Lambda Legal

Charitable Gift Annuities — Income for Your and Support for Lambda Legal

Charitable gift annuities are one of Lambda Legal’s most popular planned giving vehicles. A charitable gift annuity (CGA) is a contract under which Lambda Legal agrees to make fixed payments for life to you and/or a designated beneficiary in exchange for an irrevocable gift of $10,000 or more. Charitable gift annuities are an attractive giving option for many of our supporters who are 55 and older because they enable contributors to maintain investments needed for living expenses after retirement and fulfill their desire to help create a world without fear or prejudice.

CGAs are an increasingly popular “life income” planned giving option and can often provide returns greater than those of money market accounts, CDs or stock dividends. CGAs offer a number of advantages including:

• A reliable, partially tax-free stream of income beginning as early as age 60 to supplement retirement.
  
  
• An immediate charitable income tax deduction based on Lambda Legal’s remainder interest in the annuity (based on the age of the beneficiary[ies]).
  
  
• Deferment of capital gains taxes when the CGA is funded with appreciated securities.
  

For many Lambda Legal supporters, CGAs also offer the added satisfaction of making the most significant contribution of their lives toward Lambda Legal’s fight for the full civil rights of LGBT people and those with HIV.

Lambda Legal offers several types of CGAs:

One-life CGA:

Through this annuity, only you or your designated beneficiary (age 60 or older) will receive the income from your contribution. The rate of return on this type of CGA is higher than if two people are designated to receive income.

Two-life CGA:

Through this annuity, you can provide income not only for yourself but also for another beneficiary, such as your same-sex partner or spouse. The age of both recipients (minimum age: 60) will be used to determine your rate of return and the portion of your gift that is tax deductible.

Deferred CGA:

An ideal choice for younger donors or those who have not yet retired, a deferred CGA allows you to defer receipt of your payments on your one-life or two-life CGA after your initial contribution. To make a deferred CGA, you and/or your beneficiaries must be at least 55 years old and payments must be deferred until at least age 60.

To establish a CGA that best meets your philanthropic and financial planning goals, it is important that you consult with your attorney or financial advisor. Lambda Legal’s Office of Planned Giving can also work with you and your advisors to plan your gift to achieve maximum tax benefits and personal satisfaction. For a free, non binding consultation about CGAs and other planned giving options at Lambda Legal, please contact Judi O'Kelley at 706-549-5342 or jokelley@lambdalegal.org. All inquiries are held in strict confidence.

How a Charitable Gift Annuity Can Work for You — and for Equality

Instead of giving the government a large portion of your assets upon your death, a CGA with Lambda Legal guarantees you a reliable stream of income starting at age 60 and ensures that 100 percent of your assets in CGAs will go toward the fight for equality upon your death. Supporters can now get a jump-start on their retirement planning at age 55 with a deferred CGA.

Here are some examples of how deferred and immediate CGAs can work for you:

One-Life Immediate CGA

Joseph is 77 years old and is retired. He relies on income from his pension and Social Security, as well as the interest income from savings he accumulated during his working years. Joseph would like to increase the return he receives from his money market account but does not want to undertake a high-risk investment with his savings. He establishes a CGA with a minimum contribution of $10,000 to Lambda Legal, which guarantees him a rate of 7.4 percent, which he receives in quarterly payments for an annual total of $740. Joseph receives an immediate tax deduction of $4,574 when he establishes his CGA and $489 of his annual income is tax-free for 11 years. In addition to the benefits of increased revenue and decreased taxes, Joseph enjoys the satisfaction of making a major contribution toward Lambda Legal’s work.

Deferred CGA

Marisol is 55 years old and starting to plan her retirement. Marisol establishes a deferred CGA with a contribution of $20,000 from her savings and receives an immediate tax deduction of $6,873 for her gift. Five years later, Marisol will collect guaranteed semi-annual payments of $710 from her annuity for a total of $1,420 per year, of which $547 is tax-free for 24 years after the start of payments. Marisol likes knowing that her payments will be guaranteed and that she will play the major role she always envisioned in advancing Lambda Legal’s mission.

Two-Life Immediate CGA

Clare, age 62, and Sonya, age 65, raised a family together, with Clare as a stay-at-home Mom. Sonya wants to make sure that they both will receive enough income in retirement to live a comfortable life. As their Massachusetts marriage is not federally recognized, they cannot pass their assets to each other without the possibility of high estate taxes. Sonya establishes a two-life CGA with Lambda Legal with $15,187 in appreciated stock that she originally purchased for $5,000. Sonya receives an immediate income tax deduction of $3,710. Instead of paying all of the capital gains tax in the year that she creates the annuity, the capital gains tax obligation is spread out over her and Clare’s life expectancy. Had she sold the stock, she would have paid $2,277 in capital gains tax. But by funding a CGA with the stock, they now receive an annual payment of $850 of which $91 is tax-free for 26 years, $416 is taxed as ordinary income and $343 is taxed as capital gains, thereby spreading out their tax obligation over 22 years. When either one passes away, the other will continue to receive the same guaranteed payments for life. Knowing that they are maximizing the return on their assets while also helping secure full LGBT civil rights is an added benefit they both enjoy.

