A gift of a Life Insurance policy is a gift arrangement whereby a charity is given ownership of a new or existing life insurance policy, or is made the beneficiary of a new or existing life insurance policy.
How does it work?
It depends on whether a new or existing policy is given, and whether or not the charity becomes the owner of the policy or simply the beneficiary.
|Method||What Happens||Tax Effects|
|Gift Existing Policy||
Full rights of ownership are assigned to the charity. Donor makes annual gifts to the charity sufficient to cover premium payments.
Donor receives income tax deduction for net cash value; annual gifts to charity are deductible; death proceeds excluded from taxable estate.
|Gift New Policy||
Donor applies for new policy and upon insurance, transfers ownership to the charity. Donor makes annual gifts to the charity sufficient to cover premium payments.
Donor receives income tax deduction for annual gifts to charity; death proceeds excluded from taxable extate.
|Charity as Beneficiary Only||
Donor names the charity as beneficiary of the policy. For existing policies, a form from the company is required to do this. Donor pays premiums to company.
No current income tax deduction since donor owns the policy; death proceeds are excluded from taxable extate.
What are the benefits?
DISCLAIMER: The information contained on this page is for educational purposes only. The reader understands that Millsaps College is not rendering legal advice and that the reader should seek independent legal counsel when contemplating estate planning decisions.
For More Information Contact
Gift and Estate Planning Services
P.O. Box 151191
Jackson, MS 39210-1191
(voice) 601-974-1035 (fax) 601-974-1088