Planned Giving

In an Unstable Market, Gift Annuities Make Financial Sense for Some

Helen HauerLike many investors during these tough economic times, Helen Hauer is weighing her options for getting the best return on her money. She was in a similar position 10 years ago when she decided to make a contribution to the Salk Institute through a charitable gift annuity. She's never regretted it.

"I was going to have to pay a sizeable chunk of capital gains tax if I didn't roll over an investment I had at the time," she explains. "I had heard about annuities so I figured I'd put the entire amount in one with Salk and have a monthly income for the rest of my life. I avoided having to pay capital gains, plus, I was able to claim a deduction over six years on my tax returns."

Charitable gift annuities allow participants to donate a gift of cash or securities in return for a guaranteed fixed income for life, typically at a much better rate than a Certificate of Deposit (CD), for example. The Institute eventually receives the remaining principal for support of research.

"It's worked out great for me because I like to know exactly what my income will be each month," Hauer says, "and it also provided a better return that allowed me to increase my income."

Besides the financial benefit, Hauer made her contribution to Salk for another more personal reason. Her late husband, Arthur, suffered a severe stroke in 1994, and she hopes that her gift will help scientists advance their research of the brain, particularly how stem cells can be applied toward treating or curing neurodegenerative diseases.

"It was the first time I had known anyone to have a stroke," says Hauer of her husband. "But it affected his brain in such a way that he eventually no longer knew me or anything else. Doctors told me at the time that when certain cells die, that's it, you can never recover them. But they were wrong as I have learned from going to lectures at Salk. So I'm very curious about the brain."

An avid golfer who lives in La Jolla, Hauer likes to point out the certificate she received from the Lomas Santa Fe Executive Golf Course for shooting a hole-in-one. Although she hasn't golfed recently due to a minor shoulder injury, she's looking forward to get back out on the course while she plans her next financial move.

She's considering other charitable gift annuities, but says this time she may choose to structure them to benefit her children as well.

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A charitable bequest is one or two sentences in your will or living trust that leave to the Salk Institute a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

I give [insert dollar amount, property to be given, percentage of the estate, or "the remainder of my estate"] to the Salk Institute for Biological Studies, a California nonprofit corporation, located at 10010 North Torrey Pines Road, La Jolla, CA 92037.

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to the Salk Institute or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate, or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the gift tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to the Salk Institute as a lump sum.

You fund this trust with cash or appreciated assets—and receive an immediate federal income tax charitable deduction. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to the Salk Institute as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and the Salk Institute where you agree to make a gift to the Salk Institute and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.

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