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Minnewaska Home Development Foundation Planned Giving Charitable Gift Annuities FAQs How do we determine annuity payments? At the time the gift is made, annuity payments are established using a percentage payout calcuation associated with the age of the donor (or income beneficiary). Generally speaking, the older the annuitant, the larger the annuity payment. We use annuity rates established by the American Council on Gift Annuities (ACGA) which, since 1927, has been recommending annuity rates for charitable organizations. These rates are lower than those found in commercial annuitiees. It is important to remember these plans are charitable gift annuities. They are designed to result in at least 50% of the initial gift, known as the residuum, remaining for use by the charity after all annuity payments have been satisfied. The following chart illustrates annual annuity payments for various ages based upon an initial gift of $100,000:       Age            Annuity            Annual Annuity                          Rate                    Payment        60               5.7%                    $5,700        70               6.5%                    $6,500        80               8.0%                    $8,000        90             11.3%                   $11,300       These rates are currently in effect. What are the tax advantages of establishing a CGA? Donors receive several tax benefits when they establish a charitable gift annuity particularly if they use highly appreciated stock to fund, or purchase, the annuity: A portion of the initial gift qualifies for a charitable income tax deduction A portion of the annual annuity payment is tax-free, a portion taxed at capital gains rates. The asset is removed from the estate and is not subject to estate taxes. For example, a donor age 70 establishes a charitable gift annuity using highly appreciated stock. It was originally purchased for $60,000 and is currently worth $100,000. Immediately, the donor avoids paying tax on the $40,000 total capital gain. Then, although the donor will receive a lifetime income, a portion of the gift will qualify for a charitable income tax deduction. Next, a portion of the donor's annual annuity payment of $6,500 will be completely tax-free with only a portion being taxed as ordinary income or capital gains (and this rate may be as low as 15%). Finally, $100,000 will be removed from the donor's taxable estate, perhaps resulting in significant estate tax savings. What minimum age and amount is required to establish a CGA? The minimum age to begin receiving payments is 50. The minimum amount required to establish a charitable gift annuity if $10,000. This is true for all annuities, immediate or deferred, single- or double-life. Why does MHDF work with CGAs? There are four major reasons: To help MHDF raise more money for their vital community mission. To address MHDF's "vision" as an exemplary leader in philanthropy. To offer a tool that positions MHDF with other community charitable organizations that offer gift annuities. To provide a product that is very popular with donors. What else should you know about CGAs? It is important to know that ongoing annuity payments are guaranteed by the assets of Minnewaska Home Development Foundation. The potential risk is very low while the potential returns are quite high. Do we charge fees? We estimate total annual administrative fees to be 1% of the initial gift amount. These fees are charged against the principal of the annuity gift amount and thus decrease the residuum. The annuitant pays no fees, nor is the annual annuity payment decreased. Is the CGA available in my state of residence? We are unable to offer charitable gift annuities to residents of California, Hawaii, Illinois, Maryland, New Jersey, New York, Oregon, South Dakota, or Wisconsin. For more information, please contact: Minnewaska Lutheran Home (320) 239-2217 info@mlh-healthcare.org The information provides is not intended as legal, tax, or investment advice. Please consult an attorney, tax or financial planning professional for questions specific to your financial situation.

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