Wednesday, May 13, 2009

A Charitable Alternative to Cashing in Your Life Insurance

In our prior post, we addressed the possibility of a life settlement as an alternative to taking the cash surrender value of an unneeded life insurance policy.  Another alternative is gifting the policy to a charity and taking an income tax charitable deduction.  The charity becomes the beneficiary of the policy and the ownership is transferred to the charity as well.

If you do not need an income tax charitable deduction and you do not want to part with the ownership of the policy, you can simply designate the charity as the beneficiary of the policy.  Your estate will receive an estate tax charitable deduction for the death benefit passing to the charity.

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