We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Donating Life Insurance Nets Your Client A Tax Deduction

    March 19, 2014 by Alan Lavine

    It’s possible for philanthropic-minded clients to donate their life insurance to charity and get an attractive tax deduction.

    And not just for high-net-worth clients. Say your client paid in$50,000 in premiums for a$300,000 death benefit over the years. When the client dies, the charity may get that death benefit or more, depending upon the nature of the policy. If your client donates a second-to-die policy, for example, the death benefit could be more than twice that amount.

    “If someone is charitable, it does not matter if a person has a higher or lower net worth,” saysLisa Schneider, trust and estate attorney with Gunster,Palm Beach, FL. “Life insurance is often a forgotten asset people got at an earlier stage in life.”

    Yet there are tempting benefits for the rich as well. Schneider says persons with a net worth greater than$10 million frequently purchased life insurance policies to help minimize estate taxes. However, thanks to recent changes in the estate tax laws, they’re finding themselves over-insured for estate taxes.

    It could pay to donate the excess coverage to charity. But clients need to consider all the tax consequences. The big one, of course, is whether the donation is irrevocable or not.

    Those who want anonymity can change the beneficiary designation in the policy contract to the name of the charity. However, if your client still maintains control of the policy and can later change the beneficiary, the donation is considered revocable. Revocable gifts are not subject to a tax deduction by the donor and remain part of the policyholder’s taxable estate.

    Another option is to make the gift of the policy to charity irrevocable. This way, the donor gets a tax deduction, based on anIRS calculation called “interpolated terminal reserve value” of the policy, Schneider says. This calculation takes into account the policy’s cash surrender value. In addition, the insurance proceeds are excluded from the donor’s taxable estate if the transfer was made more than three years prior to the donor’s death.

    There are several ways to donate a life insurance policy to charity, according to the Planned Giving Design Center,Monroe, NC.

    • A policyholder can gift an existing policy. Depending on state insurable interest laws, a charity can purchase a life insurance policy on the donor and pay the premiums.
    • A policyholder can donate the policy dividends to charity and get a tax deduction.
    • An individual with a group term life insurance policy received as an employee benefit could name a charity as a beneficiary for coverage over $50,000. This way, the donor not only makes a significant gift to a charity, but also may avoid paying income tax on the amount over $50,000 of coverage paid by the employer.
    • Donors who contribute insurance policies that are not fully paid up can make annual gifts to the charity, which may use contributions to pay premiums.

    Leonard Witman, aFlorham Park, NJ, tax attorney, suggests that the high net worth may pay the premiums on a life insurance policy, get an income tax deduction and make the charity both the owner and beneficiary.

    “A charity can ask you to make an annual pledge to pay the premiums,” he says. “It works clean and simple.”

    Another option is a charitable remainder trust, which both Witman and Schneider recommend. The client gives cash, securities, real estate, tangible personal property or other property interest to a charitable remainder trust for future use by a charity. The donor receives annuity income, joint lifetime income or at least 5% of the initial value of the gift, which is used to purchase life insurance. The client gets an income tax deduction based on the gift. The proceeds of the policy go to designated beneficiaries when the policyholder dies. But the charity keeps the remainder of the assets already donated.

    If your client intends to donate a newly purchased policy, be sure he or she gets a “waiver of premium” rider. With this, the insurance company pays the premiums if the policyholder becomes disabled and can’t pay for coverage.

    Also, some insurance companies offer riders to policies with face values over$1 million. So when the policyowner dies, 1% to 2% of the face value can go to a qualified charity.

    Witman says advisors need to check their state’s insurable interest laws before naming beneficiaries, particularly if the transaction involves premium financing and coverage split between a charity and a family. Otherwise the insurance company may refuse to pay out the death benefits.

    Originally Posted at InsuranceNewsNet on March 18, 2014 by Alan Lavine.

    Categories: Industry Articles
    currency