|
Life insurance is a remarkably versatile asset. Life insurance provides
protection against the economic loss suffered in the event of death or
disability. It can be used as a supplemental source of retirement income.
It is an excellent source of liquid funds for the payment of state and
federal death costs and other expenses.
In addition, many people find that a life insurance policy makes an excellent
gift and can be given at very low cost. A gift of life insurance to Good
Samaritan Hospital can be especially meaningful for a number of reasons:
- Life insurance allows you to make a substantial gift on an installment
basis by making a series of modest payments during your lifetime.
- A gift of life insurance is certain, and the proceeds are paid promptly
without going through the time-consuming process of probate.
- Depending on the arrangement of your gift, life insurance can create
a number of favorable tax consequences.
There are several ways you can use life insurance as the basis for a
charitable gift.
Ruth Barry has made a big impression on Good Samaritan Hospital, where
the registered nurse has provided compassionate care since 1964 and
actively helped with fund-raising campaigns through the Hospital’s Foundation.
During her 40-year history with the Hospital, Ruth has served on the
Women in Philanthropy Advisory Council and two employee campaigns, helping
to raise money for a new employee fitness center and establishing an
endowment for the Employee Emergency Fund. Yet
she wanted to do more to ensure that Good Samaritan Hospital would continue
to offer state-of-the-art medical care in the future.
“Good Samaritan Hospital is so much a part of my life, who I am, the
friends I’ve made, the experiences I’ve had,” Ruth said.“Good Samaritan
Hospital paid for much of my education through tuition programs, conference
opportunities, and medical education offerings. Because Good Samaritan
Hospital has given me so much over the years, I want to be able to give
back so that others may benefit in the future.”
In addition to giving to the Hospital through her will, this past year
Ruth decided that she would give a gift of life insurance to the Foundation's
Compassionate Care Multiplied Campaign. “Life insurance was a wonderful
option for me because it allowed me to make a sizeable gift to a very
important project that would not have otherwise been possible,” said
Ruth. “I still support Good Samaritan Hospital on an annual basis, but
this allowed me to do something special.”
Making the Charity a Beneficiary of your Life Insurance Policy
You may wish to make the charity the beneficiary (or a contingent
beneficiary) of a life insurance policy as a way to make a sizable future
gift. You retain lifetime ownership of the policy, keeping the right to
cash it in, borrow against it, and change the beneficiary. A gift of this
nature is treated much like a bequest made through your will. Because
you retain the ownership of your asset (the policy), you will not receive
an income tax charitable deduction for this future gift or for your premium
payments during your lifetime. The policy's proceeds will be included
in your gross estate, and your estate can take an estate tax charitable
deduction.
Making a Gift of Your Policy
You may wish to transfer ownership of a policy to the charity, or purchase
a new policy with the charity as owner and beneficiary. If you make a
charity the owner and beneficiary of a policy, you are entitled to certain
tax advantages.
A mother’s charitable example prompted Barbara Culver to make a gift of
life insurance to Good Samaritan Hospital’s Parish Nurse Program.
 Barbara’s parents grew up in Cincinnati and lived most of their lives
here as well.“I grew up watching my Mom model giving to others daily,”
Barbara said.“Through disciplined tithing, generously giving her time,
writing a note of encouragement to someone, or creating a special family
celebration, she constantly and quietly epitomized philanthropy for
me.”
Barbara decided that any memorial to her mother must be connected to
those in need. She decided upon the Parish Nurse Program, which is a
program that places nurses in ethnically diverse, low-income communities
of mainly women and children and provides them with basic healthcare
and education with dignity and compassion.
“Helping to endow the Parish Nurse Program through a gift of life insurance
presented a wonderful opportunity for me to give something back to Mom
in a way that reflects the best of her,” Barbara said.
Wealth Replacement Using Life Insurance
A donor may make a current gift to charity and receive a charitable tax
deduction. At the same time, the donor may purchase life insurance to
replace the donated amount or perhaps, the amount after estate tax that
the beneficiaries would have received. Depending on the circumstances,
the charitable tax savings and any life income resulting from the gift
may defray the cost of the wealth replacement insurance premiums.
Creating a Life Insurance Trust
You may want to set up an Irrevocable Life Insurance Trust (ILIT).
An ILIT removes the life insurance from your estate to help reduce estate
tax while providing other benefits. For example, upon one's death, the
proceeds of the life insurance policy may remain in the trust to provide
income for the surviving spouse, but stays outside of the spouse's estate
for estate tax purposes. Or, the trust could be used to distribute proceeds
to children of a previous marriage. Although ILITs can be expensive and
more complicated than owning life insurance directly, they may be an attractive
option in certain situations.
As with all matters concerning estate planning, please consult your estate
and tax specialists. Return to Wills and Bequests.
|
