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                                             Charitable Gift Annuity

 

How many times have you heard it said, “Timing is everything?”  Financially speaking, making the right decision is a matter of timing.  The marketplace is often confusing, difficult and frustrating, and decisions are often a day late.

  

The Charitable Gift Annuity is one of the oldest forms of income producing gifts and is very favorable way of making a gift.  What is a charitable gift annuity?  Simply, it is a legal agreement between an individual and charitable organization in which the individual gives a sum of money or property and in return the charitable organization agrees to pay the donor a fixed income for life.  Samples of the annuity rate, which determines how much income can be received annually, are shown in the table below.

 

 

$10,000 Charitable Gift Annuity

 

               One Life                                                            Two Lives

              (Yourself)                                                    (Yourself and Another)

 

Age     Rate              Annual                          Age                 Rate              Annual

                                    Annuity $                                                                   Annuity$

 

60        5.7                   570                              60/65               5.6                   560

65        6.0                   600                              65/70               5.7                   570

70        6.5                   650                              70/75               6.1                   610

75        7.1                   710                              75/80               6.6                   660

80        8.0                   800                              80/85               7.3                   730

85        9.5                   950                              85/90               8.4                   840

 

Rates are available for ages not shown and will be provided upon request.

 

Note that the annuity rate increases as ages increases.  “Finally,” you are thinking, “I’m getting paid more to be older.”

 

Many Knoxville College Alumni and Friends who have been “CD shocked” over the past few years by low savings rates have been investigating the gift annuity and its benefits in today’s financial marketplace.  Here are answers to the most commonly asked questions:

 

1.      Can a husband and wife, jointly, establish a charitable gift annuity?

 

Yes.  Upon the death of either spouse the annuity continues to pay the full payment amount initially agreed until the death of the surviving spouse.  Whether you are married or unmarried, the annuity can be held jointly with anyone of your choice.  Full payments are received until the death of both parties.

 

2.      How long will the annuity payments continue?  How often can payments be received?  Will the annuity rate change?

 

The annuity gives you a fixed income for life.  Payments can be received quarterly, semi-annually or annually.  No, the annuity rate will not change.

  

3.      What is the minimum amount necessary to establish a gift annuity?  Is there a minimum age requirement?

 

$10,000 is the minimum amount.  To establish a gift annuity, you must be at least 65 years old.

 

4.      Besides cash, what other forms of value can be used to establish a gift annuity?

 

Publicly traded securities (Stocks/Bonds) and real property may be used.  Keep in mind the appreciated value is used in determining the initial annuity amount.

 

5.      What are the tax benefits from a gift annuity?

 

A.    A gift subject to gift annuity payments generates an immediate charitable income tax deduction.

 

B.     If appreciated securities or real estate are used to fund a gift annuity, a portion of the capital gains tax liability is forgiven.

 

C.     Part of the annuity payments come to the donor tax free.  Knoxville College /KC Foundation can offer general information about tax benefits, but you should seek advice from your own legal counsel or financial advisor.

 

6.      How safe is the annuity?  Is it guaranteed?

 

The annuity is an obligation and legal reserve instrument of KC/KC Foundation.  The full faith and resources of the Foundation stand behind the annuity agreement.

 

We hope you will take advantage of this unique economic and charitable opportunity.  For further information, please complete the enclosed card and return in the self-addressed stamped envelope or feel free to contact me by calling (865) 524-6511 or emailing _______________ to discuss your specific needs and the mutual advantages of the charitable gift annuity.

  

I look forward to hearing from you.

  

With warm regards,

  

Horace A. Judson

 


 

(FOR CURRENT RATES, VISIT: http://www.acga-web.org/2010ratesjuly/twolifejuly10.html