The Winchells and Blocks see charitable gift annuities a "win-win" gift

The charitable gift annuity is one of the most common, popular and simple ways to make a planned gift that provides beneficiary(ies) lifetime income in return. It is a simple contract between you and Carroll College. In exchange for an irrevocable gift of cash, marketable securities, or in some circumstances, real estate, Carroll agrees to pay one or two annuitants a fixed dollar amount each year for life. The fixed dollar amount is based on the age of the beneficiary(ies) at the time the gift is made (the older the beneficiary(ies) is, the greater the payout.) The annuity rate is usually based on recommended rates established periodically by the American Council on Gift Annuities.

A gift annuity allows you to receive a tax deduction based on your payout rate, age, and the federal discount rate. If you gift an appreciated asset, a portion of each payout will be capital gains, which is therefore spread out over your lifetime. Equally, part of each payment would be a tax-free return of principal, increasing the after-tax value of each payment. Since you have effectively removed the assets from your estate, you avoid estate taxes.

When an annuity is funded with cash, a portion of each annuity payment is treated as a return on the original investment and is received free of income tax over the life of the annuitant. When an annuity is funded with long-term appreciated securities, any reportable capital gain is spread out over the life expectancy of the donor. If the donor is not the beneficiary(ies), the donor must report and pay tax on the full amount of the capital gain in the year of the gift.

Charitable gift annuities may be funded with cash, securities, or property. Payouts may be made annually, semiannually, quarterly, or monthly. The checks are issued and sent directly to the donor or to a specified bank account. The assets of Carroll College back each annuity.

A gift annuity may be established with a minimum gift of $5,000.

Charitable Gift Annuity Example

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