South Florida Charitable Gift Annuity Attorney
A charitable gift annuity is a contract (not a “trust”), under which a charity, in return for a transfer of cash, marketable securities or other assets, agrees to pay a fixed amount of money to one or two individuals, for their lifetime.
A person who receives payments is called an “annuitant” or “beneficiary.” The payments are fixed and unchanged for the term of the contract. A portion of the payments are considered to be a partial tax-free return of the donor’s gift, which are spread in equal payments over the life expectancy of the annuitant(s).
The contributed property (the gift), given irrevocably, becomes a part of the charity’s assets, and the payments are a general obligation of the charity. The annuity is backed by the charity’s entire assets, not just by the property contributed. Annuity payments continue for the life/lives of the annuitant(s) no matter what the investment experience of the gift annuity fund. Therefore, the financial condition of the charity is very important to the donor and should be thoroughly investigated. Also, the commissions paid to “finders” of investors to purchase charitable gift annuities may be substantial, which is another factor to consider in the performance of appropriate due diligence.
Finally, many states regulate charitable gift annuities. These states require the charity to supply the state with the charity’s published gift annuity rate chart of the maximum annuity rates the charity offers, listed by “actuarial age” (age to nearest birthday on the gift date). Before considering investing in a charitable gift annuity, ask to see this schedule.
Please keep in mind that the above information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as providing legal or investment advice. If the reader has any questions concerning the contents of this post, you should contact a qualified professional.
While charitable gift annuities can serve a useful investment purpose, they are also subject to any number of potential abuses, especially if the investor is getting along in years. Consequently, it is highly recommended that substantial due diligence be performed by a qualified professional before make such an investment.
If you believe that you lost money as a result of your investment in a charitable gift annuity based upon the fraud, misrepresentation or breach of duty of your financial advisor, stock broker, insurance agent or accountant, please feel free to contact us for your initial free consultation.