ideas On Financial, Estate And gift Planning For - Cleveland Clinic

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4 the spirit of giving Philanthropy is defined as the effort or inclination to increase the well-being of mankind, as by charitable aid or donations. While there is a whole spectrum of gift planning options (see chart, “comparison of gift categories” p.6), one creative way to be philanthropic is to establish a deferred-payment gift annuity. for rose mary kubik, recipient of the george W. crile, sr. award, philanthropy extends to cleveland clinic and beyond, to her nieces and nephews in the form of deferred-payment gift annuities. a deferred-payment gift annuity may also be your gift vehicle of choice if your objective is to secure a dependable income for your future, or the future of a loved one. the deferred-payment gift annuity is a popular twist on the charitable gift annuity. the term “gift annuity” describes a plan under which we provide guaranteed annual payments to you in exchange for your gift. Our approved payout rates are calculated with just this type of exchange in mind – to ensure the maximum payment to you. the deferred-payment part of such plans is what makes them so appealing to people who want to invest resources now to compound for the future. it is the only charitable plan that allows you to build a stream of very high income that begins at a date of your choice and is guaranteed for life – instead of taking payments now. Favorable Tax Treatment Several tax bonuses go along with the high return you receive in this plan. When you begin taking your payments (for example, upon retirement), a portion of every payment is treated as a taxfree return of principal. You also receive a significant charitable income-tax deduction right away, as soon as you transfer some assets into the plan. Annuity Rates Remain strong A person at age 40 who makes a gift of $10,000 this year and defers payments until the age of 65 receives • a charitable income-tax deduction of $5,625 now • and an annuity of $2,130 every year for life beginning at the age of 65 – 21.3 percent of his or her original investment! Regardless of inflation or fluctuations in interest rates, the payments from a deferred-payment gift annuity are fixed and reliable. The amount of your payments depends on both the size of your gift and your age, both at the time you make the gift and when you begin receiving your return. The table illustrates some examples. the goal for a secure retirement is to have after-tax income equal to the after-tax income of the last working year. then you won’t have to lower your standard of living, and the retirement years can be among the best in your life. 45 Deferred Gift Annuity ($10,000) Payouts and Tax Deductions AGe AT Time oF GiFT 50 55 60 you receive every year deduction this year you receive every year deduction this year you receive every year deduction this year you receive every year deduction this year AGe wHeN PAymeNTs BeGiN 45 50 55 60 65 $500* $680 $910 $1,210 $1,650 $2,931* $3,303 $3,914 $4,686 $5,449 $530* $700 $940 $1,280 $2,947* $3,674 $4,422 $5,230 $550* $730 $990 $3,211* $4,084 $4,961 * amounts for immediate-payment gift annuity shown for comparison. $570* $770 $3,581* $4,554 Both the rate of return and the tax deduction vary according to how long you defer your payments. the choice is yours to make with each contribution.
A New Role in Retirement Planning The large income-tax deduction makes the deferred gift annuity particularly attractive these days, as many people re-examine their retirement plans and find that available tax deductions aren’t what they used to be. The goal for a secure retirement is to have after-tax income equal to the after-tax income of the last working year. Then you won’t have to lower your standard of living, and the retirement years can be among the best in your life. You can achieve this goal through the discipline of paying yourself first – which means saving a certain percentage of your income and setting it aside before spending for anything else. The cornerstone of a secure future is a qualified retirement plan: Because you can fund the plan with pre-tax dollars and defer tax on earnings, your money grows at a faster rate. The more you can put into such a plan, the better off you are. There are, however, restrictions on participation in certain plans and limits on how much you can contribute and deduct. For example, the IRA deduction has been eliminated or reduced for individuals who are covered by an employer’s retirement plan and have adjusted gross income above a certain level ($50,000 single or $75,000 joint). A Charitable supplement The deferred-payment gift annuity fulfills a definite role in light of these regulations: It provides a viable supplement to retirement plans that have much less flexibility in their design and in the timing of their payment distributions. It offers unique benefits because it combines giving and receiving. And its great advantage is that you decide when you want your payments to begin. Building a Fund over Time If building your own retirement fund is a top priority for you, think of using a series of deferred-payment gift annuities to make annual or periodic gifts to Cleveland Clinic. With each gift, you increase the total amount in your annuity fund and you obtain the higher payout appropriate for the deferred- payment plan. example a series of five deferred gift annuities funded with a gift of $10,000 each year from ages 60 to 64, with all payments to begin at the age of 65, with you in the 28 percent income-tax bracket, would pay you a total of $3,470 every year, beginning on your 65th birthday. you would also receive a total charitable deduction of $21,855 for a total tax savings of $6,119. in contrast, if you contributed the $50,000 as one gift at the age of 65, with payments beginning immediately, your payment would be $3,000 each year. the “installment plan” offers you a higher total return because of the deferred element. Each time you create a deferred annuity, you also take an immediate income-tax deduction. the deductible amount depends on your age at the time of contribution and the years deferred. With annual contributions, you not only augment your retirement income but also build by installments a capital gift that could support the project or program you may have in mind. 5
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Page 3: Top, left: canyon ranch chef scott
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