Planned Giving through Life Insurance
Josie Malandrino
Planned giving or charitable gift planning refers to the process of making a charitable gift to one or more nonprofit organizations, a gift that requires consideration and planning in light of the donor's overall estate plan. Planned giving allows donors to integrate a charitable gift into his or her overall financial, tax, and estate planning objectives in order to maximize benefits to both the donor and the charity.
One way to achieve this is through the purchase of a new life insurance policy, which designates Epilepsy Ontario as both the owner and irrevocable beneficiary.
Gifts of Life Insurance
A gift of life insurance is an attractive way of making a charitable donation because it enables the donor to make reasonable current contributions, yet leave a significantly larger future endowment. A gift of life insurance is a deferred gift, which means that the proceeds from a gift commitment made now will be realized by Epilepsy Ontario sometime in the future. Even though a deferred gift may not actually benefit the charity for many years, the gift arrangement can generate an immediate income tax charitable deduction because the future gift has been established and cannot be recalled.
Advantages
Planned giving using life insurance is a win-win situation. Your generous contribution will: - help fulfill Epilepsy Ontario's mission by providing much needed levels of future funding to an institution which has real and specific meaning to you, the giver;
- provide you with the same annual tax receipts as a regular donation by naming Epilepsy Ontario as the owner and beneficiary of your life insurance policy;
- not reduce the value of your estate for your heirs; and
- not be subject to probate fees since the death benefit is paid directly to Epilepsy Ontario.
The key word is planned. By putting a little planning into your charitable giving, you may find that there are some major advantages not only to the foundation which receives your support, but also to you, the giver. Planned giving through life insurance is a relatively straightforward estate planning solution. However, it is important to remember that in order for it to be effective, you must ensure that the policy in question is a permanent one. In other words, it must remain in effect until you die.
If you would like to make a truly special gift — one which creates a living legacy in your name — life insurance may be the answer. It allows you to make a larger donation to Epilepsy Ontario than you would have thought you could afford.
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