Help insure your favorite charity’s future
Help insure your favorite charity’s future
If you’re thinking about making a major gift to a charity, take a look at your life insurance policies. Including life insurance in your charitable giving strategy is simple and can provide tax benefits.
The easiest option is to designate a charitable organization as your beneficiary. On your death, the charity receives the policy proceeds. Alternatively, you can irrevocably give your permanent (as opposed to term) policy to charity by naming the charity as its owner. This enables the organization to access the policy’s accrued cash before your death, though this will reduce the death benefit.
Tax ramifications vary. If you donate the policy, you can take a current income tax deduction equal to the lesser of your cost basis or the policy’s value. If you continue to pay the premiums, you also can deduct each premium payment. Although you can’t deduct premiums if you make a charity your policy’s beneficiary, by retaining ownership you can change the beneficiary or access the policy’s cash value.
In both situations, proceeds paid to the charity on your death aren’t subject to estate tax.
