Many people leave assets to their favorite charity in their will.  But this is a foolish idea because it wastes a tax reduction, a retirement mistake.  You can make the charitable gift during life, retain the income from the assets and also get a tax deduction for the gift to reduce your taxes right now.

The income you receive is based on your age and is for your lifetime.

You can find the income amount you receive at this web site, which updates the amounts each year (most charities use these same tables): acga-web.org

Here is a simple example:

Mrs. Donor, age 82, gives $100,000 in a Gift Annuity to a charity, in a single life annuity. She will receive an annual annuity payment of $9,400 (figured at 9.4%). Her charitable income tax deduction will be $52,810 the year the gift is given, or spread over five years following. Of the $9,400 received each year, Mrs. Donor can exclude $5,555.40 as tax exempt income for 10 years. That’s because IRS considers part of each payment a return of principal, which is not subject to income tax. Also, the gift is excludable from estate taxes.

Before approaching your favorite charity with this idea, see a qualified financial advisor or estate planner as they may be able to get you a better deal than you may be offered at first.