Last week there was an alumni gathering here in the New Orleans area, and a delegation from The W's Alumni Office and Foundation attended and of course, made their pitch for funds. One pitch that I thought worth mentioning here was for a gift annuity.
What is a Gift Annuity?
A gift annuity is a contract you enter into with a qualified charity whereby you transfer assets to them now, and they agree to pay a return to you and/or your spouse until you die.
Why might I want to invest in a Gift Annuity?
Gift annuities allow you to receive current tax benefits for a donation to a cause or entity you support, while still receiving income from those assets.
What are the disadvantages of a Gift Annuity?
The primary disadvantage is that you give up ownership of your assets now, so that you cannot improve on the return if financial conditions change, nor can you leave the assets to your heirs.
Who should consider a Gift Annuity?
Anyone who has a charity to whom you want to leave substantial assets. Note, I am not a financial advisor and the question is who should consider a gift annuity. Basically, under the right circumstances, based on your income, the type of assets being converted and other factors too numerous to list here, a gift annuity can save money on taxes; it can avoid claims by heirs that you did not intend to give so much to the charity and it can provide current income during your life. I suppose one of the right size could get you accolades from the charity as well. This is one of those decisions that should be discussed with a tax advisor before you make it.
Where can I learn more?
Most charities that accept Gift Annuities have information about them and about how they work. MUW's information is here. Girl Scouts Louisiana East's page is here. Catholic Foundation Archdiocese of New Orleans