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200 SE Hospital Ave.
P.O. Box 9010, Stuart, FL 34995

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Income to You – CGA

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Jack Forte

 

 

 

A charitable gift annuity provides fixed payments to you for life in exchange for your gift of cash or securities to Martin Health. Gift annuities are easy to set up and the payments you receive are backed by the general resources of Martin Health for as long as you live.  

charitable gift annuity could be right for you if:

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  • You want to maintain or increase your income
  • You want the security of fixed, dependable payments for life
  • You want to save income taxes or capital gains taxes
  • You would like income that may be partially tax-free
  • You are considering a gift amount of $10,000 or more
  • You are at least 55 years of age
 

 

If this gift appeals to you and you are willing to wait to receive payments, you can enjoy the benefits of a higher rate, while still receiving a substantial charitable income tax deduction in the year that the gift is made.

Learn about a Deferred Charitable Gift Annuity.

A COPY OF THE OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM THE DIVISION OF CONSUMER SERVICES BY CALLING TOLL-FREE, WITHIN THE STATE, 1-800-HELPFLA, OR VIA THE INTERNET AT WWW.FLORIDACONSUMERHELP.COM.  REGISTRATION CH2312.  REGISTRATION DOES NOT IMPLY ENDORSEMENT, APPROVAL, OR RECOMMENDATION BY THE STATE.

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A simple contract
A charitable gift annuity is a simple arrangement between you and Martin Health that requires a one or two page agreement. There are minimal or no costs to you to establish the arrangement and no costs at all to maintain it.  

Fixed payments for life
In exchange for your irrevocable gift of cash, securities, or other assets, Martin Health will pay you a fixed amount each year for life. 

  1. Payments last for your lifetime. You cannot outlive your payments.
  2. Payments are predictable. Your payments will not be affected by investment performance or market conditions.  You will get the same amount each year. 
  3. Payments are very secure. They are backed by the general resources of Martin Health, not just by the assets you donate.

Tax-advantaged payments
Part of each payment typically will be tax-free for many years. This tax-free portion makes the payments more valuable than an equal amount of fully taxable income. The amount of this tax-free portion will be greater if you give cash than if you give stock or other appreciated property.

Who can receive payments?
You decide who will get the payments from your gift annuity. Usually, this will be you, or you and your spouse. You can, however, select any one or two people to receive the payments from your gift annuity. For example, you may wish to provide income for parents, a sibling, or a faithful employee. 

Payout rate depends on age
The older you are when you make your gift, the greater the payment rate you will receive. If you choose other people to receive the payments from your gift annuity, their ages at the time of your gift will determine their payment rate. Our minimum age is 55.

Sample annuity rate for gift amount of $10,000

Age Payment Rate Annuity Deduction

85

7.8%

$780

$5,660

80

6.8%

$680

$5,021

75

5.8%

$580

$4,577

70

5.1%

$510

$4,099

 

Tax benefits
You will earn an income tax charitable deduction in the year of your gift. If you cannot use the entire deduction that year, you may carry forward all unused deduction for up to five additional years. 

If you give appreciated property such as stock to create a gift annuity, you will avoid tax on some of your capital gain in the property. Even better, if you are the payment recipient of your gift annuity, you will be able to pay the tax on the rest of your capital gain in installments over many years.

By removing the gift assets from your estate, you may also reduce future estate taxes and probate costs.

Assets to consider
Cash currently held in a savings account, bank CD, or money-market fund makes an excellent funding asset. Usually, a gift annuity will provide you with larger payments than any of these investments.

Securities, especially highly-appreciated securities that you have owned for one year or more, are also an excellent funding asset. Giving them to us in exchange for a gift annuity will allow you to unlock their value to increase your cash flow and avoid substantial capital gains tax at the same time.

Example

Helen Thomas is a 71 year-old widow. She would like to make a significant gift to Martin Health, but she is dependent on the income produced by her investments. One of these investments is stock in XYZ Widget Corporation that she and her late husband purchased many years ago for $3,000.

Her stock is now worth $10,000 but provides little income - about $121 after tax. Helen is reluctant to sell her XYZ Widget stock to reinvest in higher yielding assets because she will have to pay $1,400 in capital gains tax in the process. This will leave her with just $8,600 to reinvest.

Helen is pleased to learn that she can make a significant gift to Martin Health and increase her cash flow by giving her XYZ Widget stock to Martin Health in exchange for a gift annuity. She can also save substantial income and capital gains taxes at the same time.

  Tax result Cash flow before tax Cash flow
after tax
(39.6​% tax rate)

Helen keeps her stock

None

$200

$121

Helen sells and reinvests for 4.0% yield

Owes $1,400 capital gains tax

$344

$208

Helen funds a 5.3% gift annuity

$4,108* income tax deduction
Avoid tax on $2,875* of capital gain

$530

$419

*Deduction amount and capital gains tax avoided may vary depending on the timing of the gift.