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Life Income Agreements
The ELCA Foundation administers a
variety
of life income agreements for the benefit of those people willing to make an irrevocable
gift to ultimately benefit ELCA ministries, while retaining a life-income interest in
their gift. These agreements are in compliance with the U.S. Philanthropy Protection Act
of 1995 and the growing number of state regulations governing the administration and
issuance of charitable gift annuities.
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Charitable
Gift
Annuity
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This page highlights
some of the advantages of the life income agreements administered by the ELCA Foundation. They are charitable gift annuities,
deferred payment charitable gift annuities,
pooled
income funds, charitable remainder unitrusts and charitable
remainder annuity trusts.
There are other options as well and prospective donors are
encouraged to meet personally with an Regional Gift Planner and
to consult with their own legal and financial advisors.
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Charitable
Gift Annuity |
Deferred Payment
Charitable
Gift Annuity |
Pooled Income
Fund |
Charitable
Remainder
Unitrust |
Charitable
Remainder
Annuity Trust |
| Minimum Gift |
$1,000
($2,500 in California) |
$1,000
$2,500 in California) |
$2,500 |
$100,000 |
$100,000 |
| Minimum Age |
35 |
35 |
35 |
35 |
35 |
Number of
Individual
income beneficiaries |
1 or 2 |
1 or 2 |
1 or 2 |
1 or 2
(see advantages below) |
1 or 2 |
It works best for
income beneficiaries |
65 or older |
ages 35 to 65 |
ages 35 to 65 |
45 or older |
65 or older |
| Best kinds of gifts |
cash and appreciated
securities |
cash and appreciated
securities |
cash and appreciated
securities |
appreciated securities and
real estate |
appreciated securities |
| Annuity/Income
rate |
Based on age of
annuitants. Fixed payments. |
Based on length of
deferral and age annuity begins to pay out. Fixed payments. |
Determined by income
of the pooled investments. |
Minimum 5%,
determined by agreement between the donor and the ELCA Foundation. |
Minimum 5%,
determined by agreement between the donor and the ELCA Foundation. |
Income tax
deduction |
Based on size of
gift, annuity rate, Monthly AFR rate from the IRS. |
Based on size of
gift, annuity rate, Monthly AFR rate from the IRS. |
Based on size of
gift, life expectancy, past experience of the pool, Monthly AFR rate from the IRS. |
Based on size of
gift, life expectancy of trust, unitrust payout rate, Monthly AFR rate from the IRS. |
Based on size of
gift, life expectancy of trust, trust payout rate, Monthly AFR rate from the IRS. |
| Advantages |
With gifts of appreciated
securities a partial bypass of capital gains with the rest prorated over the life
expectancy of the annuitants. High rates of return based on age. Some portion of annuity
payment may be tax-free for life expectancy of annuitants. |
Immediate income tax
deduction for the donor. Payout could begin when in lower income tax bracket. Some portion
of annuity payment may be tax-free for life expectancy of annuitants. |
No capital gains taxes on
gifts of appreciated securities. Amount of payout can increase over period of time. |
No capital gains taxes on
gifts of appreciated assets. Ability to include additional income beneficiaries (family)
with term of years in addition to lifetime income for donors. Unitrust rates, payout and
investments can be individually structured to meet the goals of the donor and the income
beneficiaries. Additional gifts may be made to the trust at anytime. Restriction: IRS
regulations require that the income tax deduction must equal at least 10% of the gift
value. |
No capital gains of
appreciated assets. Restriction: IRS regulations require that the income tax deduction
must equal at least 10% of the gift value. |
ELCA
Charitable Gift Annuities are backed by the full faith and credit of the
Evangelical Lutheran Church in America.
Other
Life Income Agreements
Testamentary
Charitable Remainder Unitrust
A
growing number of donors are finding a testamentary charitable remainder
unitrust an attractive way to designate funds from their qualified
retirement plans (QRP) to avoid the consequences of hefty income taxes
associated with passing on these tax-deferred savings vehicles to their
heirs. The legal documents required for this charitable trust can be
prepared by the ELCA Foundation at no expense to the donor. Donors are
encouraged to have their personal attorney or accountant review the
document. The minimum amount designated for the unitrust must be
$100,000 and the donor must be at least 55 years of age. |
Charitable
Life Estate
Donors
may irrevocably deed their ownership in their mortgage-free residence to
the ELCA. The donor will receive a charitable income tax deduction for
the fair market future value of the home that they may use if they
itemize their deductions. The donor is responsible for the upkeep and
well-being of the residence. When the donor dies or no longer wishes to
live in the residence the ELCA Foundation will sell the property with
the proceeds going to the charitable beneficiaries that the donor
selected. There is no income generated by this gift. The gift works best
for donors who are 75 years and older.
Charitable
Beneficiaries
Any ELCA
ministry may be chosen to receive the charitable remainder of your gift.
You may choose churchwide, a specific congregation, synod, social
ministry organization, college,
seminary, disaster
relief, Women of the ELCA, World
Hunger Appeal, Fund for Leaders
in Mission, etc. Gifts of certain amounts may establish an endowment
to benefit certain ministries in perpetuity. Donors
may wish to benefit more than one charitable beneficiary with their life
income agreement, with the understanding that a maximum of ten
charitable beneficiaries may be named. Non-ELCA charitable
organizations can be named for up to 30% of the gift value.
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