Charitable Giving-A Structured Approach

Charitable Giving—A Structured Approach

Here is a great article that I found written and published by U.S. Trust Bank of America Private Wealth Management. It is very informative and beneficial for those of you interested in this type of giving. I will provide the link here:

Give And It Shall Be Given......

Okay, I'm back.

Now, the articles below are there to give you insight as an average consumer wanting to give more to a favorite charity. However, I want to specifically direct my attention to pastors, members, leaders, and founders of local and smaller ministries and churches.

I tend to be direct and straight to the point but I will not intentionally offend anyone. But I want to ask a  few questions. How much money is available for benevolence in your ministry's banking account? Okay, how about this question. How often are those funds depleted? How often does your ministry come up short with its' everyday ongoing financial obligations and responsibilities? 

Wouldn't it be great to not have to worry if the weekly contributions will be enough to handle everything? I'm not saying that my suggestions are a complete fix all, but what I am saying is that the negative cash flow issue can be resolved and the ministry's indebtedness can be eliminated or more easily managed with a positive cash flow.

Let me be the first to say that this is not an overnight fix but it doesn't have to take months and years to start to see the cash flow improved. 

In order to do this, you are going to need to meet with your membership if you are pastors and have a general presentation done to explain to them the concept and gauge who will be the donors that are committed and able to start an endowment plan for the ministry. This will have to be in addition to what they are already committed to in their regular giving or just designate a certain amount of proceeds from an existing life insurance policy. So these donors will have to be people who can grasp the concept, be willing to sacrifice a little bit more and be committed to the present and ongoing success of the ministry in which community it serves.

This is not something most people will just grab hold to and run with. Most of us in the church will need to be re-educated in giving. We also will need to change our minds on how we view wealth and finances. I often say that you don't have to possess wealth to handle wealth, you just need to change your view and you will have it. 

You don't have to play the lottery, win sweepstakes or have a multimillion-dollar business, even though all of that would be nice. But more realistically, most of us work hard for the money we do get and trying to repay Peter after having robbed Paul ain't working. Being faithful in tithing and regular giving is a challenge already and trying to get our minds around giving more is a tough nut to crack. But it can be done, and I will be looking forward to sharing with you on how to do so. 

In the meantime, stay posted and I will be talking with you soon!! Be blessed today!!

A New Way To Give

An ongoing series of informational entries on giving using life insurance

Giving Feels Good

January 15, 2018

Good Afternoon Everyone!

I am super excited about sharing with you. I want to personally thank all of you who have visited my blog. Please stop by often as I will be posting on a regular basis vital information and insight on charitable gift giving.

Again, I'd like to post an article here from another source of information that I think will help you understand more how this works. I realized that I am not the only source of information and it's good to see things from other prospectives. I will try to make our posts short so that you won't get reader's fatigue, but it is a lot of good information out there and I will love sharing it with you.

Can I use my life insurance policy to give to charity?

by Adam Cecil 

December 15th, 2016

Can I use my life insurance policy to give to charity?

‘Tis the season to be generous, but giving to charity doesn’t have to be limited to the holidays. In fact, your generosity doesn’t even have to stop when you die.

Whether you have a term life insurance policy or a type of permanent life insurance, such as whole life insurance, you can use your life insurance benefit to continue your charitable giving after you’re gone.

The easiest way to give your life insurance benefit to charity: make them a beneficiary

When you set up your life insurance beneficiaries – a.k.a. who gets the benefit when you die – you can easily write down the name of a local or national charity. Life insurance policies allow you to pick multiple beneficiaries and even specify what percentage of the money should go to each beneficiary. Anyone can add a charity as a 1%, 100%, or anywhere-in-between-percent beneficiary of their policy.

Making a charity a beneficiary has other benefits besides being easy. For one, it gives you the option to keep your transaction private from your family. It’s also incontestable – there’s no way your family can legally try to block that money from going to the charity. (Plus, if we’re talking about a permanent policy, your heirs will get an estate-tax deduction.)

