Leveraging life insurance to help your favorite charity
Did you know you can set a charitable organization as a beneficiary of your life insurance policy? If your family is financially healthy and stable, or you need the tax benefit, you may consider donating the payout from your life insurance to a leave a lasting legacy for your favorite organization. Donating to an organization can also streamline and simplify estate planning, as it can reduce the amount of assets to be distributed to heirs.
Firstly, we recommend ensuring that the organization you'd like to support is a legitimate 501(c)(3) nonprofit organization that aligns with your beliefs. You may also like to ensure the organization uses donated funds in a way that you're comfortable with.
Reach out to the organization's development or gift planning department. Ensure you have the correct name and address for the designation. Ask if they have any specific requirements or forms for accepting life insurance proceeds. Once you have information from the charity, it's time to work with your life insurance company. Fill out the beneficiary designation form accurately, providing the charity's full legal name and address.
Some policies allow you to name multiple beneficiaries, so you can leave some to your family and some to charities. You can specify a dollar amount or percentage each beneficiary will receive.
It's worth noting that there are revocable and irrevocable designations. Revocable designations can be changed at any time, whereas irrevocable cannot be changed. Irrevocable designations can have tax implications, so it's best to consult with an advisor to ensure you are aware of the details and make a good choice for your situation and desires.
Regularly review your beneficiary designations to ensure they reflect your values and wishes. If needed, change or update designations.
As always, we recommend you speak with a qualified professional (advisor or attorney) regarding estate and tax planning. Some states have specific regulations as well. We welcome the opportunity to help you set up your legacy for your family or charitable organizations, so please reach out to us if you have questions or are ready to begin planning.
