Creating a charitable legacy can be one of the most rewarding planning activities for you and your family. Americans give more money to charities each year than any other nationality. According to the Giving USA 2018 Foundation report, American individuals, estates, foundations, and corporations gave an estimated $410 billion to charitable causes in 2018, increasing 5.2% over the prior year, with about 70% Americans giving to charity.

Virtually all states have passed legislation that specifically provides that charities have an insurable interest in the lives of their donors. Donors who wish to leverage their cash donations to a charity can use life insurance as an excellent means of accomplishing their goal. This is often best accomplished by either gifting a policy outright to the charity, or naming a charity as beneficiary, providing the charity of their choice with a large sum of money that can provide a lasting legacy for a cause that they believe in. Charities in turn will often recognize their best donors by crediting them with the estimated value of the future gift. This allows the donor to be recognized immediately for their gift of life insurance proceeds, if desired, and can assist the donor in acquiring naming rights and other recognition opportunities.

Making a gift of a life insurance policy to your favorite charity appeals to a variety of donors because it is a flexible, cost-effective, and in many cases tax-advantaged way to make a major gift that will benefit the nonprofit institution after the donor dies. Transferring ownership of a cash value life insurance policy makes you eligible for a charitable tax deduction based on its current value. It can also help to reduce estate taxes, since the value of the policy is removed from your estate.

As you go through the Charitable Estate Planning Process, you have flexibility in considering how to best recognize your favorite Charity or Non-Profit Organization. Annual gifting to Charitable and Non-Profit Organizations is often one of the most satisfying endeavors we can pursue. Annual gifting can also generate attractive income-tax advantages for you, and your family. Yet, you may find that you are unable or unwilling, to make current gifts at a level you would like. Or, you may be making current gifts and still want to do more, without having adverse impact on your family wealth.

Donors will often implement a new life insurance policy, applied for and owned by their favorite charity, and funded each year by a gift equal to the annual premium. Annual gifts to qualified nonprofit institutions or charities to cover the premium are currently tax-deductible to the donor, and at death the charity receives the death benefit tax-free.

Life insurance can also be used as an asset replacement strategy, whereby the donor makes a gift of an asset (such as real estate or appreciated securities) to the nonprofit and replaces the value of that asset to benefit his/her heirs with a life insurance policy. Through proper estate planning, life insurance proceeds may be excluded from your estate and not become subject to estate and income taxes, providing tax-exempt benefits that inure to the donor’s heirs.

The concept of planned giving involves gifts of the donor’s accumulated assets to ensure the charitable organizations long-term financial viability. The process often requires that donors make decisions regarding the distribution of significant portions of their estate. However, legacy gifting can take many forms, and one of the simplest methods is to name the charity of your choice as beneficiary of a life insurance policy. It is possible to arrange for a lending institution to provide the funds needed for premium payments on the life insurance policy, allowing the donor(s) to implement significant gifting arrangements with little or no out-of-pocket expense. By utilizing other estate assets to satisfy collateral requirements with the lender, the Affluence Group team is able to design flexible charitable gifting initiatives, intended to deliver maximum impact for the charity or nonprofit of your choice.

The Affluence Group will work with your advisory team, including your attorney, CPA and Planned Giving team, in order to develop the most attractive Charitable Giving arrangement for your unique situation.