Giving
-and Thinking-
Ahead

Most tools for planned giving are designed with older people in mind. But a deferred-payment gift annuity is an excellent way for people in their thirties and forties to help Queen of the Valley Hospital Foundation or any favorite charity and reap substantial benefits for themselves at the same time.

Those benefits include both a valuable charitable tax deduction now, during their high earning years, and guaranteed supplemental income later, when they’re retired and most likely in a lower tax bracket.

A deferred-payment gift annuity is one type of annuity trust. Here’s how an annuity trust works:

You irrevocably transfer cash, securities, or other valuable property to the Foundation. The Foundation arranges to pay you an income for life, based on your decision of how much you want to receive each year.

In the year in which the trust is created and funded, you get a sizable income tax charitable deduction, based on the fact that a portion of the trust assets—whatever is left after you or whoever you’ve named as beneficiary passes away—will go to the Foundation. The size of the tax deduction is calculated based on the size of the annual income to be paid out and the age of the beneficiary. Generally, the older the beneficiary and the smaller the likely payout (based on official U.S. Treasury average lifetime expectancy tables), the higher the allowable deduction.

With a deferred-payment annuity, you can create the annuity trust and get the tax deduction now, but defer the income until you’re older. That makes possible a greater tax deduction now, and a higher rate of return during your retirement years, when you’re likely to need the extra income. The rate of return is based on your age at the time of issue and the age you request payments to begin.

As the accompanying table shows, the earlier you start a deferred-payment annuity trust, the greater the potential benefits.

To sum up, funding a deferred annuity each year for several years is a great long-range strategy to:

• reduce income taxes;
• increase retirement income; and
• provide for the future mission of QVH Foundation.

Interested in finding out more details about how a deferred-payment annuity trust can work for you, and what the specific calculations would be? We’re happy to provide no-obligation information, free of charge. Please call Dick Green at the Foundation office, 257-4044, for the full story about deferred annuities and many other forms of planned giving.