One of the most popular forms of life income arrangement, a gift annuity offers many advantages.
- The payout rates for gift annuities are generally quite attractive to people in their 70s, 80s and 90s. The rates typically range from 5-9%. If a person, or couple, is currently experiencing a low return on their CDs, money market accounts, treasury notes, or bond funds, a gift annuity can be a nice alternative. The payout rates are determined by a person’s age, and once established are fixed for life.
- The donor receives a generous income tax deduction for the year in which they create a gift annuity. Often the tax deduction is 20-50% of the amount that they placed into the annuity.
- Depending upon how the gift annuity is funded, the donor can enjoy a significant portion of the income they receive from a gift annuity on a tax-free basis.
There are many forms of gift annuities. Some offer an immediate payout option, while others allow the donor to fund the agreement and get an income tax deduction now, but delay the beginning of payments until some point in the future of their choosing.
Call Oregon Tech if you are interested to learn more about gift annuities. A confidential illustration can be prepared specifically for you which will reveal what your payout rate would be, how large your income tax deduction amount would be, and what portion of your payments would be tax-free. There is no cost or obligation to inquire.
Charitable Remainder Trusts (CRTs) can be one of the most powerful planning tools available as people do retirement and estate planning.
CRTs afford the donor potentially five favorable tax outcomes by virtue of one financial transaction. They are: 1) capital gain tax avoidance 2) income tax deduction, 3) tax-free compounding 4) income payments taxed favorably, and 5) estate tax elimination (for those people with large estates).
Finally, life insurance can sometimes be a viable part of a CRT plan. If the donor(s) want their loved ones to participate in the full value of their estate, then creating a life insurance trust with some of the CRT tax savings and additional cash flow can allow loved ones to “remain whole” as it relates to their inheritance.