If you decide to leave a benefit entirely to a charity or other organization, make sure your lawyer or one of your heirs knows the policy exists; someone needs to send the life insurance company your death certificate in order to get the process of paying out the benefit started.

Another easy option (if available): a charitable giving rider

Life insurance riders can do a lot of things, like cover expenses associated with critical illnesses and even return some of your premium if you end up not dying. Some life insurance companies also offer what’s called a "charitable giving rider," which can provide an additional 1 to 2% of your base policy to the charity of your choice.

Charitable giving riders do come with limitations, however. They’re usually only available on very expensive policies, for example (though they’re usually free to add once you get there). They also usually have a limit on how much you can donate. They can also only be used on qualified charities, which cuts out many large activist organizations. If this is something you’re interested, be sure to ask your agent how you can make it work.

A slightly more complicated option: a trust

If you’re trying to control how your money should be used after you die, trusts are one of the most useful tools in the world. A trust, most simply put, is a legal relationship that allows one person to control the property of another person. Lots of people set up trusts for all sorts of reasons – you can set up a trust for your special needs adult child, for example, or a trust for a minor. If you’re Richard Gilmore, you can set up a trust so Luke can franchise the diner (that’s a Gilmore Girls reference, for those of you without Netflix).

In this case, however, you’ll want to set up a trust that dictates how you want money given to charity. If you have more complicated instructions than just "send a check to the charity," a trust is how you can outline that and make sure those instructions are actually followed. A trust can be set up with your lawyer (or online with a site like LegalZoom, if you prefer), and, once created, you can name the trust a beneficiary on your policy.

A more advanced method for permanent policies: donating the entire policy

Permanent life insurance policies, unlike term life insurance policies, are complicated beasts that are often used in advanced estate planning. Because of that, donating a permanent policy to a charity can be a useful way to both get an income-tax deduction while you’re still alive and get rid of some your taxable estate.

When you transfer a policy to a charity, they will be both the owner and the beneficiary. At this point, they can liquidate the policy, and take the cash value to use on their good work. However, they can also keep the policy going, continuing to grow the cash value. If you so choose, you can continue to pay the premiums. Both these premiums and the the policy are deductible on your income taxes. Incomes taxes can get a little complicated in this situation, so make sure you run all of this by your accountant or financial planner.

Which option is best for you?

If you follow our advice and buy a term life insurance policy, your best option is to name your charity of choice as a beneficiary on your policy. Just be aware that once your term is up and you outlive your policy (and the charitable rider), you’ll have to find another way to leave a charitable gift upon death.

If you have a permanent policy, however, and want to experience the best outcome for your income and estate taxes, it makes sense to donate the entire policy to the charity of your choice. Talk to your financial planner or the lawyer in charge of your estate planning for more information, or call your insurance company to get the ball rolling.


Charitable Gift Giving

January 9,2018

Hello, and welcome to my blog on charitable gifting and endowments. Here, I will address how life insurance policies can be used to endow your favorite ministry or church. This method has been around for many years and major organizations and churches have been well endowed by people whose lives had been touched or changed by the service given by their church's ministry. But first I want to add an article here that I think would be a great way to understand how this method of giving works and why it is highly effective in raising funds for an ongoing charity or community work.

From that point on, I will post to this blog on a regular basis addressing your questions on how this may work for your organization. 

Please feel free to reach out to me personally with any of your questions and I will be more than happy to assist you.

Using Life Insurance To Make Charitable Donations

By Mark P. Cussen, CFP®, CMFC, AFC

Millions of Americans make donations of cash and property to the charities of their choice each year. However, while these donations can provide valuable tax deductions, many donors are left wishing that they could do more for the charities that they love and support. Some donors would therefore be wise to consider using their life insurance policies as a more effective means of leveraging the support they provide. In many cases, this can be the most effective and convenient asset that they can give. However, there are a few different ways that this can be done. This article examines the various methods of life insurance donations and their advantages.