Making a Gift of a CGA

Marcus is 48 years old and wants to give his 82-year old parents a special 50th wedding anniversary gift that will be both practical and enjoyable to them while also reflecting his commitment to equality. Marcus opts to establish a two-life immediate CGA to benefit his parents with a $10,000 gift to Lambda Legal. He receives an immediate tax deduction of $4,302 and his parents receive guaranteed annual payments of $730 (7.3 percent) of which $500 is tax-free. In addition to being proud of their son for his philanthropy, Marcus’ parents enjoy spending the extra cash on little luxuries like dinner at a nice restaurant or theater tickets.

Charitable Gift Annuities at a Glance

Is a charitable gift annuity right for you? Here are frequently asked questions about how CGAs work — and how they can work for you and equality.

At what age can I establish a CGA with Lambda Legal?

You can establish a deferred CGA at age 55 and an immediate CGA at age 60.

At what age will I begin to receive payments from my CGA?

For immediate payment CGAs, payments begin in the year you establish the CGA. For deferred CGAs you can determine the age your payments will begin (age 60 or older).

Who can receive payments from a CGA I establish?

You can name anyone — yourself, your partner, your spouse, a family member or loved one — as the beneficiary of your CGA so long as they meet the minimum age requirements.

What will my payments be?

Annual payment rates range from 5.5 percent to 10.5 percent, depending on the age of the beneficiary.

What tax benefits will I receive from my CGA?

When you establish a CGA with Lambda Legal, you receive an immediate tax deduction equivalent to Lambda Legal’s remainder interest in the annuity. A portion of the income you receive from your annual annuity payments may also be tax-free.

What is the minimum gift amount to establish a CGA?

You can establish a CGA with a minimum irrevocable gift of $10,000.

How often will I receive payments?

You can choose to receive quarterly, semi annual or annual payments.

Are my payments guaranteed?

Yes. In exchange for an irrevocable gift of $10,000 or more, you will receive guaranteed, fixed annual payments from Lambda Legal.

How long will I receive payments from my CGA?

You, or the beneficiary you choose, will receive payments from Lambda Legal for life.

How will my CGA help Lambda Legal?

Your CGA not only helps you by providing returns that are often greater than other investment options, but upon your death the principal from your CGA will pass to Lambda Legal, making a significant contribution to our work and leaving your own legacy for equality.

TAKE ACTION NOW TO PROTECT YOURSELF AND YOUR LOVED ONES

No one likes to think about unexpected events like becoming disabled, losing your partner or even dying young. But whether you’re partnered or not, young or old — and whatever your economic status — you absolutely must have a plan for the unexpected.

Who will make medical decisions for you if you are unable to make them yourself? Who will make financial decisions for you if you become incapacitated? Who will take care of you and the ones you love if something happens to you? Who will inherit your belongings when you die? The truth is, there is often no safety net for LGBT people when it comes to big life issues such as these, and in almost all states same-sex couples have to take extra legal precautions to protect themselves. For example:

• If you are unable to make medical decisions for yourself, your partner may have no say in your care unless he or she has medical power of attorney. For different-sex married couples, the spouse automatically assumes responsibility for medical decisions.
  
  
• If you want to pay for college for the child adopted in your partner’s name, your tuition payment could be considered a taxable gift. Different-sex couples, who can automatically adopt together, don’t have to worry about gift-tax implications on top of college tuition bills.
  
  
• And if you die without a will, your surviving same-sex partner may receive nothing. If the same were to happen to a different-sex married couple, the surviving spouse would automatically inherit the estate — with no inheritance taxes.
  

The bottom line is you have to protect yourself and your loved ones since the government probably won’t recognize the important people in your life. Because Lambda Legal has been at the forefront of the battle for LGBT rights, we have experience and knowledge to share with you. We want you and LGBT people everywhere to be prepared with this critical information about how you can fight back and protect yourself, your loved ones and your assets.

The attached pdf file, Eight Life-planning Questions you must ask yourself NOW, lists questions that all LGBT people must ask themselves and offers some possible life-planning solutions. This is not legal advice. Consult your accountant, tax attorney or financial advisor for counsel on these and any other financial-planning considerations.