Charitable Gift Annuity
A Charitable Gift Annuity is a simple contract between a donor and a charity. In exchange for an irrevocable gift of cash, securities, or other assets, the charity agrees to pay the annuitant, or a Special Needs Trust, a fixed sum each year for the life of the annuitant. The older your designated annuitants are at the time of the gift, the greater the fixed income the charity can agree to pay. When payments are made to a Special Needs Trust, the entire payment amount is tax free.
Example
Below is an example of how a Special Needs Trust and a Charitable Gift Annuity can work together to provide powerful ways to give financial security to a family member with a disability:
• Joe and Jane Smith establish a Third Party Special Needs Trust to protect the inheritance and government benefits for their daughter Sally.
• Sally is a first year GROW student at Riverview School who qualifies for Social Security benefits.
• Jim Smith, Sally’s grandfather, is a 75 year old widower who wants to help provide for Sally’s future and make a gift to Riverview School.
• Jim has stock worth $100,000 that he bought for $10,000 many years ago.
• Jim decides to donate the stock to Riverview School in exchange for a Charitable Gift Annuity.
• Riverview School sells the stock, pays no capital gains tax, and invests the net proceeds.
• Riverview School agrees to pay $7,100 a year for the rest of Jim’s life to the Third Party Special Needs Trust established for Sally.
• Since the annuity payment is made directly to Sally’s Special Needs Trust, Jim avoids all capital gains taxes.
• Jim receives an income tax deduction of $41,547 and removes $100,000 from his estate.
• At Jim’s death, the remainder amount goes to Riverview School.
Please see a Basic Gift Illustration for this gift. The information contained in this page is for informational purposes and is not intended to provide financial, tax or legal advice. All donors should consult with their financial, tax, or legal advisors prior to making a charitable gift.
If you would like more information regarding these powerful tools, please contact Charles McNamara, cmcnamara@riverviewschool.org or (508) 888-0489 ext. 271.
