Pebble Beach, CA Tax Planning : How To Gift A Life Insurance Policy To A Nonprofit

by Richard Kuehn on 10/22/13

View From A Nonprofit Serving Seniors In Carmel, Carmel Valley, Gonzalez, Greenfield, King City, Marina, Monterey, Pacific Grove, Pebble Beach, Salinas, Seaside And Soledad California

Some financial planners are recommending that if you have no heirs that might need the proceeds from your life insurance policy, you should donate it to charity.  One way to do so but still retain the cash value while you are alive is to simply change the name of the beneficiary on the policy to the charity.  That way, if you need to tap into part of the value, you can still borrow against the value of the policy.  You can also change your mind later if you feel that the nonprofit doesn't stick to its vision, or if you decide some other person or organization is more worthy of receiving the proceeds.  If you don't believe there is any way that you would need to tap into the proceeds, a better way is to simply give the policy to the charity who then becomes the owner and the beneficiary.  This way, you will be able to write the gift off on your tax return and you will also be acknowledged by the charity for being a big donor.  If premiums still need to be paid on the policy in the future, you could pay those yourself and those would also be deductible as a charitable donation. 

Please note that this blog reflects my personal opinion and may or may not reflect the opinion of Hands to Help Seniors and the individual members comprising the Board of Governors.