The Gift That Gives Back
Through carefully planning a Franciscan Gift Annuity, you can provide yourself and a loved one an attractive income for the rest of your lives.
You are assured with the knowledge that you and your loved one will benefit and your legacy of supporting the friars and ministries continues.
How It Works
A legacy gift to the friars and payments for life to you.
Benefits of a Franciscan Gift Annuity
- Fixed income for life
- An immediate income tax deduction for a portion of the value of the assets used to fund the gift
- A portion of each payment to the annuitant(s) is tax free until the annuitant(s) reach life expectancy, at which time payments are taxed as ordinary income
- No capital gain taxes at the time the gift is made
- Reduction or elimination of estate taxes
- Upon the death of the annuitant(s), the remaining gift transfers to the friars for ministry
Franciscan Gift Annuity Requirements
- Donor is 60 years or older
- Minimum $5000 donation
- Assets to fund a Franciscan Gift Annuity: cash, appreciated securities and common stock
A real world example...
Frances and Jim Block, 74 and 76 years old, have watched interest rates fluctuate for years.
They have not been satisfied with their money market fund currently earning 3.0%. They have looked at ways they could get back to the 5-6% rate of return they were used to. However, they do not want to increase their market risk by investing in securities that would fluctuate in value.
Frances and Jim have enjoyed volunteering their time and getting to really know the ministry of the friars and having a deeper understanding of how they minister to God’s people. They wanted to invest in the friars and asked for information about a Franciscan Gift Annuity from the Mission Advancement Offices.
A Franciscan Charitable Gift Annuity is a contract between Frances and Jim and the Conventual Franciscan Friars of the Province of Our Lady of Consolation. The Friars promise to pay Frances and Jim a fixed rate of return for both of their lives. In this case, Frances and Jim were thinking of a $100,000 annuity. Based on the market conditions and other factors, such as their age, the rate* suggested by the American Council on Gift Annuities (ACGA) is 5.0%. This means that the Friars promise and guarantees to pay them $5,000 a year, regardless of changes in interest rates, for the rest of their lives. Because they are not using appreciated assets to fund the gift annuity, part of their payment will be considered tax-free return of principal for Frances and Jim.
|Franciscan Charitable Gift Annuity|
Annual Income at 5%:
Current year Income Tax Deduction:
Based on current calculations*, $3,985 of the $5,000 annual income will be free from income tax for 16 years. Also, part of their $100,000 is a charitable gift and therefore Frances and Jim get a charitable tax deduction in the current year of $36,227. That deduction could save Frances and Jim $13,404 this year (based on their 40.8% federal tax bracket). These numbers do not consider any state taxes that may be applicable. The tax deduction and tax-free income mean that Frances and Jim's effective annuity rate (what they would have to earn to equal it with fully taxable income) is 8.9%**.
Frances and Jim are happy with the increased income and the tax savings, and they are really excited about what their gift will mean to the care of the Senior Friars.
Example assumes a 3.4 percent applicable federal rate (AFR) and a federal income tax bracket of 40.8%. State tax liability is not considered. The IRS allows the AFR from the current or one of the two previous months to be used. For a gift annuity, the lower the AFR, the higher the tax free portion of the annuity payments. A higher AFR increases the charitable tax deduction.
* Based on the current ACGA suggested rates effective 05/19/2020.
** Adjusted upward because the tax-free portion of $3,985 makes the $5,000 annuity equivalent to $7,746 of taxable income for a beneficiary in the 40.8% income tax bracket and the $36,227 charitable tax deduction reduces the cost of the gift by $13,404.
We all worry about what will happen to our family and friends when we pass on to eternal life. We want to ensure our loved ones are cared for here on earth after we are gone. However, many people find thinking about estate plans to be an unpleasant or daunting endeavor. We hope the information we have available will ease the process and be a source of comfort to both you and your loved ones by allowing you to make certain your legacy will continue.
Please Note: The friars are unable to issue gift annuities to residents of certain states because of state registration requirements.
As soon as a gift is received and matched to a donor, the Mission Advancement Office sends an acknowledgment letter stating the nature of the gift, the gift valuation date, and the gift valuation amount and a clarification statement indicating no goods or services were exchanged for the gift.
The Province of Our Lady of Consolation, is a tax exempt 501(c) organization (EIN # 35-6019627) and Its members and employees do not provide tax, legal, or financial advice. Any document or information shared by our staff is intended to be educational. We strongly encourage donors to seek counsel with tax expertise from their own legal and financial advisors.