Charitable Gift Annuities

Charitable gift annuities provide for Marmion's future and an income for life for the donor, and, if desired, a second beneficiary.

A charitable gift annuity is an agreement between you and Marmion. In "exchange" for your contribution of cash, securities or other property, Marmion promises to make an annual payment to you for your lifetime and the lifetime of a second beneficiary. Your commitment will also qualify for an immediate tax deduction.

The annuity rate, recommended by the American Council of Gift Annuities, is based upon the age of the donor and second beneficiary. For example, a donor age 65 who establishes a single life annuity would be paid 6.7 percent. If a donor, age 65 establishes a two-life annuity and the second beneficiary is 63 years of age, the annuity rate would be 6.3 percent. In this example, the annual payment on a $25,000 single life annuity would be $1,675 and $1,575 on a two-life annuity. (Suggested annuity rates change periodically; contact Marmion for the current rates.)

The charitable deduction for income tax purposes is also based upon the age of the donor. A donor, age 65, could expect a deduction of approximately 40 percent of the amount of the gift. The value of the deduction is based upon the difference between the amount given and the "present value" of the annuity payments you or your beneficiary will receive, as determined by IRS tables. A similar calculation is done to determine the portion of the income that is tax-free.

A gift annuity has an additional tax advantage if funded by a gift of appreciated securities. The full fair market value of the securities will be used to establish the annuity. The donor by-passes any capital gains tax (currently 20 percent on securities held 12 months or longer). In the case of securities that pay a low dividend rate, the donor may actually realize a gain in annual income by establishing an annuity.

There's a final tax benefit, as well. Because the asset has been removed your estate, it will not be subject to any applicable estate tax.

Many financial planners recommend that at least a portion of your retirement savings be "guaranteed." Rather than purchase a commercial annuity through an insurance company, consider a charitable gift annuity and have the added benefits of helping a favorite cause and realizing tax savings.

Charitable Gift Annuity Rates Listed below is a sampling of suggested charitable gift annuity rates provided by the American Council of Gift Annuities, effective July 1, 2001:

Single Life Annuity

AGE
RATE
55
6.0%
60
6.4%
65
6.7%
70
7.2%
75
7.9%
80
8.9%
85
10.4%
90 and over
12.0%

Two Life - Joint and Survivor Annuity

YOUNGER AGE
OLDER AGE
RATE
55 55-57
5.7%
60 60-61
6.1%
65 67-71
6.4%
70 72-74
6.7%
75 76-77
7.1%
80 83
7.9%
85 87
8.9%
90 92
10.5%

Charitable Remainder Trusts

Charitable remainder trusts provide donors a method to assist Marmion by giving cash or other assets to a trust and retain a life income for themselves and a beneficiary. A donor can address a wide range of charitable interests with a single charitable trust by designating a portion of the trust to two, four or even more charitable beneficiaries.

A charitable remainder annuity trust (CRAT) establishes the annuity payment to the donor (and beneficiary) of not less that five percent based upon the fair market value of assets when transferred to the trust.

A charitable remainder unitrust (CRUT) establishes the payment to the donor (and beneficiary), again of not less than five percent, based upon the fair market value of the assets determined annually. If prudently managed the trust should grow in value, and, therefore, provide a higher annual payment offsetting any adverse impact of inflation. Additional gifts can be added to a unitrust, and your unitrust payment will increase to reflect the added amount. The annuity trust, in contrast, cannot accept additional contributions.

A charitable trust document must be drawn by qualified legal counsel to insure it meets strict IRS critiera. Marmion can assist you -- with no obligation -- with the names of qualified professionals.

In addition to an income for life, charitable remainder trusts provide tax savings. The donor will receive a tax deduction in the year of the gift. A donor age 60, for example, can expect a tax deduction of some $11,000 on a $50,000 trust. The actual amount of the deduction is based upon the age of the donor and beneficiary, if any, and the annual payment rate.

Additional tax savings can accrue if the donor funds the trust with appreciated securities. The trust can "accept" the securities at full, fair market value by-passing any capital gains on the appreciation. While the donor will not avoid capital gains taxes completely, they will be less and spread over the term of years of the trust. Because these assets are removed from the donor's estate, there also can be estate tax savings.

Marmion would be pleased to provide a charitable trust worksheet. When completed it will provide all of the information necessary to develop a confidential, personalized plan at no cost or obligation to you.