Wednesday, July 25, 2018

Estate Planning with Both Income and a Charity in Mind

“They aren’t for everyone, but this sort of donation could generate income, Eileen Ambrose writes in Kiplinger’s Personal Finance, referring to charitable gift annuities.  Typically a contract between you and your alma mater (or other institution), the charitable gift annuity is a special arrangement whereby you make a donation of cash, securities, or other assets to the organization. The institution invests the money and gives you fixed payments for the rest of your life.

“Consider yourself a prime candidate for investing with your college,” William Baldwin explains in Forbes, if:
  • you’re in a high tax bracket
  • you’d like to consume a certain chunk of your own principal (rather than leaving those assets to heirs)
  • your health is good
  • you own appreciated assets in a taxable account and you’d like to sell (but the capital gains tax would be burdensome)
  • you really like the institution’s mission and want to support it
Particular advantages of charitable gift annuities:
  1. You can diversify without paying an immediate capital gain (in fact, you can claim a tax deduction all in the first year, “skipping over” the tax that would be due on the appreciation in the assets).
  2. The annuity payments are highly secure, backed by an endowment many times larger than its liabilities.
  3. You get a tax deduction upfront.
  4. You receive a fixed, reliable amount of income for life (regardless of the rate of return the charity actually earns on the money).
  5. The income can begin immediately or be deferred until a later time (the older you are, the higher the payout rate.
“And, if you die young after buying a collegiate annuity, it’s not an insurance company that gets a windfall.  It’s an institution you admire,” Baldwin observes.At Geyer Law, we’ve found the charitable aspect of gift annuities is an attribute our estate planning clients find reassuring.

While the attorneys at Rebecca W. Geyer & Associates do not offer tax advice, we do coordinate efforts with other advisors to address the areas of tax and estate planning that overlap.  For estate planning that keeps both income and charitable wishes in mind, a gift annuity might be just the thing.


- by Rebecca W. Geyer

No comments:

Post a Comment