Is a Charitable Gift Annuity Right for You?
Did you know that you can make a generous gift to your church and other charities that will continue to pay you income during your lifetime? You can receive these benefits and more through a charitable gift annuity.
The Georgia United Methodist Foundation offers charitable gift annuities to help elevate and advance the mission of the churches and nonprofits we serve and to help Methodists across Georgia be good stewards of the financial resources entrusted to them by God.
A charitable gift annuity is a contract (Charitable Gift Annuity Agreement) between an individual donor or couples and the Foundation. The Charitable Gift Annuity Agreement outlines several important terms. As a donor, you make a gift (at least $25,000) using cash, securities, or possibly other assets. In return, you take a partial tax deduction for your donation. Additionally, you receive a fixed stream of income from the Foundation for the rest of your life. (A portion of this annual income may be considered tax-free).
So, how does it work?
Ms. Smith is 75 years old and would like to direct a significant gift to her local church and a local Methodist-related nonprofit. Ms. Smith consulted with her financial advisor and determined that the best way for her to accomplish her charitable goal was to establish a charitable gift annuity through the Foundation.
The Foundation prepared a proposal for Ms. Smith to review with her financial advisor that outlined the following terms:
- Ms. Smith would direct a gift of $250,000 to the Foundation to establish a charitable gift annuity (this gift is NOT revocable). In addition, the proposal noted that Ms. Smith might be able to claim an income tax deduction on a portion of this original gift (approximately $120,896).
- In return, the Foundation agrees to pay Ms. Smith $16,500 for the remainder of her life, representing a 6.6% fixed return that will not change.
- Of the $16,500 annual income Ms. Smith receives, $10,411 may be tax-free, while $6,089 may be treated as ordinary income. After 12.4 years, the entire amount will be treated as ordinary income.
At the time of Ms. Smith’s death, the charitable gift annuity will end. The balance of the gift annuity (approximately 50% of the original gift or $125,000) will be directed to the local church or charitable organization(s) outlined by Ms. Smith in the Charitable Gift Annuity Agreement.
Please read about Mr. Neal Moore and how he worked with the Foundation to establish a charitable gift annuity to honor the memory of his wife online here.
To learn more about charitable gift annuities, please contact the Foundation at 770-449-6726 or firstname.lastname@example.org. You can also access the Foundation’s planned giving resources online at gumf.org.
NOTICE: The information presented in this material is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. The figures cited in any examples are for illustrative purposes only.