Five Reasons to Advance a Bequest
By Jackie Jacobs
A generous donor happily informed me of a $100,000 charitable bequest provision in his Will for his pet charity. At some future time, an organization that he loves will receive a very meaningful gift of significant magnitude.
The fellow subsequently asked me if I think that the charity would like to get the gift before he died. I thought he was pulling my leg: there is no charity in the universe that wouldn’t welcome a gift sooner rather than later.
But what he really wanted to know was if it might make sense to redirect the money that he set aside, to be repurposed for a charitable gift annuity for the charity’s ultimate benefit. In other words, might there be a reason to advance the bequest?
What prompted his query was that he was that he had some highly appreciated stock. At first blush, this should have made him quite happy. But it didn’t. Why not? Despite its increase in value, it generated no dividend. He would have loved more income, but if he sold the stock and reinvested it, the capital gains tax would have exceeded his original cost basis.
Everyone should have such problems. Under the circumstances, I and his tax professional agreed that a charitable gift annuity would serve his needs. In fact, his advisor set forth five “now is better reasons” to accelerate the gift, as summarized below:
Increase your income now: One of the more important benefits of a gift annuity is the attractive rates. You are now 80 years old. You therefore qualify for an annuity rate of 6.8%. Thus, establishing a charitable gift annuity with $100,000 would provide $6,800 every year for the duration of your life.
Reduce your taxes now: Since a portion of a charity gift annuity qualifies for a charitable income tax deduction, making that gift now with assets you already plan to give later may be a tax-wise idea worth considering.
Stabilize your retirement now: Gift annuity payments are fixed. Once the payment dates are established (generally semi-annually or annually) you will receive the identical amount with every check. No need to guess or worry about the ups and downs of the financial markets. Your charitable gift annuity will be backed by the unrestricted fund assets of the host charity. You should never place all your assets into a charitable gift annuity, but in your case this will help diversify and stabilize your retirement income.
Enjoy your giving now: If you establish a gift annuity, you will experience the satisfaction of completing a gift now. Furthermore, this gives the charity the opportunity while you live to express gratitude and to include you in recognition programs.
The advice was well-received, and the donor decided in favor of giving while living. In his case, advancing his bequest with a charitable gift annuity made good dollars and sense. Feel free to contact me at 614-338-2365 or firstname.lastname@example.org with your gift planning questions.
Article appears as originally published in the Ohio Jewish Chronicle, May 28, 2015.
Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.