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Annuity question

  • 1.  Annuity question

    Posted 7 days ago
    Hello

    Many years ago, a donor (now deceased) took out a sizeable  two life annuity on his wife (also deceased) and his son (still living). The contract specifies a quarterly payment. The son would like for us to instead payout one lump sum now. Has anyone received this question? Is it even possible given that the donor, with whom we drafted the contract, is now deceased?

    Thank you!

    ------------------------------
    Tracy Rush
    Exec Dir Adv Services and Strategy Solutions
    Otterbein University
    trush@otterbein.edu
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  • 2.  RE: Annuity question

    Posted 7 days ago
    It likely is not advisable.  Whether it's even possible would probably be written into the annuity contract.

    The annuity creation and tax benefits were all set in stone at inception.  The tax-deduction is calculated in part by looking at the payout period (plus interest rates).  To pay a lump sum now would undo the original construct.  I don't know what the tax implications are, but there would be some.

    You will need to speak to your CFO or whatever financial administrator created the annuity.  This is a legal and financial matter that those folk need to iron out.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Annuity question

    Posted 7 days ago
    If you read the following article, it seems to suggest that the terms of a CGA are irrevocable.  And there's this statement:  " The payments are fixed when the donor enters into the gift annuity contract, and remain unchanged for the term of the contract."


    I do think you need lawyers and CFOs make this call!

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 4.  RE: Annuity question

    Posted 7 days ago

    Thanks, John-I appreciate it.  This seems very clear to me. I appreciate the article and will pass it on to our finance office.  I think it is also a good reminder for gift officers-to be very clear with donors about the irrevocability of these gifts. 

     

    As always, much appreciated...