Featured Blog Post

Life is often about choices. It is not unusual to find ourselves contemplating the best ways to use our time, talents, and financial resources. One of the primary times this comes into focus is in balancing our desire to address significant charitable goals with financial plans we have for our families.

It is sometimes easy to feel like we can't do all we would like to do on either front without compromising the other. In some cases, though, flexible donors find that they can achieve a win-win outcome through creative charitable planning.

For example, let's consider the goals of a couple we will call Gene and Martha. They have been successful in their respective careers and are very interested in supporting our work with a current gift of $250,000. Their primary hesitation lies in how this might affect their ability to attain their target for assets directed to their children through their estates.

After talking with a member of our staff and their advisors, they learn about a plan that may allow them to meet their goals both for our organization and their children. Here is how it works: Gene and Martha make their gift to us, and the resulting deduction generates significant income-tax savings in their relatively high federal income-tax bracket. They use the income-tax savings to purchase a special kind of life insurance policy that requires a single, up-front premium and pays $250,000 to their children when both Gene and Martha have passed.

This asset-replacement strategy using life insurance can be a very powerful plan for charity and family, but it is not right for everyone. We urge anyone contemplating such a plan to consult with their trusted financial advisors—keeping in mind several factors, including:

• The cost of second-to-die insurance is less than the cost for policies on two separate lives but will vary widely based on the ages and health of the people insured.
• This plan works for donors who itemize deductions on their tax returns. Tax savings will vary based on the donor’s tax bracket and may not cover the total premium needed to completely replace the amount of the gift.
• Generally, the proceeds from the policy will pass income tax free to the beneficiaries but confirm that with your advisors with any policy you are considering.

Please feel free to contact our office if you would like to know more about this intriguing planning strategy. We welcome the opportunity to meet with you and your advisors to discuss your goals.