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Investment Changes effective 11/1/2001: New York State Senate Bill #3770 was filed in the NY State Senate on 03/22/2001 to change the investment restrictions for gift annuity reserves to be invested ... "in accordance with the prudent investor standard as defined in section 11-2.3 of the estates, powers and trusts law and shall not be subject to the investment limitations set forth in this chapter. Such assets shall be segregated as separate and distinct funds." This change to investment rules of the Reserve Account within one's Charitable Gift Annuity (CGA) Fund became effective on 11/01/2001, when it was signed into law by Governor Pataki.
 Click here for NEW (Revised) year 2005 Annual Reporting forms (due by 3-1-06). 
7-20-2004: New York had been the ONLY state that prohibited the acceptance of real estate or, for that matter, any asset other than cash or marketable securities, for a gift annuity. Until 7-20-04, any state that accepted a NY CGA Permit, was prohibited from accepting real property for a gift annuity, regardless of the state of the charity, the residence of the CGA donor or the location of the real property. Effective July 20, 2004, that changed, with New York's gift annuity statute now allowing for contributions of "cash and other property." The required wording to be placed in CGA agreements: *This charity accepts only cash and marketable securities in return for a charitable gift annuity* is no longer required. NY is now the same as the other 9 permit states, that real property may be accepted for a charitable gift annuity, but may NOT be held as an asset in the Reserve Account of a segregated CGA Fund. For the text of Senate Bill (SB5987), click here.
7-20-2004: While the NY Insurance Dept. will NOT issue a Permit to charity until its reserves are at least $500,000, the charity is NOW REQUIRED to file for a permit BEFORE accepting its first CGA gift. The charity will be granted an *exemption* from needing a Permit, until its Reserves cross the $500,000 reserves threshold. For the text of Senate Bill (SB5987) click here, (which became law on 7-20-2004).
Receipt of NY Permit ... As of 9/20/00, charities will NOT receive a NY State CGA Permit, regardless of when they file, UNTIL their Total CGA Fund Required Reserves exceed a $500,000 threshold (entire face value of annuities in force being about $800,000) and they have at least one CGA from a NY resident. Governor Pataki signed Senate Bill #5740 on 9/20/00, which is now Chapter 431 of the Laws of 2000.
Charitable Gift Annuities regulated by State Insurance Law Code Section 1110.
Permit issued/regulated by State Insurance Department.
Board Resolution is required. Use only wording supplied by the New York State Insurance Department.
Annual filing is required. Charity's calendar year fund activity report due by March 1 each year after obtaining Permit.
Strict investment limitations. (See below.)
Reserve is required. New York Investment Rules for Reserve Account apply to reserves of entire Fund if charity has New York Permit. Rules of most stringent state where you have a permit apply (which will be New York prior to 11-01-2001).
Charity must be in continuous operation for 10 years before it can issue a gift annuity agreement.
Disclosure wording is required in agreement. Contract is governed by laws of state of residence of donors, except that New York law will prevail if donor's state has gift annuity laws/regulations LESS restrictive than New York.
New York Law requires charity to file for Permit once Required Reserve (including 10% Excess) totals $500,000 or more. Charity will NOT receive a permit until actuarially calculated reserve account exceeds $500,000 (about $800,000 in total face value of all annuities in force) regardless of when it files. MINIMUM Reserve to be maintained is $100,000. (Minimum Reserve account size changed from $80,000 on 6/8/2000.) Required Legal Reserve (RLR) includes 25% "excess" of calculated Required Reserves until RLR reaches $100,000, when the "excess" becomes 10% of the calculated Required Reserves.
REAL ESTATE: Effective July 20, 2004, a charity may now accept a deed for REAL ESTATE or other hard to value assets into its gift annuity fund, IF one is a NY Charity, or a "foreign" charity, regardless of the state where the donors, the real estate or the charity is located. NY Assembly HB 10286 was signed into law July 20, 2004 and immediately became effective. Click here for text, in PDF, of HB 10286.
