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Gifts of Life Insurance
Life Insurance Policy
Sometimes people find themselves with life insurance policies they no longer need after the death of a spouse or after children are grown. By contributing such a policy to Catholic Charities of Baltimore you can make a wonderful gift and reduce taxes that may otherwise be due upon your death.
You can also receive a charitable income-tax deduction for the cash surrender value of the policy when you irrevocably assign the policy to Catholic Charities. Be sure to use our legal name and address as follows:
Catholic Charities of Baltimore
320 Cathedral Street
Baltimore, MD 21201
Gifts of Percentage Interest in a Policy
You might choose to designate Catholic Charities to receive only a partial interest (e.g., a percentage) of a life insurance policy.
Gifts of New or Partial-Paid Policies
You may also assign a partially paid policy to Catholic Charities and keep the policy active by sending premium payments to Catholic Charities. Or you may purchase a new policy and name Catholic Charities of Baltimore as owner and irrevocable beneficiary. All of your payments would be tax deductible if you itemize.
Gifts That Save Capital Gain
Gifts of securities can be used to cover the payments on a new or partially paid life insurance policy, with Catholic Charities of Baltimore named as a beneficiary. By donating securities, capital-gain tax can be eliminated entirely.
The dividends of a whole life insurance policy may be designated to Catholic Charities of Baltimore without reducing the death value of the policy for your beneficiaries. The donor, who remains the owner of the policy, retains the right to borrow against the policy.
Naming Catholic Charities of Baltimore as Beneficiary
Another option is to name Catholic Charities of Baltimore as the primary beneficiary or co-beneficiary of a life insurance policy. You would retain ownership of the policy and have access to the policy’s cash value. Because you retain ownership, no charitable income-tax deduction is allowed at the time of the gift. Although the face value of the policy will be included in your gross estate at your death, your estate will be entitled to an offsetting charitable estate-tax deduction.
How It Works
- You assign all the rights in your insurance policy to Catholic Charities, designate us as irrevocable beneficiary, and then receive an income-tax deduction
- Catholic Charities may surrender the policy for its cash value or hold it and receive the proceeds at your death
- You receive a federal income-tax deduction
- If premiums remain to be paid, you can receive income-tax deductions for contributions to Catholic Charities to pay these premiums
- You can make a substantial gift on the installment plan
- Catholic Charities receives a gift they can use now or hold for the future
Life Insurance to Replace Gift
An important but frequently overlooked role of life insurance is the one it can play in charitable gift planning. Life insurance itself can be the direct funding medium for a gift, permitting the donor to make a substantial gift (face value of policy) for a relatively modest annual outlay (i.e., the premium payment). Life insurance can also be used to replace an asset that has been given to Catholic Charities.
How It Works
After a donor makes a gift to Catholic Charities, the tax savings produced by the charitable deduction are used by his or her children or an irrevocable trust to purchase and pay the premiums on an insurance policy on the donor’s life. Such an arrangement can ensure that the interests of family beneficiaries will not be adversely affected.
- You make a gift to Catholic Charities
- You give the tax savings from the charitable deduction to your children
- Your children purchase an insurance policy on your life with the tax savings
- Your children will receive the proceeds upon your death
- You can make a significant gift to Catholic Charities without diminishing the amount your family will receive
- Your tax savings finance this life insurance policy