Beruflich Dokumente
Kultur Dokumente
LBL6471
Present
CharityLincSM
A Gift Annuity Program
For Charitable Organizations
CharitableCapitalSM Design Center, a division of The Financial Engineering Alliance, LLC and Lincoln
Benefit Life do not provide legal or tax advice, and nothing herein should be construed to be legal or
tax advice. There is no direct affiliation between The Financial Engineering Alliance, LLC and Lincoln
Benefit Life. A charitable gift annuity is not guaranteed by any government agency. A charitable gift
annuity is subject to limited regulation in most states, and is not issued by an insurance company.
The content of this presentation is for educational purposes only.
LBL6471
10
What is Reinsurance?
The purchase of a SPIA by your charity from
LBL.
The SPIA guarantees that the lifetime periodic
payments which your charity has obligated
itself through a charitable gift annuity (CGA)
agreement will be paid directly to your charity
on the same periodic basis as the obligated
payments to the CGA annuitant until the
annuitants death.
For Educational Purposes Only
11
What is Reinsurance?
The remainder of your donors gift the
difference between the total gift amount and
the SPIA premium can be used
immediately for charitable purposes or
invested for future use.
12
Why Reinsure?
Regulations require a
charitable organization
which self insures a
CGA to reserve 100%
of the risk effectively
delaying the use of the
remainder of the
original amount
contributed until the
death of the annuitant.
For Educational Purposes Only
13
Why Reinsure?
However, should 100% of
the CGA risk be
reinsured with an
authorized insurance
company no reserves
are required!
The balance of the gift
(net of the reinsurance
premium) is available for
use immediately!
For Educational Purposes Only
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A Lifetime Payout
- Tax Advantaged Annuitant
Age
Payout
Rate 1
Tax-Free
Portion 2
Effective
Payout Rate3
65
6.0%
54.98%
6.61%
70
6.5%
57.98%
7.35%
75
7.1%
67.55%
8.25%
80
8.0%
72.54%
9.55%
Based on single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
Based on 4.2% Federal Mid-Term Rate (subject to change monthly), annuity exclusion ratio and annual payments. Once the donors basis has been recovered,
further annuity payments are fully taxable.
3
Assumes a 27% tax bracket.
1
2
15
16
17
18
19
Supplemental Income
Payments
Beth, age 75, is frustrated by the renewal rates
of her bank CDs. Beth uses $100,000 of her
maturing CDs to establish an immediate gift
annuity with a charity.
In doing so, Beth will generate an annual
lifetime payout of $7,1001, (over $4,7002 will
be tax-free) as well as an income tax
deduction of over $42,0003.
1,2,3
20
Supplemental Income
Payments
Your charity can reinsure her payout
guarantee, allowing the remainder of
her gift to be used by your charity
immediately.
Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary income.
Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
3
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a maximum
of 5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
1
2
21
Supplemental Income
Payments
Gift Amount
Annuity Payout Rate 1
$100,000
7.1%
Tax-Free Payments 2
$4,796
8.25%
$7,100
Tax Deduction 3
Income Tax Savings 2,3
$42,445
$11,460
Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary
income. Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
3
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a
maximum of 5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
1
2
22
Contributing Appreciated
Assets
Joe, age 75, purchased $75,000 worth of
publicly traded stock in 1989. Over time the
stock value has increased to $100,000 but
generates less than 3% annually in dividends.
Joe is frustrated with this but feels trapped by
the $12,0004 in capital gain taxes he would
owe if he liquidated the stock.
However, Joe can contribute his stock into a gift
annuity with your charity . . . .
For Educational Purposes Only
23
Contributing Appreciated
Assets
. . . In doing so, Joe will reduce his capital gain
tax liability to $6,9124 spreading that amount
over the next 12 years4 ($576 per year), while
generating a tax deduction of over $42,0003
as well as an annual lifetime payout of
$7,1001, 2
Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary income.
Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
3
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a maximum
of 5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
4
Assumes 15% long term capital gain rate. Capital gain may be spread over the time period the annuity is expected to be received based on the life expectancy of
annuitant age 75 (12 years). If donor is not the annuitant, the capital gain tax cannot be spread out over the donors life expectancy.
1
2
24
Contributing Appreciated
Assets (Summary)
Gift Amount
$100,000
Cost Basis
$20,000
7.1%
$7,100
$959
$2,304
$3,837
Tax Deduction3
Capital Gain Tax Savings2, 4
$42,445
$5,088
Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary
income. Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
3
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a
maximum of 5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
4
Assumes 15% long term capital gain rate. Capital gain may be spread over the time period the annuity is expected to be received based on the life expectancy
of annuitant age 75 (12 years). If donor is not the annuitant, the capital gain tax cannot be spread out over the donors life expectancy.
1
2
25
Supplemental Income
Examples
Donor: Joan, Age 65
Gift Amount
Joe, Age 60
$100,000
$100,000
6.0%
5.7%
Tax-Free Payments3
$3,479
$3,088
$6,000
$5,700
6.61%
6.14%
$32,160
$26,804
$8,683
$7,237
$90,000
$89,000
$10,000
$11,000
Annuity Rate1
Tax Deduction2
Income Tax Savings2,3
Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a maximum of
5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
3
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary income.
Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
4
The amount varies by age, sex and current interest rates. Subject to change.
1
2
26
Supplemental Income
Examples
Donor: Betty, Age 75
Gift Amount
John, Age 70
$100,000
$100,000
7.1%
6.5%
Tax-Free Payments3
$4,796
$4,070
$7,100
$6,500
8.25%
7.35%
Tax Deduction2
$42,445
$36,922
$11,460
$9,969
$75,000
$70,000
$25,000
$30,000
Annuity Rate1
Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a maximum of
5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
3
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary income.
Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
4
The amount varies by age, sex and current interest rates. Subject to change.
1
2
27
Supplemental Income
Joint Life Examples
Donor: Sue/Dan, Age 75
Gift Amount
Jan/Tim-Age 70
$100,000
$100,000
5.6%
5.9%
Tax-Free Payments3
$3,172
$3,586
$5,600
$5,900
6.12%
6.60%
$22,290
$27,920
$6,188
$7,538
$94,000
$90,000
$6,000
$10,000
Annuity Rate1
Tax Deduction2
Income Tax Savings2,3
Est. Reinsurance Outlay4
Net Cash to Charity
Based on a joint annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a maximum of
5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
3
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary income.
Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
4
The amount varies by age, sex and current interest rates. Subject to change.
1
2
28
A CD Alternative
Donor, Age 75, $100,000 Cash Contribution
Certificate of Deposit
Gift Annuity
29
A CD Alternative
Donor, Age 75, $100,000 Cash Contribution
Certificate of Deposit
Gift Annuity
FDIC Insured.
Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003. Subject to change.
This deduction may be spread over more than one year. Any amount exceeding 30% (50% if cash) of donors AGI per year must be carried forward (for a
maximum of 5 years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and annual payments.
3
Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of principal (non-taxable), part capital gain, if any and part ordinary
income. Once principal is recovered and/or capital gains are paid, remaining annuity payments then become fully taxable as ordinary income.
4
Assumes 15% long term capital gain rate. Capital gain may be spread over the time period the annuity is expected to be received based on the life expectancy of
annuitant age 75 (12 years). If donor is not the annuitant, the capital gain tax cannot be spread out over the donors life expectancy.
1
2
30
31
An Example
Male Age 75, $100,000 Cash Donation
Charitable Organization
The Charity accepts the donation
and makes a single premium
immediate annuity payment of
$65,0004 to LBL.
The Charity retains $35,000 which
can be used for charitable purposes
immediately! The Charity receives
annuity payments from LBL and then
makes the stipulated annual
payments to the annuitant.
Cash $100,000
Donation
Total Annual
Payment of
$7,100 (7.1%)1
Equals effective
payout rate of
8.25%1,3
Payments
The Donor/Annuitant
Makes a cash contribution to the
Charity.
