Exchanging Expiring CDs for Charitable Gift Annuities

Clients with expiring CDs may benefit from donating the principal to a nonprofit organization in exchange for a charitable gift annuity. The client will receive a tax deduction and payments for a lifetime. The client-donor’s age will determine the annuity payout rate.

However, this is an irrevocable transaction, so the client will no longer have access to the donated assets. Additionally, while a CD rate could increase in the future, a payout rate is fixed. A client choosing to participate in a charitable gift annuity also runs the risk of losing all remaining annuity payments if the nonprofit organization files for bankruptcy.

See Julius Giarmarco, Consider Charitable Gift Annuities for Your Clients with Expiring CDs, Producers Web, Oct. 11, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.