Andrew M. Cuomo Linda A. Lacewell
Governor Acting Superintendent
Charitable Gift Annuities
Product Outline
(Last Updated February 6, 2019)
Table of Contents
I) Scope ................................................................................................................... 1
II) Charitable Gift Annuities ....................................................................................... 1
II.A) Definition .................................................................................................... 1
II.B) Jurisdiction and Scope of Review .............................................................. 1
III) Form and Filing Requirements ............................................................................. 2
III.A) Form Submission Requirements ................................................................ 2
III.B) Filing Requirements ................................................................................... 4
III.C) Required Contract Provisions .................................................................... 5
III.D) Prohibited Language .................................................................................. 9
III.E) Right to Revoke ......................................................................................... 9
IV) Annuity Rate Requirements of § 1110(a) ........................................................... 10
V) Additional Information ......................................................................................... 10
New York State Department of Financial Services Charitable Gift Annuities Product Outline
(Version: 2/4/2019)
1
Charitable Gift Annuities
Product Outline
(Last Updated February 4, 2019)
I) Scope
This product outline applies to all charitable gift annuity contracts delivered or issued for
delivery in New York. This outline is current as of January 15, 2019. Subsequent changes
to statutes, regulations, circular letters, etc., may not be reflected in the outline. In case
of any doubt, please contact the Life Bureau.
II) Charitable Gift Annuities
II.A) Definition
A.1) A charitable gift annuity agreement is a contractual arrangement that obligates
an eligible organization to pay periodically a fixed sum measured by an
annuitant’s life (the donor or the donor’s nominee(s)), in consideration for a
gift of cash and/or other property transferred by the donor to the organization.
Upon the death of the final annuitant the organization’s obligation ends and
what remains of the gift goes to the organization as a charitable gift.
A.2) Charitable gift annuities should not compete with products offered by life
insurance companies.
II.B) Jurisdiction and Scope of Review
B.1) Pursuant to Insurance Law § 1110, a special permit is required to make or issue
charitable gift annuity agreements in New York State.
(a) All permit requirements of § 1110 must be met if the requisite reserve on
outstanding annuity agreements is greater than $1,000,000 (§ 1110(d)).
(b) If an organization’s reserve does not exceed $1,000,000, the organization
may be exempt from certain permit requirements.
(c) If exempt, the organization must obtain a letter from the Department
indicating its exempt status before issuing any gift annuities in New York.
An exempt organization must also comply with other Department
requirements.
(d) Pursuant to § 1110(f), the superintendent may examine an organization
that is exempt from obtaining a permit pursuant to § 1110(d).
B.2) The review of applications for a special permit pursuant to § 1110 is divided
into three separate parts:
(a) Financial condition and reserves. This review is completed by the Life
Bureau in both New York City and Albany.
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(b) Corporate status. The Office of General Counsel in Albany completes this
review.
(c) Form and rate compliance. This review is completed by the Life Bureau in
Albany.
B.3) Permits will not be issued until all three parts of the review are completed.
B.4) This product outline sets forth the requirements for form and rate compliance.
III) Form and Filing Requirements
III.A) Form Submission Requirements
Pursuant to § 1110(a), an organization shall, prior to issuing any charitable gift
annuity agreements in New York, provide to the Department copies, of all charitable
gift annuity agreement forms it intends to use in New York. This is required for
every organization even if the organization is exempt from other permit
requirements. Agreement forms submitted to the Department should be in the
form intended for actual issue.
Organizations applying for a special permit must submit the sample agreements as
part of their submission to the Life Bureau in New York City. The Life Bureau in New
York City will provide copies of the sample agreements to the Life Bureau in Albany,
which will conduct the review of the agreements, correspond with the organization
in that regard, and provide a disposition.
Organizations that have already received a special permit to issue charitable gift
annuity agreements, but that need to file new or revised sample agreements, must
submit those sample agreements directly to the Life Bureau in Albany for
acceptance before issuing them.
