A gift of life insurance can enable you to donate a substantially larger, future gift to the T&DH Foundation.  Not only will your gift make a difference, it will provide you, the donor, significant tax benefits.

The following are choices available to you when you give a gift of a life insurance policy.

1. Purchase the insurance yourself and name T&DH Foundation as beneficiary.
2. Own the policy yourself and name your estate as beneficiary and provide direction in your will to gift the proceeds to the T&DH Foundation.
3. Make the T&DH Foundation the owner and beneficiary of the policy.  The donor is responsible for the premium payments.
4. Donate an existing insurance policy to the T&DH Foundation, ownership is transferred and T&DH Foundation is named the beneficiary.

Tax benefits

Owner of the policy	Beneficiary	Premium Payor	Charitable tax credit derived from
T&DH Foundation	T&DH Foundation	Donor	Premium
Donor	T&DH Foundation	Donor	Death Benefit
Donor	Estate	Donor	Death Benefit

 

Donating a policy while living

Advantages:

• Larger future gift with a modest current commitment (premium payments).
• If policy is owned by the T&DH Foundation it is not considered part of the estate.  Proceeds pass directly to the T&DH foundation.
• If the T&DH Foundation is deemed both beneficiary and the owner, the donor receives donation receipts on premiums paid.

Drawbacks:

• A long term commitment (premiums) on behalf of the donor.
• The donor cannot revoke the ownership of the policy.

Proceeds donated upon death

Advantages:

• Donor retains control during their lifetime.
• With control, the donor may change beneficiaries or access any cash values built up.
• Proceeds upon death are paid directly to T&DH Foundation with a charitable tax receipt issued for 100% of the policy’s value.

Drawbacks:

• Tax receipts will not be issued to the donor during their lifetime, since the donor retains control of the insurance policy

Wealth replacement insurance

For donors wishing to give a substantial gift of an existing asset, yet do not want to diminish the value of the estate to their heirs; wealth replacement insurance has become an increasingly viable option.

A donor gift is a substantial asset to the T&DH Foundation (i.e. publicly traded securities).  The donor receives a tax credit for the fair market value of the gift.  The donor can offset this gift by purchasing a life insurance policy for the same amount with the donors heirs named as beneficiaries.  Tax savings from the gift can be used to fund the policy.

Advantages:

• Heirs receive the policy proceeds tax free and cash upon death of the donor
• Simple, probate free, intergenerational transfer of assets.
• Heirs do not have to be concerned with market value or liquidity of the tangible asset (i.e. real estate, stocks fluctuate in value).

Drawbacks:

• The value of the insurance policy may be less than the asset donated due to market value increases.

Example:

Mrs. Smith donates $100,000 of stock to the T&DH Foundation and receives a donation tax receipt.  Mrs. Smith then purchases a $100,000 Term to 100 life insurance policy to replace the value of the stock for her heirs.  Heirs receive life insurance proceeds tax free upon her death.