Mon
04
Aug
2008

gift of CGA

No votes yet
Donor (father) wants to establish CGA for son (age 64) and daughter-in-law (age 60). [1] Are there gift tax implications to faher/donor? [2] I assume son and wife will receive annual 1099-R and only claim the ordinary income part of payments on their taxes?? [3] Are there any other differences from standard CGA?
Tue
05
Aug
2008
401
points
#01 by Sue Woodard    

CGA for son

Yes, there are gift tax implications for the projected lifetime income of the two annuitants, which is reportable the year the CGA is established, (minus the exclusion for that year).

Tue
05
Aug
2008
333
points
#02 by Sherman Cohn    

Gift of CGA

What is a CGA? Remember, you are not writing just for those who went through the initiate rite!

Tue
05
Aug
2008
397
points
#03 by Staci Bush    

Gift of CGA

Ditto Sherman - what is a CGA?

Tue
05
Aug
2008
326
points
#03.00 by Chuck Simpson    

CGA = chartiable gift

CGA = chartiable gift annuity

Tue
05
Aug
2008
395
points
#04 by arthur page    

cga

if the donor retains the right to revoke the son's interest each yearly payment should qualifiy for the annual exclusion. This should shelter the annuity payment to the son from being a taxable gift to the extent it is under the annual exclusion amount.

Tue
05
Aug
2008
394
points
#05 by Scott Drogs    

Gift of CGA

Using the right to revoke can include the remaining income interest in dad's estate at his passing.

Also, if the father gives appreciated securities (i.e. stocks) in exchange for the charitable gift annuity (CGA), then he will have to recognize a portion of the gain in the year of the gift. Had he been the annuitant, then he could have recognized the gain over his life expectancy.

Tue
05
Aug
2008
411
points
#06 by Richard Davis    

DCGA

Also, if establishing a DCGA (deferred charitable gift annuity where the first payment is scheduled more than one year from the gift date) then any capital gain on assets given would be immediately taxable to the donor, and the annual gift tax exclusion would not apply. Any size gift would have to be reported as a taxable gift (Form 709), although there would not be any tax liability unless the total of this gift (present value) and any prior taxable gifts exceed $1,000,000 (the gift amount sheltered by the gift tax credit).

Tue
05
Aug
2008
437
points
#07 by Philip Rovner    

CGA to son

The reciprocal of the present value to the charity is taxable as a gift to the Donor. This amount is easliy obtained from the illustration software.

Importanly, if the donor funds this CGA with Capital Gain property (long term) the donor then realizes the full capital gain in the year of the gift. The subsequent taxable portion of the CGA to the son is taxable to the son as ordinary income.

Tue
05
Aug
2008
397
points
#08 by Susan Smith    

What is a CGA

A Charitable Gift Annuity (CGA) is an excellent option for an individual (up to two individuals per agreement...usually husband and wife) to give to a charity and still have use of the funds. He gets an immediate deduction (partial) and an agreement for set dollar payments for the rest of his life from the charity. At the end of the life of the annuitant(s), the charity has full use of the funds. Annuity payments are typically calculated using the recommended rates from the American Council on Gift Annuities and are dependent upon age. Payments may be deferred. Part of the payments may be taxed at normal income tax rate, part may be tax free, and part, if using highly appreciated assets, may be taxed at the capital gains rate. This is a great way for older clients to give low yielding long term capital gains stock in exchange for payments that will not change. Some Foundations issuing CGA's allow the individual to name OTHER CHARITIES to receive the charitable portion.

Tue
05
Aug
2008
379
points
#09 by Leslie Cook    

cgas

I work for a retirement community and cgas seem like a great alternative to CDs and other currently low yielding investments. I find that the people who give cgas do so for the charitable aspect, which is fine, but I would like to help other seniors to realize that the rate of return is a good deal for them, too. Due to current market, many people are hesitant to make any changes in their investments. Any ideas on how to sell more annuities in the current market?

