Especially designed for younger donors, deferred gift annuities make fixed annual payments to you and/or a beneficiary for life, with payments commencing at a future date.
How It Works
This gift offers the same benefits of simplicity, security and attractive income taxation of a regular gift annuity, but a higher income rate can be offered because the payments are deferred. Additionally, it may qualify you for a larger charitable income tax deduction.
Here's the process:
- You transfer cash, securities or other property to TNC.
- Beginning on a specified date in the future, TNC begins to pay you, or up to two beneficiaries, fixed annuity payments for life.
- The principal passes to TNC after the lifetime(s) of the beneficiaries.
- Defer payments to permit a higher annuity rate and generate a larger charitable deduction. The longer payments are deferred, the higher the effective rate.
- Target annuity payments to begin when you need them, such as at retirement or when a grandchild needs help with college tuition.
- Obtain satisfaction in making a significant gift now that benefits both you and TNC later.
Can It Work for You?
You may want to consider a deferred gift annuity if:
- You are in high earnings years, looking for income tax savings now and an additional source of revenue for retirement.
- You want to make a significant gift to TNC and receive payments in return.
- You want to maximize payments received from your planned gift while lowering income tax on those payments.
- You want the security of payments that won't fluctuate during your lifetime.
- You appreciate the safety of your payments being a general financial obligation of the institution.
- A deferred gift annuity at TNC can be made with a gift of $10,000 or more.
- The minimum age to start a deferred gift annuity is 35 and payments must be deferred until at least age 50.
- A deferred annuity is a contract between TNC and you. Annuity payments are an obligation backed by TNC's assets.
- You secure a charitable income tax deduction based on the market value of the assets you contributed, minus the present value of the life-income interest retained.
- No up-front capital gains tax is payable if the deferred gift annuity is funded with appreciated securities. Only a portion of the gain is recognized, with tax spread over annuity payments.
- Part of each annuity payment comes tax-free as the return of principal. The balance remaining in the deferred annuity after the death of the beneficiaries will be used by TNC for the purpose you designated when you created the gift.
Another option available to you is a flexible deferred gift annuity, which allows the beneficiary to start receiving payments on any one of a range of dates. The Conservancy offers a range of payouts with differing fixed payment amounts and differing starting dates—the longer the deferral period, the greater the fixed income. The donor receives an immediate income tax deduction for a portion of the gift based on the lowest deduction amount out of all of the years in the range, and decides on an annual basis whether s/he would like to start receiving payments.
Meet Darlene and Sam Chirman
Darlene and Sam Chirman's charitable gift annuity provides income while supporting conservation. Read their story.