Charitable Giving with Life Insurance coverage can be a great idea for those who want to be able to give a large donation to their charity of choice when they pass. Learn about how to correctly set this up.
Charitable Giving with Life Insurance coverage is a way for people to give to their favorite charity when they die. Most Americans give to charity while they are alive, and even volunteer or help in other ways. Many develop a strong relationship and sense of commitment to a particular cause. This could be because of a friend, family member or even pet that was affected by a certain condition, or a personal experience, which led them to get involved. There are so many wonderful organizations out there that we can get connected with. Charitable Giving with Life Insurance coverage can definitely be a great way to help a charity continue its mission and research after you pass.
Life Insurance coverage can offer some flexible options, which can work to your advantage when setting up a charitable gift to a non-profit organization. There are a few rules and guidelines to follow, however.
First, you should think about policy ownership. You can own your own policy or have the charity set up as the owner. If you own your own policy, then you are not subject to any income tax. If the charity owns your policy, it will also be named the beneficiary in most cases, which in turn should provide you with a tax deduction/write-off. Owning your own policy, however, entitles you to have complete control over the policy and make any changes to it during its life, such as premium payment changes, beneficiary changes and any other changes that need to be made.
As owner, you will also be able to decide how much of the death benefit proceeds should go to your charity of choice. You can also name multiple beneficiaries to receive the proceeds. You may want the non-profit organization to receive half or 75% of the proceeds, then a family member to receive the rest, or even split the rest between 2 or 3 family members. Being the owner of your own policy gives you the flexibility to make these changes.
You may decide to include a charitable life insurance donation in your will or trust. There are many trusts you can set up that will enable you to structure your giving the way you like. We recommend contacting an Estate Planning Attorney to discuss wills and trusts in greater detail if you desire more information about this.
Charitable Giving with Life Insurance coverage is a wonderful way to help others and may work for you. Shelly Alvarez Insurance is experienced with Charitable Giving strategies and can assist you with structuring the life insurance coverage that is appropriate for your situation. Please contact us with questions.
(All tax or legal advice should be directed to your attorney or accountant).