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The Nuts and Bolts of Charitable Gift Annuities

The charitable gift annuity stands out as a way to assist favorite charities while preserving — even improving — your financial security during times of low interest rates.  A charitable gift annuity makes fixed payments for life to one or two people in exchange for your gifts of securities or cash.  Payout rates depend on the age of the income recipient(s), but generally range from 4.4% to 9% for one-life arrangements.  Rates for two-life gift annuities are slightly lower.

It’s important to know that your annuity payments are backed by the full resources of the issuing charity.  Supporters looking for alternatives to stock market volatility or low CD rates may find gift annuities ideal for helping charity - and themselves.

Charitable gift annuities offer an income you can’t outlive.  If someone age 82 establishes a gift annuity with $10,000, we will pay that person $720 (7.2%) for the rest of his or her life.  Gift annuities also provide a tax deduction for a portion of the gift you transfer, and part of your payments will be tax free or taxed at low capital gains rates.

Who’s the Right Executor for Your Estate?

Considerable thought should be given to choosing an executor to manage your affairs after death.  Your executor is legally responsible for settling the estate and carrying out the provisions of your will.  It is not an easy task, although the executor can rely on the professional assistance of a lawyer and/or accountant.  The executor must:

  • probate the will
  • assemble and safeguard the estate’s assets;
  • temporarily manage investments;
  • pay estate expenses and legal claims;
  • arrange payment of any state and federal income taxes and estate taxes;
  • distribute the assets to beneficiaries and
  • make a final accounting to the court of all receipts and disbursements from the estate.

It’s common to nominate a spouse as executor, or a competent and experienced friend, relative, professional adviser or the trust department of a bank.  Or you may wish to name an individual together with the trust department of a bank, to serve as co-executors.  You might also want to name an alternative executor, should the original person die, become disabled, move to a distant state or simply decline to serve.

You can help the person you name as executor by making the job as simple as possible.  One way to help is to attach a list to your will detailing:

  • names and addresses and contact information of your advisers;
  • locations of bank accounts, along with account numbers;
  • life insurance policies, including the name of the insurer, location of the policy and value;
  • where old income and gift tax returns can be found;
  • user names, passwords and PIN numbers for your digital accounts and
  • the location of real estate deeds, birth certificates, marriage licenses, trust documents and other important papers

Planning after Losing a Spouse

The loss of a spouse is widely considered the most stressful period in a person’s life, but eventually the time comes to make plans for the future.  When things have settled down after the funeral, take time for a thorough financial review.  You’ll need to revise your will and other estate plans, as well as assess your life insurance needs, retirement plan beneficiary designation, investment plans and a household budget for one.

On a personal level, consider support groups for widows and widowers that are organized in many communities through hospitals, churches and governmental and civic agencies.  You should seek out the support of friends, your house of worship and family members during this time.

In reviewing your estate plans and making whatever changes may be necessary, consider adding a bequest to the organizations you have supported during your lifetime, possibly as a memorial to your late spouse.

Charitable Giving’s Top Three

Certain assets make great gifts from an estate, but are not as good when given during lifetime.  Here are the top three assets to give during life and through an estate:


  1. Appreciated securities — You receive a double tax benefit when you contribute appreciated stock, bonds or mutual fund shares that you have held more than one year.  You can deduct the full value of the shares - not just what you paid originally - and you avoid all capital gains taxes.
  2. Life insurance policies — A policy that is no longer needed for family security can be an excellent gift to charity, for which you’ll be entitled to a charitable deduction.
  3. Qualified charitable distributions from an IRA — If you’ve reached age 70½, you can direct the custodian of your IRA to send a gift directly to charity and owe no income tax on the distribution.  Your IRA gift can take the place of the minimum distributions you must take each year, saving income tax even though no charitable deduction is available.  You can give up to $100,000 each year.

Estate gifts

  1. U.S. savings bonds - Bonds left in an estate are subject to income tax on the untaxed interest.  Because charities are tax-exempt, no tax is owed when the bonds are redeemed.
  2. Assets not needed for heirs’ future security - If you own assets that loved ones neither want nor need, consider leaving these to charity.
  3. Retirement accounts - Heirs who receive the balance in an IRA or 401(k) account will owe income taxes on all withdrawals.  You can instead name charity as the beneficiary of all or a part of the accounts, bypassing the tax.