Charitable Giving Riders

Charitable giving riders are a relatively new addition to the family of riders available in modern life insurance policies. For example, these riders can be attached to policies with face values of over $1 million and then pay an additional 1-2% of the policy's face value to a qualified charity of the policyholder's choice, although sometimes there are limitations placed on the maximum allowable gift amount. Furthermore, these riders usually come at no additional cost and often do not increase the premium or reduce the cash value or the death benefit of the policy. These riders effectively eliminate the need to create, pay for and administrate separate gift trusts until the death of the insured.

Once the rider has been added, no further action is needed by the policyholder. These riders do have a few limitations; perhaps the largest is the high amount of protection that must be purchased in order to use them. Any charity chosen must also be a qualified 501(c)3 charity that meets the IRS definition of a nonprofit organization. Furthermore, make sure that the charity will actually accept your life insurance policy. Some types of policies, such as term policies, are often shunned by these organizations.

Policy Donations

Although this strategy is a bit more involved than merely purchasing a charitable gift rider, policy donations also provide a much greater benefit to the donor as well as the charity. Gifting a life insurance policy can greatly reduce the donor's taxable estate, which can save thousands of dollars in estate taxes for upper-income taxpayers. Gifting a policy can also yield a current income tax deduction of the policy's fair market value. Of course, this deduction can be quite significant in some cases. (To learn the basics of charitable giving, read Deducting Your Donations)

Perhaps most importantly, the charity will receive the entire face amount of the policy upon the death of the insured. This is usually going to be many times the amount that they would receive from any rider, and can represent a substantial windfall. However, the cost to the donor will only be a small fraction of that amount each year, and any premiums paid after the date of the gift will be deductible as well.

There is also no limit on the size of the policy that may be donated, since charitable donations have no ceiling for estate tax purposes. This strategy also does not impede the donor's current investment strategy, and can also provide a useful way to dispose of an unwanted policy that was originally purchase to cover a need that no longer exists.

Naming a Charity as Beneficiary

Naming the charity of your choice as the beneficiary of your life insurance policy is the simplest way to provide a charity with the death benefit proceeds from a policy, although it does not offer the income tax advantages that come with gifting a policy. However, it still reduces the donor's estate by the amount of the death benefit. Donors who are unsure of exactly how they want to apportion their assets after death can list a charity as a revocable beneficiary if they so choose. This gives them flexibility in future planning in case their financial situation changes.

Naming a charity as a beneficiary also ensures the privacy of the transaction, which can be important for donors who wish to keep their gifting intentions secret from their families or other heirs. Transfer of assets from an insurance contract is also absolutely incontestable, thus rendering anyone contesting the estate settlement powerless to stop it. Furthermore, the donor remains in a position to change the beneficiary prior to his or her death. If the donor chooses to stop paying the premiums, the charitable organization can choose to continue the process or can allow the policy to lapse.

Gifting Policy Dividends

Although gifting policy dividends will not provide the same amount of benefit to a charity as the other strategies discussed, it is possible for policyholders to receive the dividends paid to their life insurance policies in cash and donate them to charity. The dividends donated are deductible in the same manner as premiums paid on a gifted policy, and this strategy does not require any additional cash outlay from the donor. Corporations can also effectively implement this strategy as a giving policy to realize tax and community benefits.


Donors who wish to leverage their cash donations to charity can use life insurance as an excellent means of accomplishing their goal. By either gifting a policy outright or naming a charity as beneficiary, they can provide the charity of their choice with a large sum of money that can provide a lasting legacy for a cause that they believe in. Donors should consider the use of charitable riders on their cash value insurance policies to provide at least a small gift if possible. For more information on the use of life insurance as a gifting tool, consult your insurance agent or financial advisor.