Giving Now and Later

By: Richard Carnes

Some individuals strongly desire to establish plans to make a legacy gift now, but they are hesitant about giving up the annual income stream from the asset they are considering gifting to a Baptist ministry cause. One effective way to both make a gift and retain a fixed payment for life is through establishing a charitable gift annuity.

A gift annuity enables the donor to make a contribution that might otherwise come through their estate, while also retaining significant benefits today. When a donor establishes a gift annuity through an organization like the Kentucky Baptist Foundation, the property that funds the gift annuity is eventually used for the charitable ministry purpose that the donor designates, just as if the donor had left a bequest by will. But unlike a bequest, a gift annuity will provide the donor with regular payments and other benefits for as long as they live.

Under the terms of a gift annuity the donor can make a charitable gift with cash or other property. The donor or others they designate then receive fixed payments for life. The amount and frequency of the payments are determined at the time the gift annuity is funded. Also, the payments will never change and are designed to continue regardless of how long you live.

Because a portion of the gift annuity will be used for charitable purposes, the donor is entitled to an income tax deduction for the year of gift. Additionally, for a period of time, part of each payment may be received free of income tax, or be taxed at capital gains tax rates that may be significantly lower than rates paid on other income.

To summarize, the benefits for the donor considering this type of legacy gift plan are as follows:

· The satisfaction of making an important contribution to a Baptist ministry in which you believe.

· Fixed payments for life.

· An immediate income tax deduction

· A partial bypass of capital gains tax

· An extended payment of any capital gains tax due

· Partially tax-free payments for a number of years

· Removal of assets from the donor’s taxable estate while continuing to enjoy lifetime payments

To seek assistance in creating a charitable gift annuity that will ultimately provide support for worthy Baptist causes, you may contact the Foundation’s trust counsel, Laurie Valentine, or me at our toll-free number (866) 489-3533.

Richard Carnes is the president of the Kentucky Baptist Foundation, P O Box 436389, Louisville, KY 40253; toll-free (866)489-3533; KYBaptistFoundation.org

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.