Thanks

Tue
05
Aug
2008
424
points
#09.00 by M Maginniss    

Charitable Gift Annuities for Seniors

Yes, a CGA could make sense for some seniors. However, a true cost comparison requires you compare a CGA with the purchase of a private annuity. As you will see, the income stream will be lower under the CGA. That is because the charity is a partner in this transaction, and is required to receive a minimum payout after the last death (or term if a fixed number of years). This payout requirement effectively reduces the portion of the annuity income stream available to the senior.

As a result, the donor to a CGA should really have a charitable intent; in this case, it can be an excellent choice. Otherwise, a private annuity is likely the better choice from strictly a cash flow perspective. Also, unlike CDs and other assets in an investment portfolio, the annuity terminates at the last death (or term), and the funds are not available for leaving a legacy. If this is an important consideration for the senior, the annuity option is less appealing.

Tue
05
May
2009
137
points
#09.01 by Steve Hill    

Please figure it out and share!!!

This is a great market for CGAs, but folks are unfamiliar with them and therefore scared. If you figure out a good strategy, let me know. I have found that folks who are willing to really dig in with a trusted adviser and explore their options will seriously consider a cga.

Steve Hill Director of Gift Planning University of Nebraska Foundation

Wed
06
Aug
2008
356
points
#0a by Jamie Hogan    

CGA to son

I don't understand why transferring L/T C/G property to a CGA for the son would cause dad to recognize the C/G upon transfer. If dad transfers stock directly to son the holding period and cost basis transfers with it. If a CGA is used it seems that the son would recognize gain as payments are received. The treatment here seems inconsistent. Any thoughts?

Thu
14
Aug
2008
419
points
Fri
19
Feb
2010
15
points
#0b.00 by John Garesche    

Difference between a CGA and CRT

A CGA - Charitable Remainder Annuity is controlled by the charitable organization. They are responsible for the annuity payments, for all the costs in setting it up, and they often determine the percentage payment (although it is recommended to use the rates published by American Gift Council on Annuities). While there are details that can be negotiated, the money ultimately is in the control of the charity (they decide how to invest it or spend it) and the obligation to pay the annuity is a general obligation of the charity. So with an annuity, the charity can be confident that they will end up with the remainder (if any), but they bear the risk of investments and legal, accounting and investment costs.

A CRT - Charitable Remainder Trust, is a separate legal entity that enables the donor (or (a) trustee(s) appointed by the donor when setting up the trust) to retain some control over the funds - including how to invest it, etc. The obligation to pay resides solely with the trust (so if it ends up paying all the money out - or loosing it in a poor investment - there is noone else on the hook for paying the annuity payments). The trust (and therefore the donor) is responsible for the risks of investment and all costs, but the trustee (usually the donor) can choose (within the confines of the trust agreement) to change the beneficiary and the recipient charity(ies). The charity does not need to know about the trust - and often does not know.

Of course, as will all things, there are many other details and twists that can be added into these gift tools.

Mon
25
Aug
2008
364
points
#0c by Thomas Davis    

Charitable Gift Annuity

Donor has asked Community Foundation if their Charitable Gift Annuity Program allows the donor to recommend a future change of the named charitable beneficiary. Community Foundations have variance power, but is this permissable with Charitable Gift Annuity legal requirements? Thomas H. Davis, Jr.

Tue
21
Oct
2008
321
points
#0c.00 by Cindy Aegerter    

CGA changing named beneficiary

Foundation should be the named beneficiary in the gift annuity contract -- the remainder could then be placed into a donor advised fund (DAF) at the Foundation. The donor, as advisor to the fund, may then be able to change charitable beneficiary of the DAF, without changing the CGA contract.

Mon
15
Sep
2008
372
points
#0d by James Bender    

What about a Two Life with Dad?

Would the gift tax issue be a non issue if dad, who must be over 80 yr. old, does a two life CGA each with son and daughter in law.

Tue
09
Feb
2010
17
points
#0e by gregor schmitt    

Thanx

Hey nice post, good work. Thank you for sharing.

Gregor S.

Hier Gratis SMS versenden.