When to Use Life Insurance for Charitable Purposes

When the client would like to benefit one or more charities for reasons other than tax savings. When the client would like to benefit himself and/or his family through tax savings and create more income and capital at the same time a charity benefits. When a client would like to achieve the first and second objectives and is willing to incur expenses to accomplish both. Planners and clients should both be aware that tax advantages do not mean a charitable gift is without cost. Charitable tax incentives may reduce the overall cost of the gift, and the achievement of noncharitable financial security goals may be facilitated through charitable giving techniques. But charitable giving should be considered as a planning tool only if the client has genuine charitable motives and has examined more direct alternatives for the accomplishment of noncharitable objectives.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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