There are many benefits to establishing a Charitable Gift Annuity. In addition to fixed income for life, you will receive a charitable income tax deduction to reduce your taxes in the year you make your gift providing you itemize deductions. If you make a gift of an appreciated asset, such as stock or bonds, you may also avoid paying some of the capital gain tax on the sale of that asset.

A gift annuity produces ordinary income that will be taxed at your normal income tax rate. However, if the gift used to fund the annuity is an appreciated asset (something that gained value while you owned it), a portion of your income may be taxed at the lower capital gains tax rate.

A Gift Annuity can be created in the following steps:

• In a written agreement, you give your asset to a qualified foundation or entity.
• Payments are made to you in regular installments. You also receive a tax deduction.
• The remaining value of your gift goes to ministries you select upon your death.  (If you are married, and if the annuity is based on both lives, the remaining value goes to the ministry upon the second death).

Depending on your personal goals, a variation of a charitable trust could very well be an efficient way of "preserving wealth" by avoiding taxes-directing those assets where you would choose.  For more information, please consult an advisor.

Giving Through Gift Annuity (PDF)

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Last updated on May 28, 2019 by My Legacy of Faith