3.3.4 Gift Annuity Documents

An annuity contract is an agreement between the charity and the donor. There is no required federal form. However, as a result of federal and state regulatory requirements, there are several provisions that should be included in all gift annuity documents.

1. Contract Number. For compliance with some state regulatory requirements and appropriate record keeping, each gift annuity agreement should have a unique number.
   
2. Parties. The donor or donors and the charity, with their addresses, cities, states and ZIP codes should be listed.
   
3. Property. A brief description of the property and value should be included. In most cases, it is appropriate to describe the property in an attached schedule A. This additional description is essential for any property other than cash.
   
4. Annuity Payout. The annuity payout should be specified. If the annuity is paid monthly, quarterly or semiannually, the respective payment schedule should be listed. If there is a pro-rata payment for a first partial period, that amount and the first payout date must be specified. It is permissible to allow the obligation to make annuity payments to lapse with the last payment prior to the death of the annuitant. If this provision is desired, it should be included in this section.
   
5. Birth dates, addresses and Social Security numbers must be included. The annuitants (who may be different from the donor or donors) must be listed, together with their addresses, birth dates and Social Security numbers. This information will be required for submission of Federal Tax Form 1099R each year.
   
6. Annuity Provisions. The contract should state that it is irrevocable and nonassignable, except to the issuing charity. For a two-life contract, the donors may reserve a right of revocation. This right of revocation precludes reporting a gift of the income interest to the second annuitant at the time the gift annuity is funded. Since some states limit this right to a testamentary right only, most charities issuing gift annuities on a national basis will include only a testamentary power of revocation.
   
7. Any particular provisions with respect to the payment, the address of the annuitants or other matters should be listed.
   
8. The states may require specific disclosures or language. The majority of the states now require specific regulatory language in gift annuity contracts.
   
9. The signature block should specify the names and dates for signature by the donors and an officer of the charity. The charity will normally sign the agreement and accept the annuity contract after the donors have signed.