Note: The Circular Letter No. 6 of 2004 approval procedure is not available for
charitable gift annuity form submissions.
A.1) The Department will notify the organization whether the agreements are
accepted. The organization may not use the annuity forms in New York until it
receives an acceptance letter from the Department.
A.2) If an agreement form that has previously been filed with and “accepted” by the
Department is changed, revised, modified, or updated, it must be submitted to
the Department for acceptance prior to use because such form constitutes an
entirely new gift annuity form.
Note: This includes any changes to the text of an agreement resulting from an
update of commercial software that the organization may be using.
(a) The submission letter which accompanies a modified/updated gift
annuity form submission should reference the form number, Department
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file number, and date of Department acceptance of the previous version
of the gift annuity form.
Note: A modified/updated gift annuity form submitted for acceptance
must include a form number which is distinct from that included on the
charitable gift annuity form previously accepted.
(b) Where a form filing is a result of a Department audit or examination, the
submission letter should identify the observations/violations that were
noted by the auditor/examiner.
A.3) Each type of annuity agreement must be submitted as a separate form. Typical
types of annuity agreements include the following:
(a) Single-life-immediate payment – the annuity is measured by the life of
one person or annuitant, often the donor, and the annuity payments are
to commence within one year from the date of the agreement.
(b) Single-life-deferred payment – the annuity is measured by the life of one
person or annuitant, often the donor, and the annuity payments are to
commence at some later date.
(c) Two-lives-immediate payment – the annuity is measured by the lives of
two people, often the donor and a successor annuitant, and the annuity
payments are to commence to the first annuitant within one year from
the date of the agreement.
(d) Two-lives-deferred payment – the annuity is measured by the lives of two
people, often the donor and a successor annuitant, and the annuity
payments are to commence to the first annuitant at some later date.
(e) Two-lives-joint and survivor – the annuity is measured by the lives of two
people, often the joint owners of the property donated, and the annuity
payments can commence either on the date of the agreement or at some
later date.
(f) The Department considers gift annuity agreements in which donors are
annuitants to be distinct from gift annuity contracts where donors are
not annuitants and as such, must be submitted to the Department as
separate forms.
A.4) Application Forms
The Department does not review or accept application forms for charitable gift
annuities. If an organization submits an application form, we will file it for
informational purposes only.
A.5) Forms for Out-of-State Use
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A New York domiciled organization does not need to file with the Department
contract forms that it intends to issue outside of New York. However,
reserving standards are applicable to all contracts issued by the organization.
III.B) Filing Requirements
B.1) Form Numbers. Every form submitted for acceptance by the Department shall
include a distinct alphanumeric form number in the lower, left-hand corner of
the agreement. Often the form number reflects the type of annuity the
agreement creates. We suggest something along the lines of, for example: 1L-
I for a one-life immediate payment annuity; 1L-D for a one-life deferred
payment annuity; 1L-DNA-D for a one-life deferred payment annuity where the
donor is not the annuitant; et cetera. Once assigned, the form number may
not be changed unless the organization resubmits the form for acceptance.
Organizations that wish to have a separate tracking number for their own use
that varies with each instance may do so, but it must not appear in the lower
left-hand corner of the form.
B.2) Submission Letter.
(a) For the form and rate review, the organization’s submission should
include a separate letter detailing in the “re” section the form number
and brief description of each agreement submitted. As discussed
elsewhere in this product outline, the submission letter should include
any required confirmations or assurances.
(b) The submission letter should indicate whether the organization has
issued and/or is currently issuing charitable gift annuities in New York
which have not previously been submitted to and accepted by the
Department.
B.3) Every form should be written with the specific organization in mind. The full
legal name of the licensed organization and its street address must appear
prominently in the agreements.
(a) Where the organization’s legal name and/or street address has changed
from the one appearing on previously issued active agreements, a name
change and/or address change endorsement must be filed with the
Department for acceptance. Once accepted, the organization must send
the endorsements to all active agreement holders. See The Filing
Guidance for Making Address Changes, Name Changes and Merger/Name
Changes posted on our website for further information.
