Tuesday, July 24, 2012

Charitable Gift Annuity

A charitable gift annuity is a contract between a donor (the annuitant) and an organization. A charitable annuity is set up for two reasons: one, to provide a retirement income for the donor and two, to provide a charitable gift to the organization after the death of the donor. The organization can be a number of charitable causes. They are commonly used to donate to universities, churches and even organizations such as the Red Cross.

 A charitable gift annuity will usually guarantee a retirement income stream for a certain period of time (or lifetime) based on the amount of assets that are deposited into the annuity. The issuing organization of the annuity usually uses standards set forth by the American Council on Gift Annuities to write their annuity policies; and insure that the charitable gift annuities are being set up properly from an actuarial standpoint. This helps protect both the organization and the donor.

The deposit into a charitable gift annuity can be cash, securities, land or other forms of assets with real value. The charity will remain in control of the assets indefinitely. Charitable gift annuities are regulated by the individual states and the issuing charity must prove to that state that the gift annuities that it is issuing are meeting that states guidelines for actuarial standards. (Again, ACGA helps guide these charities in this area.) Lastly, the charities must keep a close ongoing valuation of its asset's value to insure that it is paying out the correct amount based on actual value of the assets not the "book value". If you have any more questions on Charitable Gift Annuities, especially in North Carolina feel free to contact us for a free phone, email or face to face consultation.

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