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Charitable Gift Annuity Using Your Refundable Entrance Fee

A charitable gift annuity provides fixed payments for life in exchange for a gift of cash or securities to Westminster Ingleside Foundation. Ingleside has instituted a new program to make this asset work for you during your lifetime. Use all or part of your refundable entrance fee to fund a charitable gift annuity and enjoy income and tax benefits all while providing an immediate charitable gift to the Foundation. Gift annuities are easy to set up and the payments to you are backed by the general resources of Westminster Ingleside Foundation.  

charitable gift annuity using your refundable entrance fee could be right for you if:

  • You want to maintain or increase your income.
  • You want to utilize all or part of a non-performing asset during your lifetime.
  • You want the security of fixed, dependable payments for life.
  • You want to save income taxes.
  • You would like income that is partially tax-free.
  • You want to make a generous gift to Westminster Ingleside Foundation.
  • You are considering a gift amount of $10,000 or more.
 

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A simple contract
A charitable gift annuity is a simple arrangement between you and Westminster Ingleside Foundation that requires a one or two page agreement. You will incur minimal or no costs to establish the arrangement and no costs at all to maintain it.  

Irrevocable gift 
A charitable gift annuity is an irrevocable arrangement. Once you transfer assets in exchange for the gift annuity, you cannot change your mind and get the assets back. This requirement assures that whatever is left of your gift when the gift annuity ends will go to support Westminster Ingleside Foundation.

Fixed payments for life
In exchange for your irrevocable gift of cash, securities, or other assets, Westminster Ingleside Foundation will pay you a fixed amount each year for life. The amount of the payment depends on the amount donated and the age of the payment recipient.  

  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 Westminster Ingleside Foundation, 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. Alternatively, you can select one or two other 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 for a payment recipient is 60.

Sample Annuity Rates for Gift Amount of $10,000

Age Payment Rate Annuity Deduction

75

6.2%

$620

$4,575

80

7.3%

$730

$4,936

85

8.3%

$830

$5,577

90

9.5%

$950

$6,219

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 your unused deduction for up to five additional years. 

If you give stock or other appreciated property to create a gift annuity, you will pay tax on only a portion of your capital gain in the property. Even better, if you are the payment recipient of your gift annuity, you will be able to report this capital gain in installments over many years. In this case, your capital gain income will replace some of the tax-free portion you would receive if you were to give cash.

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

Elizabeth White, age 87, is a resident of Ingleside at King Farm and decides that she would like to make a gift to the Foundation, have a stream of income and still have money left for her children when she passes. After consulting with her financial advisor and her children, all aware of her financial position and charitable desires, Elizabeth decides to use 10% of her $750,000 refundable entrance fee to create a charitable gift annuity. 

Step One

  • To establish the cash value of her proposed gift of $75,000 Elizabeth’s actuarial life is calculated. Using the Single Life (female) Mortality Table, her actuarial life is 7.3 years.
  • Next, the current month’s IRS Discount Rate is determined — for September 2017 the rate was 2.4%.
  • Using these variables, the present value of Elizabeth’s $75,000 portion of her refundable entrance fee is $63,077.
  • Elizabeth and Ingleside at King Farm enter into an agreement to release $75,000 from her total refundable entrance fee of $750,000, yielding $63,077 for her gift.
  • Her refundable entrance fee balance is now $675,000.

Step Two

  • Elizabeth makes a gift of $63,077 to the Westminster Ingleside Foundation to create a charitable gift annuity.
  • At 87 years of age, her payout rate is 8.2%.
  • Elizabeth will receive a charitable deduction of $31,242 and an annual annuity of $5,172 ($4,262 tax free portion and $910 ordinary income — after 6 years, the entire annuity becomes ordinary income).

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