(b) Where the organization’s legal name and/or street address changes from
the one currently on file with the Department, the organization must
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advise the Department’s Albany Office of General Counsel in writing of
such change.
B.4) Variable Information. Names, dates, addresses, amounts and other
information that would ordinarily vary from donor to donor, should be
appropriately labeled and indicated as variable material using blank lines or
brackets. For example, “[Donor 1] residing at [address of Donor 1] and [Donor
2] residing at [address of Donor 2]…”; “The annuity shall be paid in [monthly,
quarterly, semi-annual, annual] installments of $________.”
B.5) Organizations should clearly identify and differentiate between agreements
that provide for immediate annuity payments and those that allow for such
payments to be deferred. The title of the agreement should state whether
payments are immediate or deferred.
B.6) If an organization is responding to an initial Department comment letter, a
complete written response must be received by the Department within thirty
(30) calendar days. If an organization is responding to an additional
Department comment letter, a complete written response must be received by
the Department within fifteen (15) calendar days. If the organization does not
respond within the required time frame, the forms filing will be closed. An
intervening telephone conversation or similar action does not toll the required
time frame.
Note: Response letters sent via fax within the response deadline will be
accepted so long as a hard copy of the response letter and clean copies of the
revised agreement forms follow by overnight mail.
B.7) If the submission is being made by a third party on behalf of the charity, a
letter authorizing the third party to act on behalf of the charity must be
provided. The letter must be:
(a) on charity letterhead or include the charity name in the subject line of
the letter;
(b) specifically addressed to the New York State Department of Financial
Services;
(c) properly executed by an authorized officer of the charity;
(d) dated; and
(e) either
(i) specific to the file submitted for approval by including form
number(s); or
(ii) generally applicable to all forms filed on behalf of the charity as
long as a copy of such authorization is included in each submission.
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III.C) Required Contract Provisions
C.1) Each contract must include a summary description or caption. The brief
description in the caption of each gift annuity agreement must describe the
nature of the agreement; for example, “Two Lives – Deferred Payments –
Successive Interests – Donor is an Annuitant” rather than simply “two-life
deferred payment”.
C.2) The agreement must set forth the dollar amount of the annuity payments and
the date on which payments will commence.
(a) The agreement may not contain language to the effect that the annuity
payments will be determined after issue of the agreement or after sale of
the gifted property.
(b) Under most gift annuities the payment commencement date has already
been elected before the contract is issued. However, we have accepted
deferred agreements which provide for a set of flexible annuity
commencement dates. Under such annuities, the annuitant elects the
commencement date after issue of the contract from a list of potential
commencement dates set forth in the contract by giving the charity
reasonable advance notice before the desired commencement date. For
example, the annuity may provide that the annuitant may commence
annuity payments on any contract anniversary up to the 10th contract
anniversary by giving the organization notice at least 30 days prior to the
contract anniversary. Since these are deferred annuities, the earliest
commencement date may not be less than one year after the annuity
issue date.
(i) The Department has generally accepted flexible income
commencement ranges spanning from 1 – 20 years from the issue
date. Where an organization desires to use a commencement
range beyond 20 years from the issue date, the organization must
provide justification in the submission letter in support of such an
extended period. Ranges beyond 20 years will be reviewed on a
case-by-case basis.
(ii) The deferred agreement must set forth all optional commencement
dates (the first possible date being no earlier than 1 year from the
issue date) and what the annuity payment amount would be for
each optional commencement date. This is most often
accomplished in a schedule attached to the agreement. The sample
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schedule submitted to the Department should set forth bracketed
variables that show the range of potential commencement dates.
Note: The submission letter to the Department must confirm that
all optional commencement dates and corresponding annuity
payment amounts will be set forth in the schedule when issued.
