With a Charitable Gift Annuity (CGA), a donor irrevocably transfers money or appreciated securities to Lutheran Foundation of the Southwest (LFSW), in return for a quarterly or annual income from the reinvested assets for the donor and/or other beneficiaries. At the beneficiary's death, payments cease and the remaining annuity assets (the "Charitable Remainder" gift) go to the ministries of our sponsors as you have designated. The older the donor or beneficiary at the date the annuity is established, the higher the annual payout percentage.

A donor may have multiple Charitable Gift Annuities.

NOTE: A portion of the amount used to fund a Charitable Gift Annuity is tax deductible, as is a percentage of the payouts (depends on donor's age, tax bracket and other factors). In contrast, a standard annuity issued by a financial or insurance institution is generally tax deferred and merely delays when the full taxes must be paid by you or your heirs.

What are some of its key benefits?

• Helps fund dynamic Lutheran ministries in Texas.
• Can provide income for another as well as for yourself - a spouse, parent, child, etc. Income can be paid to you for life and then to another family member, or for a specified period of years.
• Is backed by the assets of the Lutheran Foundation of the Southwest and so payments continue for the full term of the annuity, as defined in the annuity agreement.
• Generates income from under-producing appreciated assets. Payout rate may well exceed dividends, rental fees or other potential revenues from the assets. LFSW will sell the asset and invest the proceeds for greater income.
• Offers higher yields for older donors or for delayed payment start dates. Payout percentage rates are set by American Council on Gift Annuities actuarial guidelines. Delaying payments can increase percentages.
• Reduces Capital Gains Taxes, which can be as high as 25% if the assets are sold outright by the donor.
• Reduces or eliminates Estate Taxes by removing the value of the donated asset or money from your taxable estate.
• Can be used to delay distributions to beneficiaries until they reach a certain age or meet other criteria.
• Provides income that is taxed at lower overall rates than ordinary income-tax rates.
• Reduces income taxes. A portion of the appreciated asset donation to fund the annuity is tax deductible, and part of the annual payouts themselves may be partially tax free for a period of years.

How does a Charitable Gift Annuity work?

A Charitable Gift Annuity pays the donor a set income per year, based upon the fair market value of the donated assets at the time the Annuity is established and the ages of the income beneficiaries. Its payout is fixed throughout the term of the agreement, no matter how investment values fluctuate. Payments can be made quarterly or annually. This annuity is a contractual agreement between the donor(s) and the Foundation; payments are backed by the assets of LFSW.

Lutheran Foundation of the Southwest offers two versions of Charitable Gift Annuities:

Standard

Payments to the donor/beneficiaries begin in the first quarter after the annuity is set up.

Deferred

Initial payments are delayed until some specified future date. Percentage rates are higher on Deferred Gift Annuities than on standard agreements.

Who should consider a Charitable Gift Annuity?

Like other Life Income Agreements from Lutheran Foundation of the Southwest, a Charitable Gift Annuity helps its donor obtain future income from under-producing assets, while also gaining a current charitable tax deduction. The Gift Annuity, however, is most beneficial for older donors because it generally offers potentially higher annual payout rates than Charitable Remainder Annuity Trusts or Unitrusts.

Additionally, a Deferred Gift Annuity can be a valuable estate planning tool for any donor who seeks an immediate income tax deduction, but can afford to delay income until retirement or some other date in the future.

Sample illustration:

Estelle Gerhard is 75 years old. She desires to support several of the Lutheran ministries who sponsor LFSW, but she cannot make cash donations because she may need income from her assets for future living expenses. After learning about Charitable Gift Annuities, however, she decides to transfer $15,000 for a gift annuity.

• At her age, she will receive an income of $1,230 each year for as long as she lives.
• She can claim $7,077.82 as a charitable gift for the year in which the gift is completed, or can carry over any excess deduction for up to five additional years, based upon her taxable status.
• $660.51 of her annual annuity income is tax free until the year 2012, when it becomes fully taxable (in this example).

Example only. Actual data, income and tax deductions vary case by case. Your LFSW consultant can answer any further questions you might have and develop specific illustrations for your personal estate planning needs and goals.

For a no-cost, no-obligation consultation in the privacy of your home, please complete the free offers page on this website or call 1-800-424-0447.