Tower Topics ~ Spring 2002

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Invest in our future and yours with a charitable gift annuity
An Easy and Safe Way

Although most people think of insurance companies when they think of annuities, Conception Abbey also offers annuities. They are called “charitable gift annuities” because, as a charitable organization, we make the payments for your lifetime. A CGA is a gift vehicle that pays you (and an additional annuitant, if you desire) a reliable amount of income each year for life. The gift can be established with cash, securities or other property, and in return you receive fixed income payments on a regular basis: quarterly, semi-annually or annually.

There are two types of gift annuities: one begins making payments within a year of the gift; the other – a deferred gift annuity – begins making payments at a future time, at least one year after the gift annuity is established.

The Financial Benefits
Aside from providing a gift to us, your CGA will offer you many personal financial benefits unavailable with typical annuities.

Charitable income tax deduction: The charitable income tax deduction is approximately 50 percent of the charitable gift annuity and is taken in the year the gift is made for both the regular and deferred type of gift annuity.

Favorable capital gains treatment: If you make the gift with appreciated property, such as publicly traded securities with a low cost basis, you avoid paying capital gains taxes on the gift portion of the transfer.

Tax-free income: The income you receive is partially tax-free, whether payments commence now or in the future. For gifts established with appreciated property, the income will also be partially taxed at capital gains tax rates.

Income for life: You and a second individual, if a two-life annuity is desired, receive a fixed and secure income for life. Income payments are often higher than yields generated from stocks. Generally, the older the donor, the higher the payment. With a deferred charitable gift annuity, the donor’s age and the time that payments begin will determine the annual amount to be received in the future.

Estate taxes: If you are the sole annuitant, the income ceases at death and is not included as part of your estate. If your spouse is the remaining annuitant, his or her interest may qualify for the estate tax marital deduction. If an individual other than a spouse, such as a sibling or child, is the remaining annuitant, the value of the remaining income is included for estate tax consideration.

Deferred retirement income: With this option, you establish a deferred gift annuity while still working and defer the income stream to a later date, such as age 65 or 70, when you may no longer be earning an income and find yourself in a lower tax bracket. Because the payments are deferred, the rate you receive is significantly higher. The gift asset does not go to work immediately at Conception Abbey because the gift is held and invested to ensure lifetime payments for the annuitant.

Figuring Your Annuity Rate
Annuity rates are higher for older annuitants and lower for younger annuitants, based on life expectancy. Rates are also adjusted according to the number of annuitants, with rates for two-life contracts often lower due to the extended life expectancy.

A specific annuity rate is a matter of agreement between you and our organization. Maximum rates are recommended by the American Council on Gift Annuities. Check with your financial advisor or our representative for current rates.

Establishing a CGA is a wonderful way for you to have control over an investment that can produce a secure income for yourself while providing significant benefits. For more information, please give Brother Mark a call at 660-944-2821.

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