Planning for the Future


Gift Annuity Rates to Increase

Starting next month, gift annuity rates recommended by the American Council on Gift Annuities will be going up.  This is the first change in six years, and the first increase in over 20 years.  The chart below shows current one-life rates and the increased rates that start July 1, for various ages.  Rates for two-life gift annuities will also be higher.


Current rates

New rates














































90 or older



Charitable gift annuities are contracts in which charity agrees to make fixed payments for life, for one or two individuals, in exchange for a donor’s gift of cash or appreciated assets.  A portion of the annual amount received may be tax-free or favorably taxed capital gains income to the annuitant.  In addition, donors are entitled to income tax charitable deductions for a portion of the gift amount.  For example, on July 1, George, age 75, transfers $50,000 in cash to fund a charitable gift annuity.  He receives:

  • Payments totaling $3,100 (6.2%) each year, of which $2,244 will be tax-free during his life expectancy;

  • A charitable deduction of $22,159;

  • The satisfaction of providing for a favorite charity.

Gift annuities can be arranged to begin payment in the year of the gift or payments can be postponed until some later date. Deferred payment gift annuities offer higher payout rates and charitable deductions.

Profitable Lessons from a Tax Return

Before filing away your 2017 tax return, ask yourself if you can learn a few lessons — and possibly make 2018 a better year financially.

Did I receive a large refund? If so, you made an interest-free loan to the IRS.  Ask your tax adviser to calculate the amount you need to pay in withholding and/or estimated tax payments to avoid any penalty.  This is especially important since tax rates have dropped for 2018.

Do I have significant capital gains or losses? Even in a bull market there are stock losers.  Offset some capital gains by selling shares that have dropped in value.  And remember: You can give appreciated stock held more than one year to charity and avoid all capital gains while also qualifying for an income tax charitable deduction.

Should I add municipal bonds to my portfolio? Although the return on municipal bonds is generally lower than that on commercial bonds, the tax-free income may make them an attractive investment, particularly if you are in a high tax bracket.  For example, a municipal bond paying 3% is equivalent to a 4.6% taxable return for a taxpayer in the 35% tax bracket.  There may also be state tax savings.

Are my investments producing more income than I need — or want? By making a gift of income-producing assets, you can shift the income to family members in lower tax brackets.  You can give up to $15,000 free of gift tax in 2018 ($30,000 for married couples).  Or you can give the assets to charity and also reap an income tax charitable deduction if you itemize.

Mid-Year Resolutions

Who says you can only make new year’s resolutions on January 1?  The goal of a resolution is self improvement — and that’s a good idea at any time of the year.  Here are a few suggestions for improving your financial picture now and in the coming years:

Review your investments — Make sure your investments are proper for your age and financial situation.

Prepare documents — You probably have a will, but have you reviewed it recently?  Ask your attorney whether any changes are needed, especially in light of higher federal estate tax sheltered amounts ($11.18 million in 2018).  Consider other documents, such as a living will or health care power of attorney.  Review the beneficiary designations on life insurance policies, IRAs and other financial accounts, keeping in mind that you can name charity as a beneficiary for any of these accounts.

Make a list — Do family members know where your will is kept?  The names and phone numbers of your tax adviser and attorney?  What life insurance policies are available?  Compile a list of important documents, names, addresses and phone numbers and leave it in an easily accessible place or with a trusted family member.  Don’t forget to include the user names and passwords for access to online accounts.

Look at insurance coverage — Make sure you don’t have too little — or too much — life insurance.  Review other types of policies, too (auto, health, homeowners, umbrella liability, long-term care coverage).  If you find you have a life insurance policy that’s no longer needed for family security, consider making a charitable gift of the policy, for which you’ll be entitled to an income tax deduction.

Family + Charity = Satisfaction

Many people want to continue their support of charitable organizations through their estate plans — but feel they must provide for family members first.  While that’s an entirely understandable sentiment, there are ways to combine support for family and charity.

Charitable remainder trusts — Sam is a widower with two children, both of whom are provided for generously through annual gifts and in Sam’s estate plan.  But Sam also wants to help his younger brother, Mike.  Sam could create a trust that will pay income to Mike for life, with the assets then passing to charity at Mike’s death.

Remainder in a home or farm — Marilyn and Phil purchased the family home from Marilyn’s mother following her father’s death.  Her mother still lives in the home with the couple.  Although Marilyn thinks she and Phil will outlive her mother, she wants the assurance that if anything happens to the two of them, her mother could continue living in the home.  Their estate plan provides that if Marilyn’s mother is alive at their deaths, the house will pass to charity, subject to her mother’s right to live in the home for life.

Charitable lead trust — Steve would like to make a significant gift to charity, but he wants to leave sizeable gifts to his grandchildren.  His lawyer suggested that Steve consider a charitable lead trust that will pay income annually to charity for a period of years and then distribute the assets to his grandchildren.  When the lead trust ends, assets could pass outright to the grandchildren — who would hopefully be more mature — or they could pass to trusts that would provide income to the grandchildren for life.

Charitable gift annuity — Sylvia owns U.S. savings bonds that her financial adviser has informed her will be subject to income tax at her death.  She intended to leave the bonds to her sister, Mary, but her sister would owe tax on the untaxed interest.  Sylvia is instead leaving the bonds to charity, conditioned on the funding of a charitable gift annuity for Mary, who will receive quarterly payments for life based on the full value, with no loss to taxes.