What is “Financed Charitable Life Insurance?

What is "Financed Charitable Life Insurance?

This is a technique that is also growing in popularity in the noncharitable marketplace. To summarize, the charity takes out a loan from a bank to pay premiums on a pool of insurance contracts. The death benefits, or in some cases other assets of the charity, are used as collateral for the cumulative loan. This […]

Introduction to Wealth Enhancement Trusts

Introduction to Wealth Enhancement Trusts

Some professionals refer to the combination of life insurance and a charitable remainder trust as a “Wealth Enhancement Trust.” Through a combination of charitable trust planning and life insurance replacement of wealth, beneficiaries may receive more wealth than if no charitable gift were made. This is sometimes referred to as wealth enhancement rather than mere […]

Tax Implications of Using Life Insurance for Charitable Giving

Tax Implications of Using Life Insurance for Charitable Giving

Income Tax A current income tax deduction is allowed for the transfer of a cash value life insurance policy to a qualified charity. The client will save an amount equal to the value of the deductible gift multiplied by the client’s effective tax bracket. For example, a $10,000 gift by a client in a 40 […]

6 Primary Ways to Use Life Insurance for Charitable Purposes

6 Primary Ways to Use Life Insurance for Charitable Purposes

Life insurance creates an instant expanded estate, and in many cases the proceeds can be transferred free of estate tax. If arranged properly, all parties could end up with a greater economic benefit than if life insurance were not used. Below is a more detailed explanation of some of the strategies used to provide for […]

Requirements of Using Life Insurance for Charitable Purposes

Requirements of Using Life Insurance for Charitable Purposes

The gift of the policy or other property must be made to a qualified charity such as a nonprofit school or hospital, a church or synagogue, or a local or civic organization such as the Boy Scouts or Girl Scouts of America. Qualified means that the charity meets three conditions: the organization is operated exclusively […]

When to Use Life Insurance for Charitable Purposes

When to Use Life Insurance for Charitable Purposes

When the client would like to benefit one or more charities for reasons other than tax savings. When the client would like to benefit himself and/or his family through tax savings and create more income and capital at the same time a charity benefits. When a client would like to achieve the first and second […]

An Introduction to the Charitable Uses of Life Insurance

An Introduction to the Charitable Uses of Life Insurance

A transfer of cash or other property to certain charitable, religious, scientific, educational, or other organizations may result in favorable income, gift, and estate tax results for the donor.1 Income taxes can be reduced and estate taxes can be saved. More importantly, a gift to charity serves to reward the donor in significant psychological and […]

A Simple Explanation of IRS Code 2703

A Simple Explanation of IRS Code 2703

In a nutshell, neither the IRS nor the courts will be bound for estate tax purposes to the price established in a buy-sell agreement unless the seller would in fact sell the interest to a totally independent non-family member for that price and that party (assuming reasonable knowledge of the relevant facts) would reasonably and […]