For example, if the agreement provides that the annuitant may
commence annuity payments on any contract anniversary for the
first five years following issue of the contract, the sample flexible
commencement date schedule submitted to the Department may
be drafted similar to the following example:
Annuity Payment Schedule
Where Payments commence on this date
Such Annual Income Amount Will Be
[day/month/year1]
$ [Annual Income Amount1]
[day/month/year2]
$ [Annual Income Amount2]
[day/month/year3]
$ [Annual Income Amount3]
[day/month/year4]
$ [Annual Income Amount4]
[day/month/year5]
$ [Annual Income Amount5]
(iii) The agreement form must provide that payments will commence
automatically on the final optional commencement date if
payments have not already been commenced prior to that date.
(iv) The agreement form must disclose that if the annuitant(s) dies
before the payment commencement date no annuity payments will
be made.
C.3) A provision indicating the age and/or birth date of the annuitants.
C.4) A misstatement provision similar to the following:
If the birth date of the Annuitant should be found to be incorrect, the amount
payable or benefit accruing under this Agreement, at any time, shall be such as
would have been provided according to the correct birth date. If any
underpayment or overpayment has been made due to such misstatement, any
such underpayment shall promptly be paid to the Annuitant, and any such
overpayment shall be charged against the current and/or next succeeding
payment(s) to the Annuitant.
C.5) A governing law provision.
(a) In most situations a statement in the agreement that it is governed by
the laws of the State of New York will suffice.
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(b) If the donor is a resident of another permit-issuing state, we have
accepted language substantially similar to the following:
This agreement is executed in the State of New York and shall be governed
by the laws of the State of [name of state], the state of residence of the
donor when this agreement is delivered to the donor. In the event that
New York and [name of state] laws or regulations differ with regard to a
specific requirement relating to minimum reserve requirements or
solvency standards applicable to charitable gift annuity agreements, the
more stringent requirement or solvency standard will apply to this
agreement. In no circumstances may any minimum reserve requirement or
solvency standard applied to this agreement fall below the minimum
standards imposed by New York law or regulation.
C.6) A statement to the effect that the obligation of the charitable organization to
make the annuity payments is in consideration for the charitable gift being
made by the donor.
C.7) A statement of the donor’s intent indicating that the donor intends, in part, to
make a charitable gift to support the work of the organization.
C.8) A provision specifying what the gift consists of, i.e., the amount of cash and/or
a specific description of any other property.
(a) Many agreements reference an attached schedule or appendix in order
to more completely describe the property transferred. However, the
agreement cannot have an unqualified reference to an unspecified gift of
property in a “Schedule A.” The agreement itself must indicate what type
of property is being described in any attachment. For a transfer of
negotiable securities, sufficient identifying information must be provided
either in the agreement or an attached schedule, i.e., name of the
corporation, type of shares, number of shares and current fair market
value.
(b) Acceptable language includes “…hereby transfer [cash in the amount of
$__________] [and/or] [other property] [described in Schedule A
annexed hereto having the fair market value of $__________].” As noted
in (a) above, the entry for [other property] must be filled in with the type
of property being more specifically described in Schedule A.
Where an organization seeks to utilize a Schedule page for the property
description, such page must be included as part of the form submission and
should contain bracketed general language where the specific description
of the gifted property will appear when the agreement is issued; e.g.,
“[Description of Gifted Property]”, or “[Property Description]”.
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C.9) A statement that upon the death of the last annuitant or the survivor of two
joint annuitants, the obligation of the organization to make annuity payments
shall end. Agreements that allow for deferred payments should also include a
statement describing what happens if the donor(s) die prior to the
commencement of the annuity payments.
C.10) If the agreement allows a donor to designate a particular aspect of the
organization’s activities as the recipient of all or part of the gift, then the
agreement must state that any gifts not specifically designated will be used to
further the general charitable purposes of the organization. This informs all
donors of their ability to designate a specific use for their donation and informs
them of the use of funds not subject to the designation.
