Legacy of Giving: What I’ve learned as a Development Officer! (Or maybe a better way to say it is, “What it was like to realize all I – and most people – don’t know!”)
By Chuck Rodgers, VP Development, WTRC Foundation
It’s a scientific, biological, psychiatric fact that giving makes us feel good! It does. Scientists believe that selfless/philanthropic behavior releases endorphins in the brain, producing the positive feeling known as the “helper's high.” Researchers say people are more likely to experience certain gains in well-being because giving to others is more memorable than spending money on themselves.
Now, that being said, even the most generous givers I know are usually frugal, money-savvy individuals who have just as much desire to give to their own family members. They also want to have some for themselves as they age. Which, you might not be surprised to hear, brings us back to this whole arena of Planned Giving! Everything about Planned Giving is geared to helping generous people do so in a way that benefits BOTH themselves or their family AND the charity or charities they choose, all while giving as little to the IRS as possible. Pretty great, huh?!
Probably one of the most profound, and yet simplest, things I’ve learned along the way is that Planned Giving can really only do two things:
Trade a Gift for Income
Oh sure, there are lots of pieces and persons, papers and professionals, but in the end they are all about finding the best planning vehicle to meet your desires! That’s it!
And since the people we hope to help through this amazing arsenal of planned giving tools are folks who are very dear to us, it’s paramount that we get this information to you as quickly as possible! Of course, there are dozens and dozens of estate planning instruments out there, like….CGA’s, CRAT’s, CRUT’s, Grantor CLT’s, Non-Grantor CLT’s, NICRUT’s, NIMCRUT’s, Flip-CRUT’s, ILIT’s, PIF’s, DAF’s…see what I mean? It’s overwhelming and can get very complicated in a hurry! That’s why I have to remind myself, when I’m swimming in all the complexity, that it’s still about helping our friends either Lower Taxes or Trade a Gift for Income, PERIOD!
Over the next weeks and months we’re going to take a look at some of the more common, though powerful, financial planning tools/instruments/vehicles that you can use to either lower your income tax or trade some particular “non-income producing” asset for income. How crazy is that?! The latter is the one I’d like to start with, the trading a gift for income, and is one of the easiest and most mutually beneficial tools out there for both you and the charity you choose. The particular estate planning instrument I’m referring to is the CGA: Charitable Gift Annuity.
So what, exactly, is a Charitable Gift Annuity/CGA? I’m glad I asked that question (because I did!). A CGA is most simply defined as:
An agreement in which an individual transfers assets to acharity in exchange for a lifetime income stream and a tax benefit.
A charitable gift annuity is a way you can make a gift to your favorite charity and receive fixed payments for life in return. The payments can begin immediately, or can be deferred to a future date which you choose. You may also establish a gift annuity for someone else; however, the total number of recipients, called annuitants, of these payments associated with any one gift cannot exceed two. The terms of the arrangement are set forth in a contract signed by you and the charity. The arrangement terminates on the death of the annuitant(s), at which point the charity uses the remaining funds on its mission.
Who establishes gift annuities?
Most gift annuity donors are retired, want to increase their cash flow, seek the security of fixed payments that will not vary, and would like to save taxes. A charitable gift annuity might be appealing in the following circumstances:
How is the amount of the annuity determined?
What tax benefits are associated with gift annuities?
How will my payments be taxed?
How do I get started?
And, finally, as I said before…. ALWAYS DICUSS THE FINANCIAL ILLUSTRATION(s) WITH YOUR TAX AND FINANCIAL ADVISORS. They can help you make an informed decision, taking into consideration all relevant factors.
Those of us in the West Texas Rehab Foundation are more than ready to sit down with you and help you walk through what your desires, hopes and dreams may be for you, your family, and your Legacy of Giving!
Continue Reading "What I've Learned as a Development Officer" (Part 2)
NOTE: The security of your CGA is only as secure as the financial strength of the organization granting it. There is no governmental guarantee. Thus, you need to know that the organization you are doing business with has the ability to honor your payments no matter what economic climate exists during the life of your CGA.
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