Now that I’ve got your attention, let me be the first to point out this will definitely not apply to everyone. If you’re one of the few it does, you’re going to thank me!
One of our members mentioned a money concern he had for his father. Let’s call him Lee. Needless to say, Lee wanted his money very safe and secure and had almost everything tied up in bank CD’s.
Shoot, who could blame him? The good news is Lee probably has more than enough money to last him the rest of his life, even if he gets sick and needs nursing or home healthcare.
The kids (our client members) have been trying to get Dad to make gifts to other family members or some of his favorite charities for years. But so far Lee will hear none of that. Probably his having lived through the Great Depression and having a very understandable concern of not knowing what the future has in store.
Lee is using the interest from his CD’s to generate monthly income to help him keep and enjoy his current way of life. I suggested Lee, at the tender age of 91, consider a “charitable CD” (the technical term is charitable gift annuity).
The way these things work is quite simple: you make a deposit with a reputable charity, in return they provide a guaranteed income for life, based on your age.
Here’s Where Being Older Pays Off!!!
The older you are, the higher the income stream. So for a 91 year old male, you get the equivalent of an 11.3% interest rate/yield. On top of that you get a tax deduction (for a $100,000 deposit) of about $10,000. Once you’re no longer able to collect the income (fancy way of saying you’ve passed away) whatever remaining balance left in the charitable annuity account goes to – as the name suggests – the charity.
Most major charities issue their own charitable gift annuities. You can also establish a charitable gift program that your family can have influence and control over to provide flexibility as to which charitable organizations receive these funds. Note: this must be set up properly before you make a deposit with a charitable CD organization.
Anyone over age 70 who is taking income from CDs or leaving part of their estate to charity should look into “charitable CD’s”. You’ll probably double the income you’re getting now, while getting a nice tax deduction. And you benefit your favorite charity(s) when your estate is settled/distributed.
