
90 - 10.5%
Annuity rates for two beneficiaries are somewhat lower than rates reflected above, for one beneficiary.
Deferred Gift Annuity
If you wish, you may defer the payments from your charitable gift annuity until you are 65 or older. A deferred gift annuity enables you to prepare for future retirement and financial stability. In exchange for a gift of cash or securities, you receive an annuity beginning on a future date you specify when you make your gift. The longer you wait for payments to begin, the higher your future annuity payments. Even though your payments are deferred, you get an immediate income tax deduction for a substantial portion of the value of your gift. Your deduction can offset current taxes on high earnings, a bonus, the exercise of non-qualified stock options, or the sale of an appreciated asset or business.
II. Life Income from a Charitable Remainder Trust
|
The noted artist, Andre Masson, was among the artists, writers and musicians rescued from the Gestapo by the IRC. Thanks to a gift of a painting entitled "Still Life with Birds" by Masson, from Peter and Phyllis Davies to a charitable remainder unitrust for the IRC, Masson's work will now be used to save the lives of other refugees. And, the Davies, old friends of the IRC, have enhanced their longstanding and generous commitment to the IRC by establishing this gift and ensuring their support of the IRCs work with refugees well into the future.
After the gift was made, the painting was sold by the trust without capital gains tax, and assets were reinvested to provide for Mr. and Mrs. Davies. They now enjoy retirement income from the trust. The trust has almost doubled in value since its creation five years ago, and so, too, has their income. After their lifetimes, the IRC will receive the trust principal.
UPDATE: The Davies were so pleased with this gift arrangement that they recently donated another piece of art - a valuable Romare Bearden painting to add to the value of the trust. This generous addition will increase the income that the Davies receive now as well as provide for the welfare of millions of refugees after their lifetimes. |
How a Charitable Remainder Trust (CRT) works:
1) You create a charitable remainder trust and transfer assets to it.
2) Next, the trustee invests the assets in order to pay you, and/or someone else you select, an annual income. The income may continue for one or more lifetimes or for a term of 20 or fewer years.
3) Finally, when the trust term ends, whatever remains in the CRT passes to the IRC.
A charitable remainder trust (CRT) is tax-exempt. Therefore:
Appreciated assets donated to the trust can be sold without capital gains tax and reinvested for your benefit.
You receive a federal tax deduction for a portion of the value of your gift. (The suggested minimum for a CRT with the IRC is $100,000.)
A charitable remainder trust can be creatively structured to meet your personal goals. A wide variety of assets can be donated, including publicly traded securities, certain business interests, real estate and collectibles.
There are two types of charitable remainder trusts. You choose the percentage payout for either type (within certain legal limits) when you create your trust. A charitable remainder annuity trust ("CRAT") provides the security of a fixed payout. (Establish a 6% CRAT with $100,000 and get $6,000 every year.) A charitable remainder unitrust ("CRUT") pays your chosen percentage of the trust value each year. Your payout can increase substantially over time as the trust value grows, providing a hedge against inflation. However, your payout will decrease in any year that your trust value falls.
Accomplishing Personal Goals with a Charitable Remainder Trust
A charitable remainder trust can help you accomplish many personal goals, including the following:
Enhancing your income for life: You can donate appreciated assets such as stock, real estate or collectibles that now produce little or no income and convert them tax-free into a substantial income stream. Example: Donate $100,000 of appreciated stock paying a dividend of just over 1% (average dividend yield of the S&P 500) to a 7% unitrust, and you will multiply your income almost seven-fold without paying capital gains tax.
Providing for a friend, sibling, or parent who might survive you: You can set up a trust to make payments to you for life and then to a friend, parent or sibling who might survive you.
Enhancing future retirement income: If you don't need income yet, a CRUT can be structured to pay little or no income now, but to grow tax-free so your future payments will be based on a larger trust value. Example: Establish a trust at age 45 with $100,000. If it grows 8% per year, it will be worth $466,096 when you reach age 65. If you have chosen a 7% payout, you will then get approximately $32,627 per year, beginning at age 65.
Providing for children, grandchildren, or other heirs: You can establish a charitable remainder trust for a term of years (maximum 20) to make payments to a child or grandchild while he/she is in college or beginning a new career. If the child or grandchild has not yet reached college age, the trust can be designed to grow tax-free until that time. (A trust cannot, however, discharge a legal obligation of support.) A trust can also be established for older children or grandchildren to provide extra spending money or even retirement income. Or, you can establish a trust from which you receive payments for life, after which the trust will continue for a period of time for children or grandchildren.
To request a personal conversation about planning your gift, please e-mail plannedgiving@theIRC.org or call Nora Benoliel, Senior National Officer for Gift Planning, at 212-551-3147 or by email at Nora.Benoliel@theIRC.org.
