Give a gift, get a tax break with charitable gift annuities
It’s gift-giving time once again, and the holiday shopping spirit can also evoke our philanthropic side. If guaranteed lifetime income is something you need in your portfolio stocking, then you might want to consider a charitable gift annuity.
With a charitable gift annuity, you receive a lifetime income stream and an upfront tax benefit while providing money to a charity,non-profit, university, hospital, or 501(c)(3) organization. Sounds like a good deal, because it is. Check with your CPA or tax adviser how a charitable gift annuity can provide a tax benefit to your specific situation.
With commercial annuities, the guarantees are only as good as the carrier backing them up. The same correlation applies to charitable gift annuities, and the organization that is offering the strategy. Make sure that your chosen charity is strong enough financially to pay your income stream. Ask to see their financials, and do your homework on their claims paying ability.
One of the most common misbeliefs about annuities is that when you die, the evil annuity company always keeps the money. That describes a “life only” structure, but this is only one of 15 ways to set up a lifetime annuity payout. You can have a lifetime income guarantee with any remaining money in your annuity account going to your listed beneficiaries upon your death. Translation, you can structure the policy so that the annuity company doesn’t keep a penny. With charitable gift annuities, when your Lear jet hits the mountain, the charity does keep the money.
Unlike the unregulated sales message that drives most indexed annuity sales, charitable gift annuities are closely regulated by the American Council on Gift Annuities. I encourage you to go to their informative web site for a full vetting of this unique strategy.
Agents have no involvement with charitable gift annuities, which means no commissions. There are no conflicts of interest or incentive trips. No bad chicken dinner annuity seminar invitations will arrive in your mailbox. If you want to buy a CGA, you will have to contact the charity.
For all of you “all annuities are bad” people out there, your misinformed broad brush argument is fully exposed as incorrect when it comes to charitable gift annuities. This type of annuity is definitely pro customer from every angle.
Hillsdale College, the Salvation Army, and Claremont-McKenna College are just a few of the charitable gift annuities I advise my clients to consider for this strategy. Contact your local charity of choice, hospital, or university to see if they offer CGAs if you need another source for additional lifetime income.
So as you go to the malls and shop on Amazon, you might want to go income shopping for yourself while donating money to an organization at the same time. With charitable gift annuities, it’s a win-win proposition for both of you.
Originally published 12.8.2015 by MarketWatch.com – http://www.marketwatch.com/story/give-a-gift-get-a-tax-break-with-charitable-gift-annuities-2015-12-08