Charitable giving through the passing assets today and after your death is a process that requires correct planning and execution. Legacy planning should always be a team effort involving an attorney, tax specialist, and financial professional.
Charitable gifting has no right or wrong way but is best in the way that you prefer.
The complexity of charitable giving through wealth transfer can increase with the number of assets you own, the people or organizations you want your wealth to benefit from, and the length of time you want your assets to last. However, by using life insurance, the complexity can lessen. Here are some ways to make life insurance benefit a charitable organization:
Name the organization as the beneficiary
This method is the easiest way to use life insurance to give to charity. However, naming a revocable beneficiary is one way the donor can change the beneficiary if they choose, keeping the donor in control if their situation changes. Also, naming a charity upon death keeps the transaction private.
Gift the policy dividends
The donor can choose to gift the policy dividends to charity, keeping the death benefit for other beneficiaries or another charity. With this option, the donor can take dividends in cash and donate cash. With this method, the dividend donation is tax-deductible.
Donate the life insurance policy (policy donation)
The donor continues to make all premium payments on a policy they donate to charity. There is no limit on the size of the policy donation, and the policy pays in full upon the donor’s death. Gifting through a policy donation can help reduce the donor’s estate taxes and provide a much more significant benefit to the charity, which has no tax consequence from the gift. The Benefits of giving through life insurance include:
- The policy value continues to grow over time until the donor dies.
- Gifting life insurance providing a much larger donation than if given in cash
- The donor can make smaller payments through monthly premium payments.
- Life insurance can provide a donation more extensive than the premiums paid, making it a good option for charitable giving. If you have questions on how life insurance can be part of your legacy planning, contact your financial professional.
The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided on this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information, and programs made available through this website. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
In addition, for those who are looking for financial advice, we realize there are many options. At Haven Financial Group, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. In conclusion, contact us today to schedule an introductory meeting!
Comments are closed.