Use Life Insurance For Charitable Giving

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Charitable giving allows for a reduction in estate taxes. Because of this people have a tremendous incentive to contribute to charity upon their death. It also gives them an incentive to contribute to charities during their lifetime. If the portion of a persons estate that is exempt from estate taxes is increased from $675,000 to $2,000,000 or $3,500,000 giving to charity would be reduced by less than 3%. Giving would be reduced much more if the Federal Estate Tax was entirely rescinded.

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• Estate tax rates will progressively diminish each year through 2009 and totally disappear in 2010. As a result the amount of an estate exempt from Federal Estate Tax increases. There is bound to be some effect on the amount of money people give to charities. People give to charities for many reasons but the reduction of estate taxes is certainly a great incentive. No Estate Taxes means less contributions to charity.

  Using life insurance as a tool to make contributions to your favorite charity at the time of your death is recommended as life insurance will allow for larger contributions. Life insurance proceeds are guaranteed by the life insurance company. Premiums can be tax deductible if the charity is the owner and beneficiary of the policy. Thus the policy would not be a part of your estate. The proceeds would not be subject to Federal Estate Taxes.

  Charitable giving is more commonplace than most people realize. The amount of the contribution usually depends on the size of your anticipated estate.