Insurance Policies/Retirement Plans

Insurance Policies

A Life Insurance policy is an excellent tool for making a charitable gift for a number of reasons.  Life insurance allows the donor to make an “amplified” gift that enables the donor to purchase at a relatively small cost (the premium) for a larger benefit at sometime for the charity.  

The gifts can be made without diluting the control of other investments and still have assets earmarked for family members. 

Donors can either gift the entire policy to the charity and receive a charitable deduction for that gift or name the charity as the beneficiary of a policy.  When a life insurance policy is given to the charity and premiums are still being made, the donor may deduct up to 50% of their AGI for the premiums.  All that is required to transfer the policy is a change of ownership form. 

When a donor names the charity as a beneficiary of a policy, the charity receives the gift at the time of the donor’s death. The donor may wish to have an endowment application on file so that the benefit of the life insurance policy can establish a permanent gift for a parish, school or other Catholic organization.

Retirement Plans

Retirement plans, such as 401k plans and IRAs, are great ways to make a charitable gift. Since any heir receiving a gift from retirement account may be subject to double taxes, it leaves donors the opportunity to make a charitable gift and still leave other bequests to their heirs.

To leave a gift in the form of a bequest from an IRA, the donor needs to change the beneficiary form or designate as such in their estate plans.

A recent tax law enacted, allows those individuals age 70 ½ or older, to make a charitable gift directly from their IRA to a qualified charity.  The maximum amount per year is $100,000 and the law is through December, 2011. 

Yes. Funds remaining in your retirement accounts at death are considered part of your estate for federal (and in some cases state) tax purposes

For more information, please contact the Catholic Foundation office at 812-424-5536 or by email at lcox@evdio.org.