Guarantee Your Gift and Your Income With A Charitable Annuity
Many of us supplement our retirement income from non-registered sources such as GICs, bonds or other fixed-income securities.
If this is your situation, you may have noticed that the income from these investments is not very tax-efficient, and often the yield (income) does not keep up with inflation. How about a special kind of annuity, a charitable gift annuity? Recent changes to the rules for charitable gift annuities may make them an attractive alternative to the income from GICs or bonds. Depending on your age and income requirements, this may be a solution that satisfies everybody, providing more income in a tax-efficient way while fulfilling your philanthropic objectives.
Here's how it works. Suppose you have CSBs, bonds or GICs worth $60,000. You are 73 years old, and you plan to leave some money to the church, but need an income from the investment in the meantime. You agree on an income of $250 a month (5%), guaranteed for a period of time, your life, or the lives of you and your spouse. The church contracts with an insurance company to determine how much capital is needed to guarantee the income for the designated period. You donate the $60,000 to the church, which buys the annuity to guarantee the income. The difference between the donation ($60,000) and the cost of the annuity (about $41000, based on current annuity rates*) is your deduction amount for taxes. Depending on your life expectancy, part of the income may be taxable to you. The balance is tax-free. The church has access to the capital difference immediately, and could receive more, depending on when you die, whether there are any guarantees associated with the annuity, and assuming they are named as beneficiary.
Who benefits? You do, because you've guaranteed a tax-efficient income for life. You will see your gift in action. The church does, because it has immediate use of some of the capital you have donated, and can plan appropriately. Your heirs have a legacy of your faith in action that inspires generosity in them and others. Succeeding generations will inherit a sure foundation that enables them to hear and spread the good news of Jesus Christ.
If you would like to explore this opportunity, Peter Bennett of the Stewardship Committee will be happy to work with your advisors to plan your gift.
* Based on August 2015 Cannex annuity rates
Please click on the following links for additional Stewardship information:
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