Charitable Gift Annuity

Definition of "Charitable gift annuity"

Donation of amount "A," made by donor X to a charity. The charity agrees to pay donor X an amount ("B") for the rest of donor X's life. Since the donation is used to fund an annuity, only a percentage of the donation can be taken as a tax-deductible gift in the year of the donation. The percentage taken is based on the Internal Revenue Service tables at the donor's age at the time of the donation. This gift is irrevocable. Since the donor is dependent on the charity to make the income payments, the donor should ascertain the financial ability of the charity to make those income payments. Thus, such an annuity permits the donor to transfer appreciated property to a charitable organization in exchange for the organization's promise to pay a continuous stream of income.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Partial payment of medical service expenses required in group health insurance, in addition to the membership fee. For example, for each visit of a physician a member may be required to pay ...

Standard for insurance regulation in New York State and a model for insurance regulation elsewhere. For example, the standard fire policy was first adopted in New York State. Similarly, ...

Intense combustion resulting in a flame or glow. In order for the fire peril to be covered under property insurance, the fire must be a hostile fire, not a friendly fire. ...

Minimum standard of financial health for an insurance company, where assets exceed liabilities. State laws require insurance regulators to step in when solvency of an insurer is threatened ...

Purchasing bond investments that mature at different time intervals. ...

Accounting procedures that defer the full funding of a life insurance net level premium reserve to accommodate the policy acquisition cost in the early years of a policy. First-year policy ...

Regulation set forth by the national association of insurance commissioners (naic) to govern life insurance sales illustrations. Includes the following major provisions: POLICY OWNER must ...

System of charges to an insured that fluctuates according to the loss experience of that insured. This is a form of experience rating. ...

Contractual agreement between two parties in which they agree to exchange a stream of interest payments on either a fixed rate for a floating rate or a floating rate for a fixed rate. The ...

Popular Insurance Questions