Gifts That Pay You Income


Jeannie Hartman Quote

Gifts That Pay You Income

A charitable gift annuity is a contract between you and Ocean Conservancy:

  • You make an irrevocable contribution to Ocean Conservancy (our minimum donation is $10,000 and you must be at least 65 years old).
  • You receive fixed annual payments for the rest of your life, at an appealing rate.
  • Your gift will benefit you first and later will support Ocean Conservancy’s future work to protect a healthy and diverse ocean.

Annuities offer tremendous flexibility:

An Annuity with Immediate Payments

Once you make your donation, Ocean Conservancy will make annual fixed income payments to you starting immediately.

If Megan, age 82, establishes a $20,000 charitable gift annuity with Ocean Conservancy, her payment rate will be 7.2%*. She will receive an annual income of $1,440 — for the rest of her life! In addition, Megan may be eligible for a substantial income tax charitable deduction.

*Based on payment rates as of January 2014.

An Annuity That Reduces Your Capital Gains Taxes

If you have stocks or mutual funds that you have held a year or longer you can use them to fund your gift annuity. By doing so, you will avoid a significant portion of the capital gains tax. The remaining gain will be equally allocated over several years of your annuity payments and will not be taxed all at once.

Betty, age 75, establishes a gift annuity using stock that cost her $4,000, and is now valued at $10,000. She will receive annual payments of $600 for life and get an immediate charitable gift deduction of $4,684. The capital gain of $6,000 is reduced to $3,189.

An Annuity with Two Beneficiaries

An annuity can be set up to benefit two people, and provide financial support for a loved one.

Sam, age 79, wants to make sure that if something happens to him, his wife, Louise, age 74 will be financially safe. They are also passionate about the ocean, and want to create a $100,000 gift annuity to benefit Ocean Conservancy. The payment rate for two beneficiaries, age 74 and 79, is 5.2%, resulting in an annual payment of $5,200. If either of them passes away, the survivor will continue to receive the full $5,200 annuity payment each year for life.

An Annuity with Deferred Payments

The payment rate of an annuity increases with age. If you don’t need income immediately, you can defer your first payment for a number of years, plan the payments to begin when you will need them and receive your payments at a higher rate.

Charitable Remainder Trusts can be customized to meet your specific financial, tax, and estate planning needs.

Charitable Remainder Unitrust

This variable income trust pays out a percentage of assets, valued annually. For your donation, you receive an immediate income tax deduction for a portion of your contribution to the unitrust and savings on capital gains taxes if you use appreciated property.

Virginia and Howard have been members of Ocean Conservancy for years. They care deeply about the ocean and its future, and have decided to transfer an asset, which they originally purchased years ago for $200,000 and is now worth $400,000, into a 5 percent unitrust. They are both 67.

  • They avoid $60,000* in capital gains taxes.
  • The first year, they receive $20,000 income from the trust. (Future income will rise or fall with the trust asset value.)
  • They receive a charitable income tax deduction for the remainder value.
  • They support Ocean Conservancy and ensure a healthy ocean for generations to come!

* assumes combined state and federal capital gains rates of 20 percent

Charitable Remainder Annuity Trust

This fixed income trust generates income that is determined at the outset and never varies.

Jack is retired and would like to diversify his assets and receive predictable income. He is 75 years old. A retired marine biologist and longtime scuba diver, he wants to support Ocean Conservancy’s efforts to protect and sustain vibrant marine life. He transfers $375,000 in low-yielding mutual funds, which have a cost basis of $180,000, into a 5.25 percent Annuity Trust. The trust will make income payments of $19,700, based on the initial trust value, to Jack for the rest of his life. The results:

  • Jack’s annual income from these assets increases from almost nothing to $19,700.
  • He avoids paying $39,000* capital gains tax.
  • He receives a charitable income tax deduction for the trust remainder.
  • His gift supports Ocean Conservancy and helps protect and sustain marine life!

* assumes combined state and federal capital gains rates of 20 percent

Deferred Charitable Remainder Trust

If you do not need additional income now, but want to have more in your later years—and want the income tax deduction now and tax-free growth while you wait—you may wish to create a trust variation that increases income until a future date.