LEAVING A LEGACY
Life Insurance & Retirement Plans
LIFE INSURANCE
A gift of life insurance can offer BAM critical financial support. Such a gift may be appropriate when the growth of your other assets or the reduced need of dependents decreases a life insurance policy's value to you. There are numerous ways to make a gift of life insurance to BAM:
Designate BAM as the beneficiary of an existing life insurance policy. Your estate will be entitled to an estate tax deduction if the insurance proceeds are ultimately paid to BAM.
Give an existing life insurance policy. By making BAM the owner and irrevocable beneficiary of the policy, you receive a federal income tax deduction for the gift. If the policy is paid up, the donor's deduction equals the replacement value. If there are outstanding premiums to be paid, the deduction is approximately equal to the cash surrender value of the policy. If you purchase a new policy on your life and give it to BAM, the deduction is for the premium payments made. Giving a life insurance policy irrevocably to BAM will get the value of that policy out of your estate and possibly save estate taxes later.
RETIREMENT PLANS
A donor may wish to name BAM as a beneficiary of his or her qualified retirement plan, so the full or partial share of the remainder passes to BAM. Plans that are most appropriate for funding charitable gifts include profit sharing plans, 401 (k) plans, and IRAs, among others. Ask your plan administrator for the appropriate form.
A gift of plan assets to BAM after a donor's lifetime can be an attractive option for several reasons. Because of tax rules, the transfer of plan assets to family members, other than the spouse, at the death of the plan participant may trigger two federal taxes-estate tax and income tax-potentially consuming up to 70% of plan assets and leaving little to family members. Leaving other estate assets like cash, stock, or real estate to family members while making a charitable gift of plan assets could provide a major gift to BAM at minimal cost to heirs.
A gift of life insurance can offer BAM critical financial support. Such a gift may be appropriate when the growth of your other assets or the reduced need of dependents decreases a life insurance policy's value to you. There are numerous ways to make a gift of life insurance to BAM:
Designate BAM as the beneficiary of an existing life insurance policy. Your estate will be entitled to an estate tax deduction if the insurance proceeds are ultimately paid to BAM.
Give an existing life insurance policy. By making BAM the owner and irrevocable beneficiary of the policy, you receive a federal income tax deduction for the gift. If the policy is paid up, the donor's deduction equals the replacement value. If there are outstanding premiums to be paid, the deduction is approximately equal to the cash surrender value of the policy. If you purchase a new policy on your life and give it to BAM, the deduction is for the premium payments made. Giving a life insurance policy irrevocably to BAM will get the value of that policy out of your estate and possibly save estate taxes later.
RETIREMENT PLANS
A donor may wish to name BAM as a beneficiary of his or her qualified retirement plan, so the full or partial share of the remainder passes to BAM. Plans that are most appropriate for funding charitable gifts include profit sharing plans, 401 (k) plans, and IRAs, among others. Ask your plan administrator for the appropriate form.
A gift of plan assets to BAM after a donor's lifetime can be an attractive option for several reasons. Because of tax rules, the transfer of plan assets to family members, other than the spouse, at the death of the plan participant may trigger two federal taxes-estate tax and income tax-potentially consuming up to 70% of plan assets and leaving little to family members. Leaving other estate assets like cash, stock, or real estate to family members while making a charitable gift of plan assets could provide a major gift to BAM at minimal cost to heirs.
