Feel good by giving to a charitable cause, your University.
Creating a legacy by giving to your organization of choice helps you to shape the future of their cause beyond your time. Your legacy will touch the lives of others.
Writing a check to make a charitable contribution is one way to give that may be tax-deductible. However, there is another way to make a contribution to your charity that will support your cause long after you are gone.
Charitable Giving Using Life Insurance
Designating a charity (Florida Memorial University) as your policy's beneficiary in your estate planning. Life insurance is an excellent tool for making charitable gifts for a number of reasons. Life insurance provides an "amplified" gift that enables you to purchase immortality on an installment plan. Through a relatively small annual cost (the premium), a benefit far in excess of what would otherwise be possible can be provided for charity. This sizeable gift can be made without impairing or diluting the control of a family business or other investments. Assets earmarked for family members can be kept intact.
Advantages of using life insurance
There are many reasons why life insurance could be considered the "Ultimate Endowing Tool":
1. A life insurance policy provides a guaranteed death benefit. So, assuming premiums are paid, the charity's receipt of a given amount is certain. Compare this with a gift of real estate or marketable securities that may be subject to wide fluctuations in value.
2. If the insurance policy is owned by a charity, assuming premiums are paid, the gift can't be revoked by the donor. So rather than a "maybe someday" gift that might never be made, charity-owned life insurance is a "right here, right now" gift.
3. Life insurance provides an "amplified" gift. Incredible leverage is possible. A relatively small amount of premiums can translate into a large and meaningful gift. The leverage ratio of death benefit to premiums paid is extremely favorable, usually many times more than the charity would otherwise receive through a non-life insurance gift.
4. Life insurance can legitimately be considered a way to obtain "immortality on the installment plan": Almost anyone, regardless of economic station, can assure a meaningful and significant gift, a larger gift to charity through life insurance than by other methods.
5. A life insurance gift is cost-efficient and provides "100 cent" dollars. There is no "slippage" due to federal estate or state death taxes, state or federal income taxes, administration or estate settlement costs, or any other fees or charges.
6. Life insurance involves none of the cost, delay, or uncertainty of probate.
7. The use of life insurance involves a negligible risk of contest. Because of the contractual nature of life insurance and the fact that it passes outside a person's probate estate, there is only a scintilla of a chance the payment of life insurance owned by and payable to a charity could be successfully contested by disgruntled heirs. Nor can a surviving spouse intercept the policy proceeds payable to a charity. A spouse may elect against the decedent's will without affecting a charity's claim to policy proceeds because the insurance money passes by contract to the charity outside the probate estate.
8. There is no statutory limitation on charitable gifts of life insurance. Under so-called mortmain statutes, in some states, gifts to charity made by will within a relatively short period prior to death can be disallowed. But life insurance proceeds are typically not subject to such restrictions or risk.
9. Life insurance is generally accorded a greater level of protection against creditors than are other assets under most states' creditor laws.
10. The policy owner has the right to borrow or use policy cash values as collateral as soon as they develop. If the charity is the owner of the policy, it can use policy values for any reason whatever at any time. These cash values are obtainable almost instantly once they accrue in the policy. If the donor is the owner of the policy, he or she can use policy values for any reason at any time.
11. Life insurance can be publicity-free or can provide "leveraged" honor. The size and even the existence of a life insurance gift can be completely confidential because of the contractual nature of life insurance. On the other hand, amplified recognition is possible if publicity is desired. For example, a "millionaire's club" can be formed to announce each purchase of a policy with a "face value" (initial death benefit) of $1 million or more.
12. Unlike other installment-type gifts, the gift of life insurance can be "self-completing." So, regardless of how few premiums the donor paid prior to death, the amount the donor intended the charity to receive (i.e., the policy's death benefit) is paid to the charity. Compare this to annual gifts made by a "best intentions" donor who dies after one or two years. Furthermore, if the insured becomes disabled, assuming a "waiver of premium" feature was attached to the policy and the disability meets the terms and conditions of the waiver of premium provision, the insurer will keep the contract in force and pay all premiums on behalf of the policyowner. Thus, such a charitable gift is, in essence, "self-completing" in the event of the insured's disability. The charity can choose to continue the policy--either out of income or capital or by using the policy's own cash values and nonforfeiture options--if the donor starts to pay premiums but for some reason is unwilling or unable to continue.
13. A life insurance gift to charity is relatively "painless." From a cash flow perspective, the gift of personally owned life insurance to charity is not typically perceived as the loss of "a needed asset" because no income-producing asset is being given away. From wealth transfer perspective, a gift of life insurance to charity doesn't affect the family business, home, or investment portfolio that the heirs expect to receive.
14. The transfer itself is simple and cost-efficient. Any size or type (e.g., term insurance, ordinary, variable, universal, or combination) of policy can be used, and absolute assignment forms are cost-free.
15. Upon making the gift, the donor typically pays no ordinary income tax on any gain in the policy, no matter how large the gain.
17. Annual premium statements (request duplicate premium notices), coupled with annual "thank you" notes, give the charity a continuing contact--and opportunity to enhance its relationship--with the donor. It is very important that each annual premium be considered by the charity as an opportunity to renew and deepen the relationship and bond between the donor and the charity, and recognize again the generosity of the donor. Whenever possible, those directly affected by the gift (e.g., scholarship recipients or department heads) should be introduced to the donor--perhaps giving the donor a "progress report" and a further chance to see what each annual premium is helping accomplish and sustain.
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