Life insurance is an asset you may not think of donating to the Anne Carlsen Center until you hear what a powerful tool it can be to contribute and help our work’s mission.
When you own a life insurance policy with accumulated cash value, you’re essentially sitting on money. When the original purpose for the protection no longer applies—such as to educate children now grown or to provide financial security for a spouse now deceased—your life insurance can be redirected to help support a worthwhile cause. One option is to simply name the Anne Carlsen Center as the primary beneficiary. However, naming us as beneficiary while you still retain ownership of the policy does not qualify you for an income tax deduction. On the other hand, naming us as the beneficiary and also assigning us ownership of the policy as a current charitable gift does provide you tax benefits.
Don’t own an existing policy but still realize how beneficial giving life insurance can be? If so, you can—in most states—purchase a new insurance policy and name a qualified non-profit like the Anne Carlsen Center as the beneficiary and owner of the policy. Rather than paying premiums to the insurance company, you make tax-deductible cash gifts to cover the annual premiums. Even greater leverage is possible when two donors, usually spouses, purchase a two-life second-to-die policy. With two lifetimes before the payment of death benefits, a future gift to us will cost you even less.
Profile of a Giver of This Gift
- Do you have a life insurance policy that no longer fits the need for which it was originally intended?
- Would you like to receive tax benefits from your gift this year?
- Would you like to support our organization?
Is This Gift Right for You?
If you’re concerned making a donation to the Anne Carlsen Center Children’s could threaten to reduce the amount you can leave to your loved ones, breath easier for life insurance can make up the difference. Depending on your age, health and marginal income tax rate, the money you save in taxes thanks to the charitable deduction you will receive for your donation can be used to purchase life insurance with death benefits equal to the value of your gift.
Another option is rather than owning the new life insurance yourself, it may be preferable to own the policy inside an irrevocable life insurance trust (also called a wealth replacement trust). You would typically name a bank trust department or trust institution as trustee. Doing so will enable your heirs to receive the death benefit of the life insurance without having to pay estate taxes. Plus, life insurance is generally income tax–free to your beneficiaries.
Benefits of This Gift
- You receive an income tax charitable deduction, available under most circumstances.
- You realize tax savings from use of the deduction, and these savings can be invested for future income.
- You reduce your future estate tax liability.
How to Make This Gift
Contact your insurance company to arrange for assignment of ownership of the policy at its current value to the Anne Carlsen Center. Then, one of three scenarios could unfold:
- We might surrender the policy for cash once we receive ownership, providing us much-needed funds and relieving you of the obligation to make ongoing premium payments.
- We may keep the policy in force so that the original face value will ultimately become your gift. In this case, you pledge to make cash gifts at least annually, which we will use to pay the premiums. The gifts are tax-deductible.
- Another alternative is that we might decide to accept a smaller amount of paid-up insurance and still keep the policy in force for your lifetime, and you would be relieved of the obligation to make further premium payments.
For More Information
We understand these gifts are complicated, that’s why we would be happy to work with you and your advisors to discuss a potential gift that meets your financial goals while also supporting our mission. You are not alone in making these life-impacting decisions. Please contact the Anne Carlsen Center Foundation at 1-800-568-5175 to help you answer any questions you may have or to futher discuss your giving options.
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The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.
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