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How to Establish a Charitable Gift Annuity
1. You transfer cash or appreciated stock (or sometimes other assets) to Dickinson.
2. You and Dickinson sign an annuity agreement through which Dickinson promises to pay to you (or to you and your spouse or to any other person you might name) a fixed annuity payment for as long as the beneficiary or beneficiaries live.
3. If you want to defer the payments until some later date, you simply write that into the agreement.
4. You receive an immediate income tax deduction for a percentage of your gift and avoid or defer a significant portion of your capital gains tax.
5. The amount of your deduction and the annual payment is all based on the ages of the beneficiaries when the payments begin.
AGE
|
SINGLE
|
COUPLE
|
45 with payment
deferred until age 60
|
12.1%
deferred value
|
11.5%
deferred value
|
55 immediate payout
|
5.5%
|
5.0%
|
65 immediate payout
|
6.0%
|
5.6%
|
75 immediate payout
|
7.1%
|
6.3%
|
85 immediate payout
|
9.5%
|
7.9%
|
6. The annuity payments are underwritten by the reserve and the total assets of Dickinson College.
7. At the
Charitable Gift Annuity Case Study
JOE AND JANE: Both age 75, rely on cash flow from CD's to provide for daily living. The CD's are now only providing 2% interest. They are also concerned that they might outlive their retirement income; they would like to support Dickinson but do not want to jeopardize their primary source of income. At the end of the lifetimes of the beneficiaries, the principal of the annuity is available to Dickinson for whatever purpose you and Dickinson agree upon.
| JOE AND JANE'S ANNUITY BENEFITS |
| |
W/OUT ANNUITY |
W/ ANNUITY |
| VALUE |
$25,000 |
$25,000 |
| INCOME |
$500 (2%) |
$1,575 (6.3%) |
| SECURITY |
????? |
Guaranteed |
| TAX DEDUCTION |
$0 |
$9,386 |
| TAX FREE |
$0 |
$951 |
| GIFT |
$0 |
$25,000 |
A Charitable Gift Annuity for an Elderly Parent
Ann would like to support Dickinson but has financial responsibility for her 89 year old mother. She is currently making gifts to pay her mother's nursing home care. Those gifts are not tax deductible and Ann is worried about what would happen to her mother if something unforeseen happened to her first. As a solution, she establishes a charitable gift annuity that provides secure and steady income to her mother for life.
ANN'S ANNUITY BENEFITS |
| |
W/OUT ANNUITY |
W/ ANNUITY |
| VALUE |
$100,000 |
$100,000 |
| INCOME |
$3500 (3.5%) |
$11,000 (11%) |
| SECURITY |
????? |
Guaranteed |
| TAX DEDUCTION |
$0 |
$55,931 |
| TAX FREE |
$0 |
$8,470 |
| GIFT |
$0 |
$8,470 |
If you would like to learn more about this kind of gift or if you would like to see a confidential example designed specifically for you, please call Carolyn Yeager at 717-245-1052 or send an e-mail to yeager@dickinson.edu.
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