Universal or Variable Life
These policies place greater emphasis on growth. The premium and/or the death benefit may change, and growth in the cash value will depend on investment performance. Premiums may continue throughout life or end when sufficient reserves are accumulated to sustain the policy. Large initial premium deposits may render future premium payments unnecessary.
Any of these policies can fill an important niche in one’s financial plan. As time passes, however, its original purpose may become less important. As children grow up and we accumulate other resources, the need for family protection decreases. Policies purchased to provide cash for estate settlement are less needed since the Estate Tax may not be an issue for most families. Policies with a face amount that seemed large in pre-inflation days may seem insignificant today.
As time goes by, our priorities change. We find ourselves wanting to share our good fortune with those around us, to show our support of the causes and institutions we believe in, to leave the world a little better than we found it. When goals such as these take shape, the life insurance policy that served us well in years gone by can serve us in an entirely new way when we make a charitable gift. In other cases, a new policy can be the key to achieving philanthropic goals.
Here are some possibilities:
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Give the death proceeds. Marvin Holcomb no longer needs the $25,000 death benefit from the policy he took out years ago when his family was young. So he decides to have the YMCA receive the proceeds payable at his death.
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Give the policy itself. Nancy Helm, age 75, had almost forgotten her paid up $50,000 policy until she began thinking about establishing an endowment with the YMCA in memory of her husband. She depends on the income from her other investments, but the insurance policy makes an ideal gift. Because she makes the YMCA the beneficiary and also the owner of the policy, her gift is irrevocable, and she receives a tax deduction for the cash value of the policy. Nancy’s policy is paid up, but if premiums were still owing and she continued to pay them, she would receive a tax deduction for those payments as well.
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Give a new policy. Ralph Swanson, in his mid-40’s, would like to make a significant gift to the YMCA. He has no existing policy or assets to contribute but he does have some discretionary income, so he purchases a new $40,000 policy naming the YMCA as both owner and beneficiary, and pays for it in five annual payments of $1,200 each. He receives a tax deduction for each payment.
HAVING THE WILL
More people make charitable contributions while they are living than later through their will or trust. Fact is, most people never get around to making a will or trust. They die, “intestate.”
What is there about creating a will that puts people off? Why do so many of us seem to lack the will to make a will? Well, for one this, it is inconvenient to find a good attorney, make an appointment, and spend the time going through the process of gathering information and making decisions. It’s much easier to put it off.
Another reason to delay the decision to make a will is the uneasiness many fell in having to contemplate their own death, or the death of a spouse. They plan to face these feelings later. Always later.
A further reason for postponement may relate to the difficulty of dividing up one’s estate when family conflicts exist, or when one is unsure how wisely the inherited assets will be used.
Still others lack the will to have a will because they consider it unimportant or irrelevant. They may think they have too few assets to bother with a will or may assume that everything will go automatically and equally to all members of the family. They fail to understand the benefits of a will, not only in settling their estates according to their wishes, but in making things easier for the loved ones left behind.
Whatever the reason, making a will takes will power. It requires not only choice but action.
We have seen the differences a will can make. We have witnessed the peace of mind it provides, not only for the maker, but also for the family members. We have seen, as well, the great good a gift in a will does for our charitable purpose. Indeed the YMCA depends on estate gifts to help us serve future generations.
Our planned giving specialist is available to talk with you confidentially about your gift and estate plans, and to assist you in finding a good attorney.
Neither the author nor this organization is engaged in rendering legal or tax advice. Rather, this publication is intended to provide only information of a general character. For advice in specific cases, the services of an attorney or other professional advisor should be obtained.
