Many individuals own life insurance. A life insurance policy may be purchased to provide peace of mind, financial liquidity, investment diversification or as a potential inheritance. However, as an individual’s situation changes over time, the life insurance policy may no longer be needed for its original purpose. In this case, the owner of that policy may choose to use it philanthropically and donate it to a nonprofit. (Or, a donor may choose to purchase a new policy specifically to support a nonprofit organization.) Simplicity is one of the major advantages of life insurance gifts.
Should you own a policy and wish to bequest it to Brophy, please let us know. We are grateful for your foresight and generosity.
In this case, the donor will retain full control of the policy during his or her lifetime, with Brophy receiving the insurance proceeds at the donor’s death. While the donor would not receive a charitable income tax deduction, there is one positive tax aspect. The donor’s estate should be entitled to a charitable estate tax deduction for the amount transferred to Brophy. Brophy has relationships with a group of insurance professionals who can help if you should need assistance in completing the appropriate paperwork to make this designation.
Here, the donor irrevocably transfers ownership of the policy to Brophy. An outright gift generally will produce a charitable income tax deduction equal to the donor’s basis in the policy. Again, if you need assistance with this type of transaction, Brophy knows insurance professionals who can help you.
This is another straightforward way to make a legacy gift. The donor is able to deduct premium payments as charitable contributions for as long as the premiums are paid. In addition, the life insurance policy proceeds would not be included in the donor’s estate for tax purposes. Brophy can put you in contact with an insurance professional to provide assistance in making this kind of donation.
Be sure to consult your tax advisor before making a planned gift. If you have questions about legacy giving, please contact Chief Development Office Steve Beaird.