Life Insurance Leads Gainsville Florida FL
Reader’s Question:
If I do not have any legitimate beneficiary, will it be possible for me to donate my life insurance proceeds to a chosen charity?
Carlyn
Gainsville Florida FL
Any policy holder can donate his or her life insurance policy to charity. Life insurance is a good way to leverage affordable premium payments into a substantial future donation. There can be several ways by which you can give your life insurance policy or its death benefits from it to a chosen charity. Each method will have different advantages and disadvantages to both you and the chosen charity.
You can help your favorite charity by simply naming the charity as a beneficiary on your policy. By doing this, the charity will receive the death benefits when you die. One disadvantage of this approach is that you will not be able to take the charitable income tax deduction for the premium payments that you make. There will be no gift tax implications. The proceeds of the life insurance policy will be included in your taxable estate, but you will receive an offsetting estate tax charitable deduction.
Another way to help your favorite charity in Gainsville Florida FL is to donate an existing life insurance policy to the charity. You will be able to claim income tax deduction for either the tax basis or the fair market value of the policy for the year of the donation. You can also make deductible cash gifts to the charity which they can use to make the premium payments. The proceeds of the policy may be included in your taxable estate but you will receive an offsetting estate tax charitable deduction.
Another way to donate a life insurance policy to charity through monetary donation to the charity and have the charity buy the life insurance policy. The charity makes the premium payments and you make income and gift-tax-deductible donations to the charity. The proceeds of the life insurance policy will not be included in your estate for tax purposes.
You might want to check if Florida’s State Laws do not consider a charity to have an insurable interest in a donor and will not allow a charity to purchase a life insurance policy on a donor.
There can be a number of other strategies to choose from, as well as a number of tax rules and differing state laws that may influence your decision. If you are considering a substantial gift of life insurance to a charity, ask your attorney or tax advisor in Gainsville Florida FL to help you decide on the best approach.
Tags: life insurance donation, life insurance tax, insurance as charity donation