Charitable Planning

Charitable giving is an integral part of many estate plans because it is one of the most effective ways to minimize estate taxes while protecting family assets. By setting up a tax-favored charitable plan, you can support causes you believe in, leave behind a shining legacy and pass family values from generation to generation.

Through proper charitable planning, you can – depending on the investment – remove the asset from your taxable estate, ensure a substantial immediate tax deduction is given and even guarantee benefit income protection. We can help you:

  • Plan and implement a charitable giving strategy.
  • Structure your plan for maximum tax advantage.
  • Select the best tax-favored assets for gifting.

BeamaLife can work with you to build a philanthropic legacy as part of an integrated wealth transfer strategy. We can help you determine the best way to give to nonprofit organizations while minimizing tax issues that may impact your family’s future.

Donate Big with Life Insurance

Most wealthy individuals purchase life insurance to make sure their families are taken care of after they’re gone or as a key component to tax-advantaged estate planning.

What they may not know is that life insurance can also aid in supporting a favorite charity. When properly structured, life insurance allows money to grow tax-free and is subsequently transferred to your beneficiary tax-free. At the same time, your estate receives a charitable deduction for the amount of the proceeds upon your death.

Bigger Donations…and a Tax-Free Break

Here’s how it works: say you decide to transfer your insurance contract to your favorite health-focused charity or your alma mater. You get an income tax deduction this very year; at the same time, you set the stage for leaving behind a generous legacy.

Let’s say you are 58 years old and your estate is worth $10 million. According to Daily Finance, you can purchase a $10 million life insurance policy with an increasing death benefit at a cost of $718,000 per year for seven years. If the value of the life insurance policy grows at 7.5 percent during the 30-year period, your charity receives almost $27 million upon your death. Now that’s a gift that will make a major impact!

Much Larger Charitable Contributions

Giving through life insurance allows you to make a far larger contribution than outright cash or appreciated property. And there are many ways that life insurance can be utilized. Some gifts are self-completing – awarded only in the event of your death or disability. Some are bequests at death, which go to the charity free of any federal tax. You may choose to give an existing policy or policy dividends. Let’s take a look at three of the most popular ways to set up your life insurance policy for charitable purposes:

Policy Donations

If you’re seeking a greater benefit for the charity of your choice, you may want to consider a policy donation. By gifting the life insurance policy, you could end up paying thousands less in estate taxes and at the same time, reap an often significant income tax deduction of the policy’s fair market value.

When you pass away, your charity will receive the entire face amount of the policy – a substantial windfall that’s far greater than it would receive from a charitable giving rider. Any premiums paid after the date of the gift may also be tax deductible.

Rather than surrender a policy that was initially purchased to help provide support for a divorced or deceased spouse or children who are grown up and self-sufficient, you can dispose of it through charitable giving. There is no limit to the size of the policy that may be donated.

Designating The Charity As Beneficiary

Perhaps the easiest way to provide your charity with death benefit proceeds is simply to name it as a beneficiary. Although you will not save on income taxes, your estate will be reduced by the amount of the death benefit.

There are other benefits to designating the charity as beneficiary: it’s flexible, so you can list the charity as a revocable beneficiary and switch to another charity (or another family beneficiary) down the road.

If your relationship with family members is thorny, you can transfer assets in this incontestable way, making it virtually impossible for anyone to contest the estate settlement. In this case, the proceeds are paid confidentially and your heirs need not know your intentions, either before or after your death.

Gifting Policy Dividends

You may also choose to receive the dividends paid to your life insurance policy in cash and donate them to charity. Although the benefit to the charity is not quite so substantial, you can deduct benefits from taxes and need not concern yourself with additional cash outlay. If you own a corporation, it’s a great way to recognize tax and community benefits.

THE SECRET OF LIVING IS GIVING. Speak to BeamaLife to set up your life insurance policy to support your charitable goals. Call a BeamaLife specialist today at (877) 972-3262 to speak or complete the personalized proposal request form now.