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Giving Today and Receiving Income for a LIFETIME

"It is truly a blessing when a gift is received, and it is even more amazing that the donor could receive an income for a lifetime after having given that gift to a charitable organization," says Diane Ruder, vice president of development for Otterbein Senior Lifestyle Choices. She explains that a donor can give a gift in a way that provides income while supporting the mission of the organization through a gift annuity. When someone is thinking about making a donation, then considering a gift annuity makes sense.

"The income generated from the gift could be assigned to a spouse or even a grandchild," Diane says, referring to the assignment of benefits from the gift. When someone establishes a gift annuity, they give a specified amount of money and the organization in return provides a designated payment to the person or persons identified by the donor. For many donors, this payment provides additional income in retirement or assists a grandchild with college costs. It could even be given back to the community as a second gift.

As Joe Frederick, chair of the Otterbein Portage Valley development committee, states, "Taking a look to evaluate if the gift annuity fits with the donor's goals and portfolio is important." Identifying that making a gift is important is the first priority. Then going over the ways a payment could be helpful is the next step.

"It is important to work with your advisors as well as the organization in planning this type of gift," says Patricia Gory, regional director of development at Otterbein Portage Valley.

With a gift annuity, the amount of income generated depends on the age of the person making the gift and the amount of the gift. Generally, the older someone is, the higher the interest applied to the gift, thus making the gift payment higher. With a gift annuity, there may be some federal and estate tax savings, as well as some costs avoided in probate. Once the donor transfers the assets to the charitable interest, the donor receives the payments for life and/or the lifetime of another person.

The gift annuity is just one way of giving and can be designated for benevolent care-a fund for residents who need confidential, financial assistance through no fault of their own. At Otterbein, all residents enjoy the comfort of knowing that one never has to leave the campus even if he or she is having a financial crisis. "There is great satisfaction in giving," Patricia says. "A gift annuity can help change the lives of residents."

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Information contained herein was accurate at the time of posting. The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results. California residents: Annuities are subject to regulation by the State of California. Payments under such agreements, however, are not protected or otherwise guaranteed by any government agency or the California Life and Health Insurance Guarantee Association. Oklahoma residents: A charitable gift annuity is not regulated by the Oklahoma Insurance Department and is not protected by a guaranty association affiliated with the Oklahoma Insurance Department. South Dakota residents: Charitable gift annuities are not regulated by and are not under the jurisdiction of the South Dakota Division of Insurance.

A charitable bequest is one or two sentences in your will or living trust that leave to Otterbein Senior Lifestyle Choices a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

"I give to Otterbein Senior Lifestyle Choices, a nonprofit corporation currently located at Lebanon, OH, or its successor thereto, ______________ [written amount or percentage of the estate or description of property] for its unrestricted use and purpose."

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to Otterbein or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to Otterbein as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to Otterbein as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and Otterbein where you agree to make a gift to Otterbein and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.
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