Charity Can Begin With the Gift of Life Insurnance

Almost everywhere, individuals and business sectors are feeling the strain of these tough economic times. And, it stands to reason, when corporate and personal budgets are tight, donations to charities and nonprofit groups suffer. In fact, a survey of the United Way’s largest chapters projects donations this year will decline 2% to 5.6%1.

But, even now, regardless of your income level, you can continue to support your favorite philanthropic organizations by donating through life insurance. When you name your chosen charity as the beneficiary of your policy,2 you are contributing to a worthy cause and can benefit from potential tax deductions.

There are several methods of gifting life insurance as a charitable donation:

• Designate a charity as owner and beneficiary. This benefits the charity and gives the donor a bonus in the form of income tax benefits. Premiums on such a policy are deductible to taxpayers who itemize their deductions. Consult a tax professional for details.
• Designate charity as beneficiary. As policyowner, you retain the right to make changes to the policy including changing the beneficiary. While premium payments are not tax deductible, upon the donor’s death, the estate receives a charitable estate tax deduction for the proceeds, as allowed by law.
• Donate an existing policy. If you own a policy with coverage that is no longer needed, you may consider donating it to a charity. The donor could irrevocably assign or transfer the policy to a charity as owner and beneficiary. This gift is generally not subject to gift tax, and, in most cases, may be eligible for a charitable income tax deduction.
• Create a charitable remainder trust. This is a complex planning option for donors with unproductive appreciated assets, such as real estate. This transaction can be structured to benefit the donor, heirs and charity. Consult an attorney or accountant for advice.

Even in a challenging economy, with a little foresight and creativity, you can continue to support worthwhile endeavors and gain satisfaction in knowing you’ll be able to contribute for the long term.

This educational third-party article is being provided as a courtesy by Ruthe B. Schwartz.

Neither Money in Montion Inc., its employees nor New York Life Insurance Company, nor its agents, provide tax, legal or accounting advice. Please consult your own tax, legal or accounting professional before making any decisions.

Ruthe B. Schwartz is an Agent for New York Life Insurance Company.  Money In Motion Inc. is not owned or operated by New York Life Insurance Company, its subsidiaries or affiliates.

1“Charities See Donations Drop as Need Spikes,” money.cnn.com, February 13, 2009.
2Must be a qualified charity.
3New York Life does not provide tax advice. For tax advice specific to your situation, please contact your professional tax advisor. Also, state laws vary with respect to charities and insurance. Consult your legal advisor for details.

334102CV (exp 12/31/10)