Planned Giving Insights and Information

BDQ #3: The Assignment Revocation Rigmarole: A Gift Annuity Pushmi-Pullyu

The BDQ (Big Dumb Question) We’ve all been there: at some point during a presentation someone says, “This may be a dumb question, but…” and the presenter (hopefully in a gracious tone of voice) says, “There’s no such thing as a dumb question,” before providing the obvious answer. But sometimes, just to yourself, you have to admit you were wondering about the same thing. That’s the idea behind this occasional series we’re calling “The Big Dumb Question” (or BDQ). Our aim is to provide easy to understand answers to basic gift planning questions – the kinds of questions you may be reluctant to ask. We’ve got a list of topics in mind (see below). The Assignment Revocation Rigmarole: A Gift Annuity Pushmi-Pullyu The provisions of the “IRA Legacy Act” provide a limited opportunity for donors to make a qualified distribution in exchange for a charitable gift annuity. This new option comes with several constraints, including a requirement that the gift annuity contract cannot be...

IRS Updates Rules for Computing Planned Gift Deductions

On June 1, 2023, the IRS made public Treasury Decision 9974 (TD 9974). TD 9974 contains final regulations relating to the use of actuarial tables in valuing annuities, interests for life or a term of years in property, and remainder or reversionary interests in property. A change of immediate importance to gift planners, TD 9974 requires use of the 2010CM mortality table when computing the deduction for a gift annuity, charitable remainder trust, or other split-interest gift made on or after June 2, 2023.

Trust Matters: Life Income Gifts and Revocable Living Trusts

In our work with planned giving professionals, we receive questions from time to time about donors using trusts in conjunction with life-income gift arrangements. The most common question is whether charitable gift annuity (CGA) payments – or beneficiary payments from charitable remainder trusts (CRTs) – can be issued to trusts rather than directly to the annuitants or trust beneficiaries. But there is a second question that comes up as well – whether a trust can be the donor or grantor of a gift annuity or CRT.

When Your Donor Should Consider a QCD for a CGA . . . and When They Shouldn’t!

Since January 1, 2023, it has been possible for a donor to make a qualified charitable distribution (QCD) from an IRA of up to $50,000 to fund a gift annuity. This new giving opportunity has sparked a lot of interest among gift planners. Some have already helped donors complete this type of gift. Many limitations apply to the QCD for CGA arrangement in addition to the $50,000 maximum: the donor can make this type of gift in one year only and must be at least 70 ½ years old, only the donor and the donor’s spouse can be annuitants, the gift is not deductible, the donor cannot defer the annuity payments, and all annuity payments are fully taxable as ordinary income. On the positive side, the distribution from the IRA is not taxable and counts toward the donor’s required minimum distribution (RMD) for the year. Which raises the question: Under what circumstances, if any, does funding a gift annuity with a QCD make financial sense?