Gift of the Month: Charitable Gift Annuity (CGA)
Thursday, May 22, 2008

 
Why is the CGA our “Gift of the Month”? Because the suggested annuity rates from the American Council on Gift Annuities (ACGA) will decrease on July 1 -- the first decrease in five years.
 

What does this mean? People who wish to make a philanthropic gift while locking in a guaranteed income for the rest of their lives should act before July 1. The ATS, like most non-profits that offer CGAs, follows the suggested rates from the ACGA. As a result, now is the time for people to consider establishing a CGA.
 

Here is a link to the ACGA suggested annuity rates: http://www.tigertables.com/CgaRates.htm.
 

For more information please contact me at mark@ats.org or at (212) 407-6313
 

Legislative Update
 

Charitable Lead Trusts (CLTs) are extremely favorable in current economic conditions because the Sec. 7520 Applicable Federal Rate (AFR) is at a historic low. As a result, the IRS calculation of tax benefits assumes that the CLT will earn a low rate of return. If, however, the return exceeds the low AFR, the earnings pass tax-free to the trust’s beneficiaries.
 

But as more and more people recognize the current favorable use of these trusts, some have found methods for abusing the tax benefits. These abuses can leave little reward to the charitable beneficiary and big tax breaks to the non-charitable taxpayers.
 

Last month, the Senate Finance Committee heard testimony about the importance of CLTs as well as suggestions for reform to deter abuse.
 

Here is a link to the informative testimony of Diana Aviv, President and CEO of Independent Sector, a leadership forum for charities and foundations: http://www.independentsector.org/programs/gr/20080403_Aviv_Oral_Testimony.pdf.
 

Have you seen a recent increase in the use of CLTs? What is your opinion about their efficacy in estate planning and charitable giving? We’d like to know. Please mark@ats.org or at (212) 407-6313.