Planned Giving

Charitable Gift Annuity

How is a charitable gift annuity set up?

A gift annuity can be set up with a simple four-step process. First you request a proposal that details the specific benefits of a gift annuity based on your situation. Second, we prepare a gift annuity application for your approval. Next the transfer of the assets (check, stocks, bonds or real estate, etc. $10,000 minimum) to Millsaps College takes place. Finally, you receive the formalized gift annuity contract specifying the payment dates and the amount of each payment you will receive for life.

What are the tax benefits?

Because the gift is irrevocable, a significant portion of its full value qualifies the donor for a charitable contribution income tax deduction in the year it is made. This helps reduce both income tax liabilities and the actual cost of making the gift.

Estate tax advantages occur when transferred properties avoid estate taxation.

How can a charitable gift annuity be funded?

There are multiple ways to fund a Charitable Gift Annuity. One is through the traditional avenue of a monetary gift. However, a charitable gift annuity may also be funded with appreciated property. In that case your charitable deduction can be taken up to 30% of your adjusted gross income. Another advantage of using appreciated property is avoiding some capital gains and being able to prorate the gain incurred over your lifetime.

For example, Marsha Harold, age 65, wants to use appreciated securities to fund a gift annuity with Millsaps College for $25,000. At her age, the rate of return is 6.7%. Mrs. Harold will receive payments of $1675.00 per year for the rest of her life. She will receive an income tax reduction of $9,500 in the year she funds the annuity. Plus she avoids some capital gains taxes altogether.

Can I defer my payments until a late date?

If you do not need your payments to begin right away, there is a plan specifically for you. You can make the gift now, while your income is greater, and defer or postpone the payments until you retire. The payments will be based on your original contribution plus accumulated interest from the time of the gift and on your age when payments begin.

This plan gives you a current income tax deduction, the opportunity to accumulate income for the future, and parts of all future payments are considered tax-free.

How do I establish a deferred payment charitable gift annuity?

Suppose John Dodge, age 55, is interested in a contributing to Millsaps. He is also interested in a way to supplement his retirement income. Mr. Dodge funds a deferred payment gift annuity specifying payments to begin in 10 years. Mr. Dodge will receive an immediate income tax deduction for the annuity and will defer all annuity payments until retirement, when he will need the income more. At Mr. Dodge’s death, the remaining annuity balance will be available to Millsaps. This plan allows Mr. Dodge to enjoy tax benefits now and greater payments during retirement.

Can I establish a gift annuity in my will?

You may wish to establish a gift annuity for someone in your will. In this case, the annuity would become effective at your death, providing regular payments for your loved one beginning immediately from that time. You would also know you are creating a legacy at Millsaps while meeting the needs of your loved one.

If you have additional questions or would like an estimate on a Charitable Gift Annuity please send us an email. We would welcome the opportunity to speak with you.