By establishing a Charitable Gift Annuity, you donate an asset to charity and receive, in exchange, an annuity for life.  At the end of the Gift annuity's term, the charity retains the value of the asset.

Here are the major benefits to you:

   1. You never pay capital gains tax on the asset that you donate.
   2. You will receive more income than you would from a bond or certificate of deposit.
   3. A portion of the income you receive will be tax free.
   4. You will receive an income tax deduction for the gift you make to charity.

If you have an asset worth $100,000, for which you paid $50,000 and want income you will first have to pay $7500 in capital gains tax.  If you invest the remaining $92,500 in a ten year treasury bond @ 4% interest, your income will be less than $4000/year. This income is fully taxable.

The same asset, put into a gift annuity will receive $6100 of income, #1732 of which is tax free, for the equivalent of 8.4% income stream! In addition, you will receive a one time incom etax deduction of 35,204, obviously this can be of great value in your overal financila situation.

Gift annuities can be tied to the length of the lives of both husband and wife, so if their is a need for lifetime joint income, the gift annuity works extremely.  for you people in their 30's or 40's the gift annuity is a great option - immediate income tax benefit and a deferred lifetime income that increases until the time that payments begin!

For additional information contact associates in financial planning at aifp@aol.com.