Ultimate Gift Guide

Charitable Giving

Research indicates that approximately one-third of participants in The Great Wealth Transfer have not engaged in robust estate planning, often neglecting to create a will or trust for directing their wealth transfer. Even those who have completed their planning might need to revisit their documents as family dynamics and tax legislation are continually evolving.  While this planning can seem overwhelming, framing the establishment and maintenance of an estate plan as the ultimate gift to family members can help motivate action.  Advisors have the opportunity to position themselves as gift guides, assisting clients in turning their Wish Book into reality.

Life insurance can significantly enhance the value of a charitable gift. The potential for gifting leverage arises because the death benefits are usually greater than the premiums paid. The extent of this leverage depends on factors such as the size of the policy's death benefit, the insured's health and life expectancy, and the total premiums paid.

Here are some options for leveraging life insurance for charitable giving:

(1)   New policies can be implemented specifically for charitable contributions, provided the insured has a history of significant donations to the charity and is healthy enough to qualify for a policy.

(2)  Existing policies can be transferred to a charity. By changing the owner and beneficiary of an existing policy to a charity, the donor can also gift funds to cover any ongoing premiums.

(3)  It may be possible to exchange an existing policy for a new one that does not require additional premiums, depending on the insured's health. After the exchange, the charity can be appointed as the owner and beneficiary. In this scenario, there would not be any ongoing premium requirements for the charity to consider. 

While these options may not provide immediate financial support to the charity, they can lead to substantial future contributions, such as funding a scholarship or constructing a facility in the donor's name. Although many life insurance policies are intended for charitable donations via their eventual death benefits, there are also various ways for charities to access funds within a permanent life insurance policy during the donor's lifetime.

Navigating life insurance can be complex, as not all policies are the same. For those interested in charitable giving through life insurance, consulting with an experienced life insurance professional knowledgeable in charitable planning can yield the best outcomes.

Contact us with any questions or opportunities to help you or your clients achieve identified goals. This is what we enjoy doing for only a select number of families, businesses, and charitable institutions each year, and we look forward to hearing from you.