Planned Giving - Life Income Gifts
A donor may choose to make a gift to Albany Medical Center and receive immediate financial benefits, including a lifetime stream of income and a charitable income tax deduction. There are several such gift vehicles to select from, including charitable gift annuities, deferred gift annuities, and charitable remainder trusts. Life income gifts may be designated to benefit a particular department or program at Albany Med, or may be made unrestricted to the Annual Fund in order to provide support to the area of greatest need.
- Charitable Gift Annuity
- Charitable Remainder Trusts
Charitable Gift Annuity
How does a Charitable Gift Annuity Work?
In exchange for an irrevocable gift of cash or other assets, Albany Med agrees to pay one or two persons a fixed sum quarterly for life. Albany Med’s general resources guarantee the payments. The Charitable Gift Annuity rate of return is often higher than what’s available from many conservative investments. Charitable gift annuities may be created with a gift of $10,000 or more.
What are the advantages of a Charitable Gift Annuity as a gift to Albany Med?
- Guaranteed life income that you cannot outlive.
- Charitable income tax deduction.
- A portion of the income received is income tax-free.
- Reduction and deferral of capital gain tax on highly appreciated assets.
- You may designate yourself and/or your spouse or another person to receive the income.
- Membership in the Pillars Society
How is the annuity rate determined?
The annuity rate depends on the age of the annuitant(s) at the time of the gift. The older the annuitant(s), the more income Albany Med can agree to pay annually. The rate in effect when you establish the annuity never changes and is guaranteed for life.
Albany Medical Center is a member of the American Council on Gift Annuities; therefore using rates recommended by this Council.
Following are sample annuity rates that Albany Med has offered recently:
| $25,000 Gift Annuity | ||||
| Single-Life Annuity Rates | ||||
| Age(s) | Rate (%) | Annuity Payment | Tax-Free Portion | Tax-Deduction |
| 65 | 5.7% | $1,425 | $866 | $7,762 |
| 75 | 6.7% | $1,675 | $1,155 | $10,678 |
| 85 | 8.9% | $2,225 | $1,731 | $13,229 |
| 90+ | 10.5% | $2,625 | $2,121 | $14,6409 |
|
Illustrations presented here are based on 3.6% AFR and a gift of cash in January 2009. Actual results will vary depending on the date of the gift and other factors. | ||||
Opportunity:
78-year-old has a $50,000 Certificate of Deposit that is now coming up for renewal, but the reinvestment rate is only 3%.
She decides to put the $50,000 into an Albany Med Charitable Gift Annuity in September 2007.
Result:
Albany Med will pay her 7.2% annually, or $3,600, for her lifetime. She is entitled to an income tax charitable deduction of $24,945.
Approximately 66% of each annuity payment is tax-free for the next 10.5 years.
The proceeds will be used to create an endowed program fund in the Children’s Hospital in her memory.
Interested?
Can I arrange for income in the future, such as when I retire?
Many retirement arrangements such as IRAs, Keoghs and 401(k) plans have contribution limits. An alternative, if you are younger and wish to supplement your retirement plan, is the deferred payment charitable gift annuity. This program enables you to give cash or securities now and receive annuity payments at a later specified time, such as at retirement. Deferring annuity payments yields higher payouts when payments begin and a significantly larger income tax deduction in the year the annuity is established.
Opportunity:
He contributes $25,000 in January 2009 to a deferred payment charitable gift annuity that will begin at age 65.
Result:
When he reaches age 65, Albany Med will pay him a lifetime annuity of $2,825 per year, or 11.3% of his initial $25,000 gift.
Interested?
How can Albany Med’s Office of Gift Planning be of assistance?
We are charitable planning specialists and have resources available to fully support both your investigation and implementation of gift planning techniques. Our services are professional, confidential, collaborative and are provided without cost or obligation. We encourage you to call on us to assist you, your family and your advisors in exploring financial, estate and charitable planning.
Charitable Remainder Trusts
What is a Charitable Remainder Trust?
You transfer property to a trust either in life or through your Will with Albany Medical Center generally serving as trustee. Albany Med investment managers invest, manage and distribute the assets in accordance with the terms of the trust document, including payments to you or your designee. At the end of the trust term, the remaining assets are distributed in accordance with your stated charitable wishes. Albany Med will serve as trustee for a minimum gift of $100,000, with rates of return 5 – 7 percent.
There are two basic types of charitable remainder trusts: a charitable remainder unitrust (CRUT) and a charitable remainder annuity trust (CRAT).
- In a CRUT, the income beneficiary is entitled to receive a fixed percentage of the fair market value of the trust assets as revalued annually. Thus, the income payment will increase as the value of the assets increase. Conversely, the income payment will decrease if the value of the trust assets decrease. Additional gifts are permitted without creating a new trust.
- In a CRAT, the income payments are set at the inception of the trust. The payments do not fluctuate and have no correlation with the future value of the trust assets. Additional gifts are not permitted without creating a new trust.
As a general rule, your tolerance of market risk is the primary factor in selecting a CRAT or CRUT. Historically the CRUT has been more popular because it allows income to potentially increase with inflation.
What are the Benefits of a Charitable Remainder Trust?
A charitable remainder trust allows you to provide income to yourself, your spouse, your children or another beneficiary, while helping to meet important objectives:
- Increase your income. Also, CRTs provide great flexibility in managing the income tax treatment of the payments you receive from the trust.
- Obtain a significant income tax charitable deduction.
- Unlock appreciated assets (cash, securities, real estate, business interests, etc.) without incurring a capital gain tax.
- Remove assets and future appreciation from your taxable estate.
- Diversify your portfolio with minimum tax costs.
- Supplement your retirement income with the potential for long-term income growth.
- Secure investment and administrative management through Albany Med with no fee.
- Retain flexibility in the timing of income distributions.
- Establish legacy support for Albany Med. Your gift is credited based on the fair market value of the property transferred to the trust, allowing you to reach charitable goals that on the surface appear unobtainable.
- Membership in The Pillars Society
Planned Giving Gift Calculator
How Can Albany Med Be of Assistance?
We are charitable planning specialists and have resources available to fully support both your investigation and implementation of gift planning techniques, such as charitable remainder trusts. Our services are professional, confidential, collaborative and provided without cost or obligation. We encourage you to call on us to assist you, your family and your advisors in exploring financial, estate and charitable planning.
