May 01, 2012
At Covenant Trust Company, we understand that people have different aspirations when it comes to their money. Whether it’s attaining financial security or supporting charities, we know we aren’t simply managing money but are also helping our clients realize their dreams. To meet the various needs of our clients, we offer a variety of different financial services and options, including Charitable Gift Annuities. Though a Charitable Gift Annuity (CGA) is first and foremost a way to donate money, it also provides tax deductions and a lifetime stream of income for donors. As such, a CGA can help you reach your charitable dreams as well as your financial goals.
A Charitable Gift Annuity is an irrevocable contract between a donor and a charity. If, for example, you were to set up a CGA between yourself and a Covenant ministry, you would agree to make a donation to them, and they would agree to make fixed payments to you (or someone else of your choosing) for the rest of your life. A two-life gift annuity (for a married couple, for example) pays throughout the life of the survivor. After the payments stop, the Covenant ministry would keep the remainder of the donation.
The amounts of these fixed payments are based on several different factors, including the amount of money donated, the age of the donor(s), and the payout rates set by the American Council on Gift Annuities. Though payments deplete the principal of the donation, they are ultimately backed by all of the ministry’s assets so donors can feel secure that their payments will always be there.
Part of your payments during your life expectancy will not be subject to state or federal income tax. And if you itemize deductions, your gift qualifies for a charitable deduction. Also, the amount given is removed from your estate, so it will not be subject to tax later on. For a more accurate understanding of how a CGA will affect your tax situation, be sure to contact your tax advisor.
So what are your financial and charitable goals? How can a CGA help you reach them? Contact a local Financial Service Representative to find out. We can provide a personalized and free illustration of how a CGA can help you, your family, and your favorite ministries.