Wills and Life Insurance

Many people give large donations to their favorite organizations through their wills or from their life insurance proceeds. This may be termed legacy gift or planned giving. Their donation reduces the amount of your taxable estate which might save you estate taxes. This is usually only applicable for those with the states worth millions of dollars. There are a couple of different ways to give via your will. General gift, you state a specific amount of money or percentage of your state to go to an organization. The charity gets this amount and the other beneficiaries receive the remainder residuary gift. This is the opposite of the general gift. You stayed in your will, how your assets will be distributed, and then direct that any remaining assets are to be donated to the organization of your choice. You can give not only money but specific items that you own, such as vehicles or real estate. Many people choose to designate donations from their will to an organization’s endowment fund rather than its general fund or designated programs. This allows the large gift Last for the life of the endowment and creates ongoing earnings for the organization. You can also donate using life insurance policies. Here are a few examples. donating a policy. You can donate ownership of a policy on your life to an organization, you receive a deduction for the lesser of your tax basis or the cash value of the policy. premiums paid on the policy after the donation are also deductible. As owner and beneficiary of the policy the organization will receive the face value of the policy upon your death. This method provides tax deductions during the life of the insured and can greatly reduce the taxable estate of the insured. Name organization as the beneficiary, you can designate a portion of the death benefit proceeds to an organization by naming them as a beneficiary of the policy. Unlike donating the policy, you still maintain ownership of the policy but just add the organization as a beneficiary. This doesn’t provide tax benefits during the life of the insured but still reduces their taxable estate charitable giving writer policies over $1 million may allow you to add a charitable giving writer. This pays a small percentage for example, one to 2% of the face value of the policy to organizations you designate. Those payments usually don’t come out of the death benefit of the policy. gifting through wills and life insurance is complicated and requires the expertise of an estate planning attorney.