A charitable gift annuity (CGA) is often a gift of choice when a guaranteed income is desired. A gift of cash or securities is transferred to Deseret Trust Company in exchange for a contractual life income paid at least annually. The income is guaranteed by the issuing charity. A portion of the gift is invested and used to provide income for life, and the remaining portion qualifies as a present-interest gift to the Church or one of its institutions. Part of the annuity income may be received tax free. Any capital gains taxes due on the asset that was exchanged for the annuity are paid over the annuitant's life expectancy.
The typical donor:
Needs guaranteed income for life.
Wants a fixed income based on the original value of assets transferred.
Desires to make a "present gift" for estate planning purposes.
Does not plan to make additional gifts to the annuity.
Is between the ages of 55 and 80.
Gift features and benefits:
Income for life (fixed payments)
Possibility of one or two income beneficiaries
Guaranteed contractual agreement
Issued and administered by Deseret Trust Company
How Do I Make a Gift Using a Charitable Gift Annuity?
Charitable gift annuities cannot be issued in every state because of differing regulatory requirements. Philanthropies can advise you regarding availability in your state. The professional staff of Philanthropies drafts a gift annuity document that names the annuitant and the gift recipient, either the Church or one of its institutions. Once the document is signed by both you and Deseret Trust Company, you transfer cash or marketable securities to Deseret Trust Company.
Before you begin, be sure your financial and legal advisors are part of your gift strategy team. A charitable gift annuity can have an impact on other parts of your financial and estate plan. The professional staff at Philanthropies can assist you and your advisors in the completion of your gift annuity documents.
Other Facts You Should Know About a Charitable Gift Annuity
Sample annuity rates offered for one person for a $50,000 gift with quarterly payments using a charitable gift annuity through Deseret Trust Company on 1 November 2022 were:
age 65, 4.8%, annual annuity amount of $2,400, tax deduction of $23,178
age 70, 5.3%, annual annuity amount of $2,650, tax deduction of $24,488
age 75, 6.0%, annual annuity amount of $3,000, tax deduction of $25,957
age 80, 7.0%, annual annuity amount of $3,500, tax deduction of $27,411
The charitable deduction shown above will likely be different if the annuity is created in a later month because the IRS Discount Rate changes monthly.
A charitable gift annuity is a contract between you and Deseret Trust Company. You make a gift to a charity that is legally obligated to pay you a fixed amount of income for your lifetime. The transaction is, in reality, a bargain sale—part sale and part gift—because the value of your gift to the charity exceeds the value of the annuity promised by the charity. The annuity is backed by the general assets of the issuing charity (Deseret Trust Company). The rate you receive for your annuity is structured to provide the Church or one of its institutions with a gift amounting to approximately 50 percent of the amount transferred in exchange for the annuity.
When you establish a gift annuity with the Deseret Trust Company and are concurrently working with a licensed financial professional, Deseret Trust Company may choose to buy an annuity contract on your life from a commercial insurance company. In that situation, your annuity amount and terms of the agreement remain unaltered.
The Deseret Trust Company adheres to the charitable gift annuity rates established by the American Council on Gift Annuities, a national organization that suggests rates for nonprofit organizations to offer to annuitants. The recommended rates are based on age and are the same for both genders. There can be exceptions to those rates based on extenuating circumstances.
For a detailed discussion of the services we provide you and your advisors, please contact us at 1-877-650-5377 or by email.