Is it possible for me to donate my insurance for a charity? If so..how do I go about that?
Posted: 01 Oct 2008 05:11 Post Subject:
Yes, it is possible for you to give your life insurance policy for charity. It is truly one of the ways to convert your premiums into donations for the future. There are many ways of doing it. Therefore all you got to do do is to study the merits and demerits of each way separately. Thanks, ArindamSenIndies
Posted: 01 Oct 2008 05:53 Post Subject:
Why don't you declare your favorite charity as the beneficiary to your policy? It is the simplest way to carry on your life insurance benefits to your charity after you pass away. But in doing so the income tax deductions for your charity won't be applicable on the premiums. This is one disadvantage and so you'd need to take a call on this. Thanks, Evan
Posted: 01 Oct 2008 05:58 Post Subject:
Surely you can Caromel, in fact it'd be a great gesture indeed. By naming a charity as the beneficiary of your policy you can make sure that the proceedings of your plan will go for charitable purposes. Ask your agent for more details and also about the procedure to name the beneficiary.
Posted: 01 Oct 2008 06:01 Post Subject:
But in doing so the income tax deductions for your charity won't be applicable on the premiums
Also there is no significance for a gift tax. A taxable estate that you may possess would include the proceeds of your policy. You'd also receive a compensation in terms of a deduction for your estate tax.
Posted: 01 Oct 2008 06:04 Post Subject:
If my opinion is sought, I'd say that it's the best way to be remembered after your death. Many a times a single person may wonder whether he/she requires a life plan or not. I'd say, why not?, you can plan your future by making contribution towards a life insurance plan and may nominate your favorite charity to reap the benefits of your planning. It's a great way to make a contribution to the society.
Posted: 01 Oct 2008 06:08 Post Subject:
My friend, I'd rather say that another option that could be of some benefit to your charity is to donate your current life insurance policy to your charity. That year, you'd be entitled to receive a tax deduction on your income either on a tax basis or the fair market worth of your policy (which one stands less).I don't see any harm in doing this. ArindamSenIndies
Posted: 01 Oct 2008 06:16 Post Subject:
Hi Arin..I suppose if that's what he is supposed to do, then he should be able to support his charity with cash deductible gifts which they could use for premium payments. The policy proceeds may get attached with the taxable estate, but he would be entitled to receive a compensation in terms of his charity estate tax deduction. I guess that's alright! Evan
Posted: 01 Oct 2008 06:25 Post Subject:
hey..I guess you all have a third option!
I think you could also donate the money to your charity & persuade them to buy your life policy. If you gotta pay your gift-tax to your charity, then they should not have any problem regarding the premium payments. Well, this is one such scenario wherein the policy proceeds would not be included within the taxable estate and would not be considered for taxation. IMO that stands pretty fair on your side. Purpleheaded08
Posted: 01 Oct 2008 06:37 Post Subject:
One thing I'd like to mention over is that there are a couple of states who would not count a charity to have any insurable interest upon such donors. That is the reason why in such states it is not permissible to buy such policies on donors.There are a variety of state laws and a set of tax laws that direct you to pick one from amongst a number of strategies.You should not hesitate to consult your tax consultant or attorney regarding this process.
Posted: 01 Oct 2008 02:06 Post Subject:
You could also establish a trust. Name the charity as the executor and the trust as the beneficiary.