Charitable Gift Annuity

Charitable Gift Annuity

Many find charitable gift annuities a very good idea because of the lifetime income the donor to the Theatre can enjoy. With a charitable gift annuity, a person makes an arrangement whereby the Calumet Theatre will receive the remainder of ones annuity upon the death of the annuitant, or other person the annuitant designates. In the meantime the donor, or other person selected by the donor, receives income for life based upon their life expectancy at the time of executing the annuity.

An example of a creative designing of a charitable annuity is shown in the case of a person we will call Mrs. Em. Mrs. Em, aged 77, consulted her attorney and asked the question, “How can I provide for my brother if he survives me and also give to my favorite charity?”

There are four plans she can choose from. She can instruct the executor of her estate to transfer funds to the charity conditioned on her brother receiving specified annual payments for his life. The payments would be based on her brother’s attained age at the time of her death. At her brother’s death, anything left goes to the charity. This arrangement is referred to as a testamentary survivor-ship gift annuity. Another method is to instruct the executor of her estate to create a charitable remainder annuity trust , which will pay her brother a fixed income for life, or to establish a charitable remainder uni-trust, which would pay her brother a variable income for life. To quality for the federal tax benefits with either of these trust plans, the minimum annual payment to Mrs. Em’s brother must be at least 5 per cent of the fair market value of the trust assets, determined annually, if the uni-trust is used. If the charity has a pooled income plan Mrs. Em can designate her money to that fund, and her brother would receive his pro-rated share of the income earned by the fund each year.

In any of these plans, whatever remains at the death of Mrs. Em’s brother becomes the property of the charity she has designated.

Your financial ad-visor will be able to advise you on the best way to satisfy your wishes to help the Calumet Theatre while providing tax benefits and lifetime earnings for you or a loved one.