Charitable Gift Annuity

by Jeff Rose on December 28, 2012

If you’ve just come into a large sum of money then you’re options for what to do with it are many. Some would spend it on items they want, some would spend it to pay off bills, their mortgage, and other debts and still others would donate a hefty portion to a charity. Little do those few know that donating money or property to a charity can benefit them as well. A charitable gift annuity can be just the thing to provide security for you and your family while helping those in need. Imagine doing something good and being rewarded for it, and then being able to enjoy that reward when it matters most.

A charitable gift annuity works much like basic annuities, but is slightly more complicated. It all begins with a donation to whichever charity you want, most have likely worked with charitable gift annuities before and understand the process. In return for the donation, the charity makes payments on an annuity in your place, though you, and possibly a spouse, will still be the beneficiaries. Not only does the charity benefit, but so do you and your family.

Another benefit of a charitable gift annuity is the tax-deferred interest the annuity earns. All annuities earn a tax-deferred interest, but charitable gift annuities have a slightly higher yield. A slightly higher interest may not seem important at first, but that little adds up over time, and when you begin to receive payments from the annuity you might wind up happily surprised to see how much larger it is compared to what it could have been.

Sometimes, the matured annuity is larger than anticipated, and the beneficiary passes on before the entire amount is withdrawn. Another great feature of a charitable gift annuity is that any remaining money left after a beneficiary has passed on, or their spouse if a second beneficiary was stipulated in the agreement, can be given back to the charity. In the end, you could wind up helping a charity not just once, but twice.

Taking a sum of money to secure an annuity is a wise, responsible choice. Taking that same money and using it for a charitable gift annuity is more than just responsible, it’s a worthwhile decision that can help thousands, maybe millions, of people as well as provide a secure, safe nest egg for you and your family.

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