CAPITAL GAIN/LOSS: A gift annuity (no matter what the asset) is accepted into the Fund, and then is sold from and by the Fund. Any gain or loss in the sale is a gain or loss to the Fund and does NOT affect the annuity to be paid to the annuitant(s). One does NOT accept the gift, sell it and then place the "net proceeds" into your Gift Annuity Fund. The asset offered for the annuity is admitted to the CGA Fund and the Fund then sells the asset. Present NY State allows you to accept ONLY cash and negotiable securities for a gift annuity and your gift annuity agreement must state this fact. (See the paragraph above for a possible future change.)
New York - Gift Annuity Agreement Requirements (as of 5/13/99)
New (as of 5/13/99) Requirements in Gift Annuity Agreements (See Product Outlines for Charitable Gift Annuities at web site: http://www.ins.state.ny.us/lifeindx.htm#pagetop
ALL Gift Annuity Agreements issued to New York residents or by New York charities must include . . . .
a) A distinct alphanumeric form number in the lower-left corner of each annuity agreement.
b) Every agreement form must prominently show the issuing charity's official name and address.
c) Age and/or birth date(s) of annuitant(s);
d) A provision for corrective action if a misstatement of age has been made.
e) A statement that agreement is governed by laws of New York, or if charity is based in another Permit Issuing state, the laws or regulations of the more stringent state will govern the minimum reserve requirements or solvency standard applied to the agreement.
f) Statement that donor intends in part to make a charitable gift to support the work of the organization.
g) Statement that only cash and negotiable securities may be used to fund a charitable gift annuity.
h) Statement as to TYPE of asset (cash and/or negotiable securities) must be specified in the body of agreement and not just in an attached schedule listing the assets given.
i) Agreement must clearly identify and differentiate between agreements that allow for immediate payments and those whose payments are deferred.
j) Agreement must state payments shall end upon death of the last to survive annuitant.
k) Agreement must state that organization's obligation to make payments shall end if all annuitants die before payments start.
l) If agreement allows donor to specify a particular aspect of organization's activities to benefit from all or part of the remainder of annuity gift, then agreement must specify that any gifts not specifically designated will be use to further the general charitable purposes of the organization.
m) Agreements must be drafted in unisex terms, not gender specific words (i.e. "his wife" or "her will"). Acceptable wording includes "his/her".
n) If "Right to Revoke" wording is to be used, it must be exercisable only by will, and if used as "variable wording", it must be offered to every potential donor, regardless of the donor's gift tax status. It may be used as "variable (optional) wording" ONLY if charity will confirm in writing to the NY State Insurance Dept. that every potential donor will be given the choice of whether or not to include the "Right to Revoke" wording in the agreement. If agreement states that agreement is irrevocable, then the right to revoke provision must be prefaced with language similar to: "Notwithstanding any of the foregoing sections..."
o) The "College" or "Tuition" Gift Annuity (where the payments could be exchanged for a specific payment to be made annually over 4 or 5 years beginning with the annuitant's 18th birthday), is prohibited, because New York State Law specifies that the charity will not obtain full benefit of the charitable gift until the annuitant's death.
For actual wording for Gift Annuity Agreements (See Product Outlines for Charitable Gift Annuities at website: http://www.ins.state.ny.us/lifeindx.htm#pagetop
Text of Applicable sections of NY State Insurance Law
Above List Compiled by:
James B. Potter
Planned Giving Consultant
Planned Giving Resources, Inc.
P.O. Box 665
Baker, Louisiana 70704-0665
Phone: (225) 774-6700
E-mail: jimbpotter@aol.com
Click here for new info on Minimum Reserve needed to obtain a permit in New York.
This page last updated January 13, 2006.
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Click here to see the Master Set of 6 Gift Annuity Agreements (offered by Planned Giving Resources, Inc.) that will work in all 50 states (with the addition of the "Extra Wording" state specific "disclosure language" that is now required by 30 states.)
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