What is a PACTT Charitable Gift Annuity?
A charitable gift annuity is a contract in which PACTT, 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 the remainder of 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 PACTT's assets, and the payments are a general obligation of PACTT. The annuity is backed by the entirety of PACTT 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. There are three types of charitable gift annuities: Immediate, Deferred, and Flexible.
Immediate Gift Annuity
With an Immediate Gift Annuity, the annuitant(s) start(s) receiving payments at the end (or the beginning) of the payment period immediately following the contribution. Payments can be made monthly, quarterly, semi-annually or annually.
Deferred Gift Annuity
With a Deferred Payment Gift Annuity, the annuitant(s) start(s) receiving payments at a future time, a date chosen by the donor, which must be more than one year after the date of the contribution. As with immediate gift annuities, payments can be made monthly, quarterly, semi-annually or annually.
Flexible Gift Annuity
A Flexible Gift Annuity means that the donor does NOT have to choose the payment starting date at the time of the contribution. The annuitant (who may or may not be the donor) may choose the payment starting date based on his/her retirement date or other considerations. The older the annuitant(s) when the payments start, the larger the payments will be.
This concept provides some of the flexibility offered by commercial annuities sold by commercial insurance companies. The donor would choose an initial target date for the payments to start. The charity would then offer a range of payouts with differing fixed payment amounts and differing starting dates based on earlier or later years.
Since the charitable deduction remains fixed, the annuity rate for each starting date would have to change. The payments would be lower if the starting date was earlier and higher if the starting date was later. Each annuitant would have to determine on an annual basis whether or not they wish the annuity payments to start that year.
PACTT offers three versions of each type of charitable gift annuities:
- A "single life" agreement (annuity paid to only one person for their lifetime),
- A "two lives in succession" agreement (annuity paid to person "A" and then if person "B" survives person "A", pay person "B"), and
- A "joint and survivor" agreement (pay annuity paid to two persons simultaneously with both names on the annuity payment check, and at the demise of the first annuitant, the survivor is paid the full annuity amount) This is used for married couples who file joint tax returns and/or who live in community property states.
For more information about how a PACTT charitable gift annuity can be a strategic vehicle for supporting PACTT while at the same time benefiting you and your family, please contact:
Terry Herbstritt
PACTT Development Office
708-386-3904
therbstritt@pactt.org
