Would you like to secure a guaranteed income while leaving a meaningful legacy for a charity you care about? A charitable gift annuity might be the right fit for you. Pure’s Senior Financial Advisor, Kyle Stacey, CFP®, AIF® explains what it is, how it works, and the benefits it offers.
Learn more about:
- Definition
- Tax benefits
- Special considerations
Transcript
Today, we’re going to talk about a financial tool that combines giving back to a charity you care about while securing a stable stream of income for yourself or a loved one. It’s called a charitable gift annuity, and it can be a win-win situation for both your financial future and the causes you support.
So, what exactly is a charitable gift annuity?
Well, first off, it’s not an annuity product you purchase at a financial institution, instead, a charitable gift annuity is a contract between you and a non-profit organization. If you make a donation to the charity—usually in the form of cash, securities, or sometimes real estate—and, in exchange, the charity agrees to pay you a fixed amount of income for the rest of your life.
So, what does that really mean? Let’s break it down.
First, the income you receive from a charitable gift annuity is guaranteed through the non-profit organization. The charity will continue making payments to you for as long as you live, no matter how long that is. The amount you receive is based on factors like your age and the size of the gift. Typically, the older you are when you set up the annuity, the higher the payout typically is. This makes charitable gift annuities especially attractive for retirees looking for a steady stream of income.
Here’s the really special part—even though you’re receiving these payments, the gift you make to the charity doesn’t end with you. When you pass away, the remaining value of the gift goes directly to the charity. This means that, through this arrangement, you’re not only securing your own financial well-being, but you’re also helping to fund the charity’s mission for years to come.
Charitable gift annuities come with some special tax advantages. When you make your initial donation, you’re eligible for a charitable income tax deduction, so for the portion of your gift that goes to that charity you can write some of that off. In addition, a portion of the annuity payments may be tax-free, depending on the type of gift you made and for how long the annuity lasts. These benefits can help you reduce your taxable income both now and over time.
So, again, why do some people consider charitable gift annuities?
- Steady Income: If you’re looking for reliable income in your retirement, a charitable gift annuity can provide just that.
- Tax Deductions: The immediate tax benefit of making a charitable gift can be significant, especially if you’re in a higher tax bracket.
- Leaving a Legacy: You’re able to support a cause that’s close to your heart and creating a lasting impact even after you’ve passed on.
- Simplicity: It’s a straightforward arrangement, there’s no need for complex investments or management. Once the contract is set up, the charity handles the rest.
In summary, a charitable gift annuity offers a unique opportunity to support your favorite charity, earn income for life, as well as receive tax benefits, and leaving a meaningful legacy.
So if you’re interested in this charitable strategy or others like it, may benefit you or your financial situation, feel free to reach out to Pure Financial Advisors.
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IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
• Charitable gift annuities typically pay lower interest rates than regular annuity products, they are irrevocable and are only safe as long as the charity is around.
CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.
