Ideas Worth Considering: Charitable Gifts of Life Insurance
By Chris Askin CSPG, CFRE
President & CEO
Insurance in general is a big part of our work at the Community Foundation of Northern Nevada, and that includes life insurance. Donors can benefit by thinking about life insurance as a way to fulfill their charitable goals, and the Community Foundation is a key partner in this endeavor because of our capacity to manage such assets, and because the financial benefit from insurance can be used to support a donor’s charitable interests for almost any charity or purpose.
Below are a few examples.
One might choose to gift current policies, resulting in a current charitable gift deduction and the Community Foundation’s promise to maintain the policy through term. We have received several gifts of this type. Another gift option could establish a term policy, with the donor making an annual “charitably deductible” gift to the Community Foundation to cover the premium cost. These types of gifts are made by donors who have a history of giving to their favorite charities, and who want to make sure that their gifts continue should they die prematurely.
In some gift arrangements, a donor makes a gift to establish a charitable trust that provides an income stream to their heirs, with the remainder going to charity. The donor uses the charitable gift deduction to receive a lump sum savings on their taxes, which they then use to purchase a life insurance policy payable to their heirs. In this plan, the family receives income and a life insurance benefit that helps to replace the asset that was contributed, while a significant gift is also made to charity. Sometimes such gifts sound too good to be true, but such win-win scenarios are possible, thanks to our tax code, which provides significant benefits for individuals engage in charitable giving.
Naming the donor as full or partial beneficiary on a current policy, or working with the Community Foundation on a Life Settlement – an unwanted and unneeded policy that can be gifted, then sold through a secondary market – may provide the donor with both a current charitable gift deduction, and a current charitable benefit to the charity of their choice.
The Community Foundation of Northern Nevada can provide support to explore these and other giving ideas that involve life insurance, and can prepare an analysis of what may be most beneficial to you based on your current financial and estate goals, and your charitable objectives. Should you wish to explore any of these ideas, please give me a call at (775) 333-5499 or email here.
The Community Foundation of Northern Nevada is strengthening our community through philanthropy and leadership by connecting people who care with causes that matter.
October 23, 2021