Life-Income Agreements
Life-income agreements are often attractive to donors who desire to make an irrevocable commitment during their lifetime. A life-income agreement will benefit one or more charities at your death (or at a specified future date). The donor (and/or other selected beneficiary(s)) usually retains the right to an income stream during one or more lifetimes.

Life-income agreements are often funded with highly appreciated assets (worth more than their original cost) such as real estate, personal property or stock. The potential benefits to donors may include increased income, income tax deductions, avoidance and/or deferral of capital gains tax, and estate tax relief. Most life-income agreements are in the forms of Charitable Gift Annuities or Charitable Remainder Trusts.
 

• Outright Gifts During Life

• Life-Income Agreements

• Gifts Taking Effect Upon Death

Charitable Gift Annuity
With a Charitable Gift Annuity, you transfer an asset to a charity and in return receive fixed annuity payments for one or two lifetimes. Most charities use a percentage rate for payouts (based on age) suggested by the American Council on Gift Annuities. Older individuals receive the highest rates.

Charitable Gift Annuities allow you to receive an income tax deduction for a portion of the value of the gifted asset. In addition, the income beneficiary(s) (typically you and/or your spouse) receives partially tax-free income for a period of years. You will also receive capital gain tax benefits if you fund the gift with appreciated property.

A variation of this popular gifting method is the deferred gift annuity. Here, the payments begin in a later year, typically with a higher return rate. Many donors choose this method to defer their income until retirement.

For a confidential, no obligation Charitable Gift Annuity calculation, print out the form below and send to:
Development, The Village Family Service Center, P.O. Box 9859, Fargo, ND 58106 or call 701-451-4900.

Please send me a confidential, no obligation charitable gift annuity calculation.

Name ______________________________________________________________

Address_____________________________________________________________

City ___________________________________ State _____________ Zip _______

Your birth date _________________ Your spouse’s birth date _________________

Amount of gift under consideration _________________________________________

Charitable Remainder Trust
This is a more sophisticated and flexible way to accomplish a deferred charitable gift. Donors make a substantial irrevocable gift to a trust that they have established and the selected beneficiary(s) receives annual payouts in either a fixed amount or an amount based on a fixed percentage of the annual value of the trust assets. Selected charities typically receive the trust assets either upon the death(s) of the income beneficiary(s) or after a selected term of years.

Some donors use part of the additional income they receive from the trust (as well as tax savings) to purchase life insurance to benefit family members, thereby replacing the gifted asset. Under this plan, the gifted asset is removed from the potential estate taxation. The insurance policy is usually owned by an entity other than the insured party, thereby avoiding estate taxation on the policy proceeds.

The concepts herein are intended to provide information of a general rule only.
They should not be construed as legal, tax and/or financial advice.
Readers are urged to consult with their own professional advisors for their specific situations.