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Your path to this gift:
You're considering a lifetime gift in partnership with UCI> Your planning objective is increased income > Your investment preference is the stability of fixed income payments
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Of all the gifts that pay you back, the gift annuity may be the simplest and most affordable. Here are some of the features that make the gift annuity our most popular life-income gift:
- You contribute your gift directly to UCI -- not to a trust -- and we agree to pay you a fixed amount for life. You know upfront how much you will receive in return for your gift.
- A charitable gift annuity is easy to create. The gift agreement is a simple contract between UCI and you. Your payments become one of our general obligations, backed by our corporate assets, not just the principal of your gift. We commit to making your payments.
- Gift annuities generally pay a slightly higher income rate than other life-income gifts.
- A charitable gift annuity may be funded with a gift of $10,000 or more. Gift annuities bring the benefits of a life-income gift into reach for many donors.
- You will receive a charitable income tax deduction when you create a gift annuity, based on the fair market value of the assets you contributed minus the present value of the life-income interest you retained.
- If you fund your charitable gift annuity with appreciated securities, no upfront capital gains tax is payable. You can contribute appreciated but low-yielding assets and put the entire amount of your gift to work earning income for you. Only a portion of your capital gain will be reportable, and the tax will be spread out over your annuity payments.
- A third tax benefit of a gift annuity is the treatment of your income payments: part of each payment will be treated as the tax-free return of principal. This increases the effective yield of a gift annuity and is not available on other types of life-income gifts.
(Note: The IRS provides that the capital gain and tax-free income benefits are in effect during your life expectancy -- if you live longer, the entire annuity payment will be taxed to you as ordinary income.)
- Your gift annuity can make payments to a maximum of two people.
- After the death of the last annuitant, the balance remaining in your gift annuity will be available for the use you designated when you created your gift annuity.
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Example*
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You hold a stock portfolio that has appreciated well but only pays you and your spouse 2 to 3 percent income per year. The two of you are now 70 and 68, and you're concerned that if you sell some of the stock to reinvest in bonds, capital gains taxes will cut heavily into the proceeds. You want to make a gift of $50,000 to UCI, but you need the income that your portfolio provides you.
You are looking for a gift plan that will continue this income, and, if possible, increase it.
You make a gift of stock that has more than doubled in value since you and your spouse bought it. Your gift annuity will pay you a 6.5 percent income rate for an annual payment of $3,250, a significant improvement over the $1250 the stock has been yielding.
Here's a summary of the income and tax benefits from your gift annuity:
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Donors
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Husband and wife
70 and 68
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*This example is based on a factor that changes monthly. Contact our office for a personal illustration based on the latest rates.
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Amount contributed (stock)
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$50,000
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Cost basis
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$20,000
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Current dividend income
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$1,250
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Gift annuity rate
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6.5%
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Click here to calculate the benefits a gift annuity would give you.
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Annual payment (fixed)
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$3,250
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Charitable deduction
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$7,027
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Increased annual income
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$2,000
($3,250 annuity vs. $1,250 dividend)
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Note: The Charitable Gift Annuity is not the only gift plan that pays you lifetime income. Compare its benefits with those of the annuity trust and the unitrust.
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How Do You Create a Gift Annuity?
First, read our gift annuity disclosure statement. You should then consult with an attorney expert in the area of charitable gifts and estate planning. We will provide a draft of the gift annuity agreement for review by you and your attorney, and will help you transfer cash or securities when you make your gift.
Email us, complete the personal illustration form, or call us at 949-824-8384 so that we can assist you through every step of the process.
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