Receives an annual payout of $7,100
(of which 67.55%1,3 is tax-free) for
life.
Receives a substantial income tax
deduction of $42,4452. (Can be used
to offset other income over a five
year period of time.)
Can purchase life insurance to
replace the asset at death.
Remainder
Beneficial
Charities
32
An Example
Male Age 75, $100,000 Cash Donation
Charitable Organization
The Charity accepts the donation
and makes a single premium
immediate annuity payment of
$65,0004 to LBL.
The Charity retains $35,000 which
can be used for charitable purposes
immediately! The Charity receives
annuity payments from LBL and then
makes the stipulated annual
payments to the annuitant.
Cash $100,000
Donation
Total Annual
Payment of
$7,100 (7.1%)1
Equals effective
payout rate of
8.25%1,3
Payments
The Donor/Annuitant
Makes a cash contribution to the
Charity.
Receives an annual payout of $7,100
(of which 67.55%1,3 is tax-free) for
life.
Receives a substantial income tax
deduction of $42,4452. (Can be used
to offset other income over a five
year period of time.)
Can purchase life insurance to
replace the asset at death.
33
An Example
Male Age 75, $100,000 Cash Donation
Footnotes
1 Based on a single annuitant charitable gift annuity and ACGA rates effective 7/1/2003.
Subject to change.
2 This deduction may be spread over more than one year. Any amount exceeding 30%
(50% if cash) of donors AGI per year must be carried forward (for a maximum of 5
years). Assumes a 4.2% Federal Mid-Term rate (subject to change monthly) and
annual payments.
3 Assumes a 27% tax bracket. Annuity exclusion ratio. Annuity payments are part return of
principal (non-taxable), part capital gain, if any and part ordinary income. Once
principal is recovered and/or capital gains are paid, remaining annuity payments then
become fully taxable as ordinary income.
4 Assumes 15% long term capital gain rate. Capital gain may be spread over the time
period the annuity is expected to be received based on the life expectancy of annuitant
age 75 (12 years). If donor is not the annuitant, the capital gain tax cannot be spread
out over the donors life expectancy.
34
CharityLincSM
Safe . . . Simple . . . Flexible
Partially Tax-Free Payments
Capital Gain Tax Advantaged
Generates An Income Tax Deduction
No Legal Fees
No Market Risk
Fixed Payments for Life
For Educational Purposes Only
35
CharityLincSM
In a Single Transaction
Transform low-yielding assets
Reduce income taxation
Make a charitable gift
Offset taxation on other income
36
CharityLincSM
Why Charitable Organizations
Reinsure
Harnessing the Planned Giving Power
of Financial Services Professionals
37
CharityLincSM
Why Charitable Organizations
Reinsure
Harnessing the Planned Giving Power
of Financial Services Professionals
38
CharityLincSM
Providing a New Tier of Planned Giving
Tier I
Tier II
Tier III
Tier IV
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Services Provided
Training and support of Financial Services
Professionals
Illustrations and detailed proposals
Technical design support
Website for processing, illustrations, etc.
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Our Network
of
Community
Foundation
Facilitators
Lump Sum
Premium
Payments
Stipulated
Payouts
Remainder
Lincoln
Benefit
Life
Your Organizations
Existing Donor
Base
The CharitableCapitalSM
Design Center
Financial Services
Professionals
Your Organization as
Beneficial Charity
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The CharitableCapitalSM
Design Center
Planned Giving Through Financial
Services Professionals
Lincoln
Benefit Life
Single Premium
Annuity Payments
Annuity Payments
Develop
a
Reinsured
CGA
Program
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Your Organization
Immediate Use of Remainder
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Donor/Annuitants
Of Charities within
your Community
Lincoln
Benefit Life
Develop
A Reinsured
CGA Program
for use by
Charities in your
Community
Single Premium
Annuity Payments
Annuity Payments
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Your Community
Foundation
A Facilitator
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Thank You!
CharityLinc
SM
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