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How to use annuities for charitable giving

Many people volunteer or help out charities in other ways during their lifetimes. So, it makes sense to provide these entities with some type of benefit down the road, as well. Giving cash, tangible items (such as real estate), or other donations is certainly noble. But did you know that you can also use annuities for charitable giving – and that doing so could create a win-win scenario for both you and the charity?

Options for Using Annuities in Charitable Giving

There are several ways to incorporate annuities in your charitable giving. One is to use a charitable gift annuity. This is a contract between an annuity owner and the charitable organization.

As the donor, you would make a gift to the charity (using cash, securities, or various other assets). In return, you would be allowed to take a partial tax deduction for the donation. In addition, you could also receive a regular, set stream of income from the charity (via the annuity) for the remainder of your lifetime.

If you are married, you and your spouse can set up the charitable gift annuity together. In this case, you could both receive income from the annuity until both of you pass away. Unlike other fixed income investments like bonds, you can count on income from a fixed annuity to remain stable in amount and consistency – regardless of what happens with the stock market or interest rates in the future.

In addition, because the income payments from a non-qualified annuity (i.e., an annuity that is not in an IRA or retirement plan) consist in part of a return of your contribution, you would receive part of the payment income tax-free.

You could also consider setting up a charitable remainder trust, or CRT. This is a tax-exempt vehicle that allows you (as the donor) to make a gift of assets and/or other property to the trust while at the same time retaining the ability to receive an income stream from those assets.

There are different variations of charitable remainder trusts. One of these is the charitable remainder annuity trust, or CRAT. With this type of trust, you could place cash and/or property into the trust, and then receive a fixed amount of income each year.

The amount of your income payments is based on a percentage of the value of the assets that you funded the trust with, at the time you made the contribution. Upon your passing, the “remainder” of the funds are transferred to the charity.

Although using annuities in charitable giving can provide numerous benefits, using these strategies may not be suitable for everyone. With that in mind, it is important that you talk with a professional who can answer your questions, allowing you to anticipate how the process works.

Are You Ready to Set Up a Legacy and Benefit a Charitable Organization?

Making a donation to a charity can provide the organization with necessary funding, while also allowing you to leave a legacy. But using various strategies can involve some in-depth planning, so it is recommended that you work with a financial specialist who is well-versed in these types of strategies.

At Annuity Gator, our primary focus is on educating individuals (and financial professionals) on how annuities may be used in retirement and legacy planning. We can help you determine whether or not an annuity is right for you, and if so, which option to move forward with.

So, if you would like to learn more about how annuities are used in charitable giving, feel free to contact the professionals at Annuity Gator by calling (888) 440-2468 or sending us an email by going to our secure online contact form. We look forward to assisting you.

How to use annuities for charitable giving

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