Note: It may be permissible for such provision to designate the organization’s
support of another entity as the use of the gift as long as such support is in
accordance with the general charitable purposes of the charity and does not
violate any other statutes or regulations governing charities. However, the
Department may object if it appears that such designation is being used as a
means for the entity ultimately benefiting from the gift to operate a gift
annuity program without complying with the requirements of Insurance Law
§ 1110.
C.11) If the person signing the agreement on behalf of the charitable organization is
not an officer of the organization, the agreement must include a statement
that the person signing is duly authorized to sign on behalf of the organization.
If the person signing the agreement is an officer, the signature block should
include the officer’s title.
C.12) A statement indicating that the agreement, including any attached schedules,
if applicable, constitutes the entire agreement between the parties.
C.13) A statement indicating that the agreement is irrevocable.
C.14) A statement indicating that the agreement is nonassignable, except that it can
be assigned to the issuing organization.
C.15) A signature block for the donor(s) to sign the agreement.
III.D) Prohibited Language
D.1) Agreements may not contain language that indicates that the organization
does not intend to be bound to make the agreed upon annuity payments.
D.2) Agreements may not contain sex-specific terms and must be drafted using
gender neutral language. Examples of sex-specific language include references
to “his wife” or “her will”, “husband” and “wife”. We have accepted forms
that use “his/her”, “Annuitant 1” and “Annuitant 2”.
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III.E) Right to Revoke
E.1) The right (or power) of revocation in charitable gift annuities involves the
ability of a donor to terminate some portion of the future interest of an
annuitant or successor annuitant in the donated property. The exercise of this
right ends the organization‘s obligation (either in whole or in part) to pay an
annuity after the death of the revoking donor. For gift tax reasons, the right to
revoke is often included where the donor names someone other than or in
addition to himself/herself as annuitant. The revocation language does not
apply when the donor is the sole annuitant. The agreement must indicate
whether or not the donor will be an annuitant.
The right to revoke is an optional feature in charitable gift annuity agreements.
This option must be offered to every potential donor, regardless of his or her
gift tax status. Therefore, revocation language should be enclosed in brackets
to denote variability.
Note: With the following exception, the organization must confirm to us in
writing that every potential donor will be given the choice of whether or not to
include the provision, and that the revocation wording will be either included
as written or not included at the option of the donor(s). A confirmation is not
required for forms where the donor is the sole annuitant.
If a revocation provision is not included at the option of the donor, any
subsequently numbered paragraphs in the agreement will need to be
renumbered. Accordingly those section numbers should be bracketed as
variable; i.e., “[8.], [9.], [10.]”.
E.2) The right of a donor to revoke may be exercisable only by the donor’s Last Will
and Testament or other testamentary means, and cannot be revoked by any
non-testamentary means.
E.3) If an agreement states elsewhere that it is irrevocable, then the right to revoke
provision must be prefaced with language similar to the following:
“Notwithstanding any of the foregoing sections, . . .”
E.4) If the agreement is established by two (2) donors wherein either or both
include the revocation option at issue, the revocation text should indicate that
each donor may revoke up to such donor’s “proportional interest” in the gifted
property.
IV) Annuity Rate Requirements of § 1110(a)
IV.A) The maximum annuity rates used by the organization shall be computed on the basis
of the annuity standard adopted by it for calculating its reserves so as to return to it
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upon the annuitant’s death a residue at least equal to one-half the original gift or
other consideration for such annuity.
IV.B) A schedule of the maximum rates must be accepted by this Department for filing
with every application for a special permit or request for an exemption from the
permit requirement.
IV.C) The rate requirements of § 1110(a) prohibit the issuance of a so-called “College Gift
Annuity” in which the life annuity issued could be exchanged for a specific payment
to be made annually for four years beginning with the annuitant’s 18th birthday.
The language of § 1110(a) clearly contemplates that the organization will not obtain
full benefit of the charitable gift until the annuitant’s death.
V) Additional Information
There are additional guidance documents and materials available on the Department of
Financial Services website. They address topics such as the application for a special
permit, annual report requirements and reserve issues.
