Wills, Trusts, and Estates

Charitable Gift Annuities

A charitable gift annuity is a gift that will provide you with income for the rest of your life and generously support the University.

Gift Annuity Basics

  • A gift annuity is an irrevocable gift to the University of Virginia.
  • A gift annuity may be established with a minimum of $5,000 and may be funded with cash, appreciated securities, or real estate.
  • The minimum age to fund an immediate gift annuity is 55 years of age.
  • A gift annuity is a simple contract between you and the University of Virginia Foundation.
  • Under this contract, you contribute assets to the Foundation, which in turn provides a guaranteed fixed income for life for one or two beneficiaries.
  • The amount of the annuity payment depends upon the age of the individual receiving the income (or the combined age of two beneficiaries).
  • You may claim a charitable income tax deduction in the year you make the gift for a portion of the gift annuity’s value.
  • If you fund your annuity with appreciated assets, a portion of your capital gains tax will be avoided and the remainder will be paid over time.
  • A portion of the annuity income may be tax-free.

Don’t need income now? Try a deferred gift annuity.

Deferred Gift Annuity Basics

  • Similar requirements and benefits as a charitable gift annuity.
  • There is no minimum age requirement for establishing a deferred gift annuity although you must be at least 55 years of age to receive income payments.
  • You select a future “start” date (one year or later) to begin receiving income payments.
  • You receive a larger immediate income tax deduction.
  • You receive a larger annuity payment due to the delay in the start date.

Please Note: Due to individual state restrictions, U.Va. is not able to offer gift annuities in all states. Please call the Office of Gift Planning at 434-924-7306 or 800-688-9882 to determine if this option is available in your state. Or view our list of states eligible to offer gift annuities.

How Does a Charitable Gift Annuity Work?

One-Life Gift Annuity

Mr. Taylor is 75 years old and wishes to support the University. He decides to fund a gift annuity with $30,000 in cash. The gift annuity rate for an individual his age is 5.8%, so Mr. Taylor will receive quarterly checks in the amount of $435 (or $1,740 annually) for the rest of his life in exchange for his $30,000 gift.

In addition to receiving regular fixed payments, Mr. Taylor will receive a portion of this income tax free. Mr. Taylor will also receive an immediate income tax charitable deduction of $12,803. When Mr. Taylor dies, the remainder of the annuity (estimated at $42,525) will support the University school or program designated in the contract he executed with the University of Virginia Foundation.

See Mr. Taylor’s charitable annuity illustration.

Two-Life Gift Annuity

Mr. Taylor wishes to include his wife, age 72, in his gift annuity plan. Because there will be two individuals receiving income, the gift annuity rate will be 4.9%. The Taylors’ quarterly payment will be $367.50 ($1,470 annually). A portion of this income payment will be tax free. When one beneficiary dies, the other will continue to receive the annuity payments.

See Mr. and Mrs. Taylor’s charitable annuity illustration.

Deferred Gift Annuity

Ms. Pearce is 55 years old. She recently received a $50,000 bonus from her employer. She is interested in establishing a gift annuity but doesn’t need the income until she retires. Ms. Pearce decides to fund a gift annuity now but defer income payments until she is 65 years old. She will be able to claim an immediate income tax deduction of $13,109 on her current year federal tax form. In ten years, she will begin receiving quarterly income payments of $800 ($3,200 annually) for the remainder of her life. Because she deferred the payments for a decade, Ms. Pearce’s gift annuity rate will be 6.4%.

See Ms. Pearce’s calculation.

Use our Gift Calculator to see how a gift annuity or deferred gift annuity can work for you.

The University of Virginia does not provide legal, tax or financial advice. We strongly recommend that you consult professional advisors on all legal, tax or financial matters, including gift planning considerations. To ensure compliance with certain IRS requirements, we disclose to you that this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties.

From Love at First Sight...

As a public high school student in Baltimore in the mid-1950s, Joel Levin applied to two colleges — the University of Maryland and the University of Virginia. Accepted at both, he was eager to start the next chapter of life and chose the school in Charlottesville, where classes started a week earlier. It was love at first sight.

Read Joel Levin’s Story »

Contact

Jason Chestnutt, CFP®
Office of Gift Planning
Telephone: 800-688-9882
Email: giftplanning@virginia.edu