Life Insurance Policy
An important but frequently overlooked role of life insurance is the one it can play in charitable gift planning. Life insurance itself can be the direct funding medium for a gift, permitting the donor to make a substantial gift (face value of policy) for a relatively modest annual outlay (i.e., the premium payment). Sometimes people find themselves with life insurance policies they no longer need after the death of a spouse or after children are grown. By contributing such a policy to the Lewis County Historical Society, you can make a wonderful gift and reduce taxes that may otherwise be due upon your death.
You can also receive a charitable income-tax deduction for the cash surrender value of the policy when you irrevocably assign the policy to the Historical Society. Be sure to use our legal name and address as follows:
Lewis County Historical Society
7552 S. State St.
P.O. Box 446
Lowville, NY 13367
Gifts of Percentage Interest in a Policy
You might choose to designate the Lewis County Historical Society to receive only a partial interest (e.g., a percentage) of a life insurance policy.
Gifts of New or Partial-Paid Policies
You may also assign a partially paid policy to the Lewis County Historical Society and keep the policy active by sending premium payments to the Historical Society. Or you may purchase a new policy and name the Lewis County Historical Society as owner and irrevocable beneficiary. All of your payments would be tax deductible if you itemize.
Gifts That Save Capital Gain
Gifts of securities can be used to cover the payments on a new or partially paid life insurance policy, with the Lewis County Historical Society named as a beneficiary. By donating securities, capital-gain tax can be eliminated entirely.
The dividends of a whole life insurance policy may be designated to the Lewis County Historical Society without reducing the death value of the policy for your beneficiaries. The donor, who remains the owner of the policy, retains the right to borrow against the policy.
Naming the Lewis County Historical Society as Beneficiary
Another option is to name the Lewis County Historical Society as the primary beneficiary or co-beneficiary of a life insurance policy. You would retain ownership of the policy and have access to the policy’s cash value. Because you retain ownership, no charitable income-tax deduction is allowed at the time of the gift. Although the face value of the policy will be included in your gross estate at your death, your estate will be entitled to an offsetting charitable estate-tax deduction.
How It Works
- You assign all the rights in your insurance policy to the Historical Society, designate us as irrevocable beneficiary, and then receive an income-tax deduction
- The Historical Society may surrender the policy for its cash value or hold it and receive the proceeds at your death
- You receive a federal income-tax deduction
- If premiums remain to be paid, you can receive income-tax deductions for contributions to the Historical Society to pay these premiums
- You can make a substantial gift on the installment plan
- The Historical Society receives a gift it can use now or hold for the future
Life Insurance to Replace Gift
Life insurance can also be used to replace an asset that has been given to the Lewis County Historical Society. For example, if you make a gift to the Lewis County Historical Society, the tax savings produced by the charitable deduction can be used by you or your children or an irrevocable trust to purchase and pay the premiums on a life insurance policy on the your life. Such an arrangement can ensure that the interests of family beneficiaries will not be adversely affected.
An important but frequently overlooked role of life insurance is the one it can play in charitable gift planning. Life insurance itself can be the direct funding medium for a gift, permitting you, as the donor, to make a substantial gift (face value of policy) for a relatively modest annual outlay (i.e., the premium payment).
How It Works
- You make a gift to the Historical Society
- You give the tax savings from the charitable deduction to your children
- You children purchase an insurance policy on your life with the tax savings
- Your children will receive the proceeds on your death
- You can make a significant gift to the Historical Society without diminishing the amount your family will receive
- Your tax savings finance the life insurance policy