Investing In Kids Through A Charitable Gift Annuity

A gift annuity is a contract between a charity and donor. In return for a donation of cash or other assets, the charity agrees to pay the donor, (or a friend or family member if the donor so chooses), a fixed payment for life. The donor can also claim a charitable tax deduction. If a donor funds a gift annuity with long-term capital gain property like appreciated stock, the donor will report only some of the gain, and may be able to report it in installments over many years. 

Like any other annuity, this plan will pay you a fixed dollar amount for life. You begin by making an irrevocable gift of money or securities to The Kentucky United Methodist Homes for Children and Youth. The income you will receive is determined by your age (and the age of a second beneficiary, if you choose) at the time of the gift. The Kentucky United Methodist Homes for Children and Youth guarantees the amount, which remains constant once your gift is made.

Example: Alice, 75, enters into an agreement with the Methodist Home of Kentucky, Inc. for a Charitable Gift Annuity in the amount of $50,000. In return for her irrevocable gift of $50,000 Alice receives a contractually-guaranteed annual payment of 7.1%, or $3,550 (based upon her age) every year for her lifetime.

This type of income plan is particularly attractive because the older you are, the higher the rate you can secure when the contract is signed. Here are examples of recent rates:

ONE LIFE TWO LIVES

AGE RATE AGE RATE

55 5.5% 65/60 5.5%

65 6.0% 70/65 5.7%

75 7.1% 75/70 6.1%

85 9.5% 85/80 7.3%

Note: For current rates, please call us. The above numbers are samples of rates that have been given in the past. Rates are based on the published rates set by the American Council on Gift Annuities, of which we are a member, and which reflect nationwide economic trends.

You are entitled to an income tax charitable deduction in the year of your gift. Also, a large portion of each annuity payment to you is tax-free for a period of years. Both figures are based upon life expectancy as determined by the U.S. Treasury tables.

Contact Melinda Ryles-Smith at 859-873-4481.