Gifting a life insurance policy that is no longer needed is an inexpensive way for your client to make a significant charitable contribution. In the case of a “paid up” policy, the donor transfers ownership to the Foundation and the Foundation becomes the beneficiary. The client can claim an income tax deduction of the policy’s cost basis or its cash surrender value, whichever is less.
If a policy is unpaid, the foundation still can be named owner and beneficiary. The client receives a deduction based on the policy’s interpolated terminal reserve value. In addition, if the donor continues to make premium payments, each payment is deductible as a charitable gift. Single year deductions will be limited to the 50% AGI limitation with excesses carried forward and deducted for up to five additional years.
Gifts by Will or Trust
The Warren County Foundation may be designated as the beneficiary of a bequest or trust distribution by the terms of a will or a trust agreement.
Suggested Language if your client decides to include the Warren County Foundation in his/her will:
“I hereby give, devise, and bequeath to the Warren County Foundation, a not-for-profit organization duly organized and existing under the laws of the State of Ohio, the sum of ($ _____ or X percent of my estate, or description of specific property, or the rest, residue and remainder of my estate). The same and income thereof, to be owned, held and used by the Warren County Foundation for the following purpose: (identify a specific fund or purpose, or state that the gift is for the unrestricted endowment of the Warren CountyFoundation.
Retirement Plan Assets
A gift of an individual retirement account (IRA) or 401(k) plan can be made naming the Warren County Foundation as a beneficiary or contingent beneficiary of a set amount of money or a percentage of the account assets. Gifts of retirement plan assets avoid income tax (on income in respect of a decedent) that would be applicable to every dollar that comes out of such plans. Estate taxes would also be avoided.
Retained Life Estate
A gift of real estate (home, farm, vacation property) can be made to the Foundation while the donor retains for life the possession or enjoyment of the property. At time of death, the property is an asset of the Foundation and is excluded from the donor’s estate.
Charitable Gift Annuity
A charitable gift annuity (CGA) is a contract between your client and the Foundation that enables your client to make a charitable gift and secure a stream of income for life. Any balance remaining in the CGA after your client’s death (and that of a second beneficiary, if applicable) goes to a designated fund at the Foundation. Such a fund can be used for emerging community needs, can be designated to benefit your client’s favorite charity or charities, or can be used to establish a permanently endowed donor advised fund whereby family members make grant recommendations to public charities.