Volume: AL, Issue: 3, Charitable Gifts
Have You Ever Given A Gift That Gave Back To You?
How does it work?
You establish the CGA, with a minimum amount of $10,000, garnering you an instant tax deduction, while paying you a fixed percentage annually for life. The percentage is based on your age, so the older you are, the higher the percentage yield.
Let's say at 60 years of age, you enter into an agreement for $20,000. This would give you a payout percentage of roughly 5.5% and would make annual payments of $1,100 for the rest of your life. Of this income, approximately $645 would be tax free. You would also gain an immediate charitable deduction of just about $4,466.
If you don't need the income right away, and want to defer your payments for a period of years, than we can enter what is called a Deferred Payment CGA. This would give you a larger payout from a higher percentage rate, but would allow you to take the immediate charitable deduction. Many people use the Deferred to supplement a retirement income.
We can even include your spouse and enter what is known as a Two-Life CGA. This would provide the annual payments to the surviving spouse for the rest of his/her life as well. The payout would be smaller per annum; however the payments would be extended for a number of years.
What happens to the original investment?
Upon the death of the trust holder, or subsequent surviving spouse, the money will be used as designated by the donor in the trust agreement. It could be used for scholarships, building maintenance funds, student programs and equipment, or other programs you wish to fund.
I look forward to hearing from you.
James Hanrahan
Headmaster
