Gift Annuity Voluntary Termination – What to Do and How to Do It

If you have an annuitant who finds their gift annuity income “nice, but not necessary,” they may be interested in voluntarily giving up their right to future annuity payments. Voluntarily releasing, or terminating, their interest in a charitable gift annuity (CGA) allows the charity to access the residuum early. The charity can also count part of the released amount as a new outright gift. Voluntary termination is also an effective way of managing the issue of a CGA that is wasting. An annuitant who is charitably inclined may agree to terminate their annuity to spare the charity the continued expense of paying the annuity from general operating funds.

The Deferred Gift Annuity Surprise

I found a recipe for Cherry Surprise Cookies. The surprise is a nugget of chocolate inside the cookies. Like these delicious-sounding cookies, deferred gift annuities can come with a surprise. The surprise can be pleasant like chocolate or dreadful, as in losing lots of money.

Giving It the Old College (Annuity) Try Doesn’t Always Succeed

I learned recently of a donor who left money to charity in a manner that made it seem like she wanted to establish a so-called “college annuity” for her seven-year-old granddaughter. The applicable bequest language indicated that the annuity would begin “on or about July 30 of the year the beneficiary attains the age 19 years, and the payment shall continue for a term of 5 years.” If perhaps you’re not familiar with the college annuity, it’s a deferred charitable gift annuity established for the life of a young child, with the deferral period ending – and payments beginning – when the child is age 18 or 19. Shortly after the annuity is established, the child’s guardian (usually a parent) exercises a right explicitly reserved in the gift annuity agreement to commute the lifetime payments into a stream of payments made over the course of only four or five years. Because the present value of the lifetime payments must equal...

A Potential Tax Trap for Married Couples Who Fund A Gift Annuity

A gift annuity funded by a married couple with their separate property can create unexpected tax issues. This article examines the tax consequences of such a gift, how to properly plan such a gift, and how to avert problems with this common gift structure.