Ralph and Marge have entered into their retirement years and are prayerfully considering the stewardship of all of their assets – often referred to as their estate. While they live comfortably and have considered making gifts of some “extra” assets (mostly CDs and a few low-dividend stocks), they wonder if they might someday need the income these assets can provide.
Are there charitable options for Ralph and Marge that could allow them to both receive income and make a generous gift? Yes! Here are two options.
The Charitable Gift Annuity (CGA)
Like all annuities, the CGA provides income based upon the age(s) of the annuitant(s). The older you are, the higher the income paid.
Benefits of the CGA include fixed income for life (a portion may be tax-free), a charitable tax deduction, partial avoidance of any capital gains tax, and the joy of knowing you are making an important contribution to Kingdom ministry.
The charitable gift annuity is an agreement between you and a specific charity. They are most typically funded with cash and/or appreciated securities. The following chart represents a sample of current CGA rates for one and two life annuities.
Contact us for current rates.
You can read or download our eBook, A Guide to Charitable Gift Annuities, here.
The Charitable Remainder Trust (CRT)
Example: Several years ago, Ralph and Marge decided to move across town and in the process purchased a new house. Rather than sell their old house, they decided to retain it as a rental property. This worked quite well until Ralph passed away and Marge was left to manage the property rental and maintenance.
Because she didn’t enjoy “fixing broken toilets,” Marge looked for another option. A charitable gift planner at her favorite ministry explained how Marge could give the rental house to a Charitable Remainder Trust, receive income for life from the trust, and not have to manage a rental property.
After further exploration, Marge learned that she would also receive a charitable tax deduction and that her favorite ministry would receive a cash distribution at her death. All-in-all, the concept made good sense to Marge and she is now enjoying income similar to the rent – without ever having to fix another broken toilet!
The CRT has many of the same benefits of the CGA – but can be more flexible for the giver(s). With a CRT you can choose to receive fixed or variable income depending upon your needs and desires. CRTs can be funded with cash, appreciated securities, or other non-cash, non-liquid assets. While CGAs are generally most advantageous for older individuals, the CRT may work for much younger adults as well.
Because the CRT is a separate tax-filing entity, it is most useful for those looking to contribute at least $100,000. If you want the ability to have a more hands-on agreement, or want to use a non-cash, non-liquid asset to produce lifetime income and make a generous gift – the CRT may work well for you.
You can read or download our eBook, A Guide to Charitable Income Agreements, here.
Planning Tools for Christian Stewards
Wills and Revocable Living Trusts – are often considered the foundational documents for estate planning and distribution.
A Will is a document that expresses the final distribution desires of an individual. Wills are subject to state law and nearly always require the involvement of the probate court. A Will distributes only property that was titled solely in the name of the deceased.
A Revocable Living Trust can be used by an individual or a couple. The Trust provides management of assets during lifetime and final distributions at death. It will avoid the probate process on assets that are titled to the trust during lifetime.
Powers of Attorney – give another individual the legal ability to make decisions on your behalf. They are important when an individual is disabled and cannot manage their business and/or medical affairs.
Titling – must be coordinated with your other legal documents to assure that your planning desires are accomplished. Titling can be a very useful way to transfer assets, or it can be the “fly in the ointment” that creates havoc in your plans.
Beneficiary Designations – can often be used to transfer assets to desired beneficiaries with minimal cost and delay. Some assets, like life insurance and qualified retirement accounts, have built-in beneficiary arrangements. Many other financial instruments and tangible assets can also be transferred, without probate, by beneficiary arrangement.
Making Gifts From Your Estate
You can continue to give beyond your lifetime with a bequest from your estate. You can include language in your Will or Trust to make gifts to ministry. Your bequest can be:
- A percentage of your estate,
- A gift of a specific amount,
- A gift of a specific asset,
- A gift of the balance of your estate (after other specific distributions), or
- A contingent gift when the beneficiary you have named predeceases you.
Your attorney can help you include a gift to AGWM in your estate documents. Our legal name is:
AGWM, a not-for-profit organization organized in the state of Missouri, with principal offices located at 1445 N Boonville Ave, Springfield, MO 65802, Federal Tax ID # 44-0577787.
You can also designate a gift today that will be completed in the future by naming AGWM as a beneficiary of banking or investment accounts, life insurance retirement plan assets, and even real estate. Request the appropriate beneficiary designation forms from your account manager to complete the gift designation.
