Charitable Gift Annuity

In uncertain economic times, you might be looking for a lifetime income while paying the least amount of tax possible. The annuity option may just be the alternative that provides you with what you are looking for in addition to supporting your Church.

How does an annuity work?

In its simplest form, an annuity is an agreement in which you make one or more payments in exchange for receiving a set amount of income for a period of time. It’s a form of “living life insurance” or pension; annuities have been around for a long time and are commonly used by conservative retirees who want to make sure that they’ll have a regular income for the rest of their lives. Even though annuities are a way to invest money, they are actually an insurance contract and therefore are only sold by insurance companies.

This method allows individuals to have a certain, specified income provided for life with a low annual income tax cost. Under this option, you can purchase an annuity (with an initial capital amount. The annuity provider, usually an insurance company, will pay you, the annuitant, a yearly amount for your lifetime. This yearly sum can be disbursed semi-annually or even monthly.

Reduced Income Tax

Only part of the annuity payments received would be subject to income tax. The reason for this reduced personal income tax is because part of the annuity payments that you are receiving is a return of your own funds that were used to purchase the annuity.

Benefits to you

  • Increased annual income
  • Same annuity income each year
  • Income for life with option of a guaranteed period
  • Lower income tax on annuity income
  • Possible replacement of capital with life insurance
  • Donation receipt for initial donation
  • Donation receipt for insurance premiums where the Church is owner and beneficiary of the policy

Benefits to the Church

  • It can receive part of the initial capital for assistance with the annuity option
  • It can be the beneficiary of any remaining guarantee period should the annuitant(s) (you alone, or you and your spouse) die before the end of the guarantee period
  • The Church could be the sole or joint beneficiary for life insurance that has been purchased

Prior to making a donation or gift, we recommend that donors seek independent professional advice concerning the possible financial, taxation and legal consequences.

Last Updated

Aug 10, 2017

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