November 7, 2009
Educational CGAWe can also help you establish an Educational Charitable Gift Annuity (CGA) so you can help put a child, grandchild, or any loved one through college.
A deferred charitable gift annuity that can be funded with cash or securities, an HSUS Educational CGA can be set up in many ways, including the disbursement of deferred payments to younger loved ones in the four years that they attend college.
For example, a grandparent who has a newborn grandchild can arrange an Educational CGA for four annual payments, with the first payment disbursed 18 years from now and the last, 21 years from now. The donor (e.g., grandparent) receives no payments with an Educational CGA. The income beneficiary (e.g., grandchild) receives all payments and must also pay taxes on that portion of the payments considered to be ordinary income, but typically at a lower tax rate than the donor, because students not working full-time usually fall into the lowest tax brackets.
Setting up a gift annuity that does not benefit the donor, but instead benefits someone such as a grandchild, can trigger gift or generation-skipping transfer taxes. Please consult a tax advisor about the possible transfer tax issues of such an arrangement.