Legacy Planning

Legacy Planning

After decades of working hard, saving, and investing, it's common to want to share what you've accumulated with those around you. If you are one of millions of Americans who are concerned about leaving something to family members or a favorite charity, now is the time to begin planning your legacy. Employing the appropriate giving strategies now may help increase the value of your gifts both to yourself and your intended heirs.

There are many financial products and services out there to choose from. AE Financial & Risk Management can help you decide which are most appropriate for your situation and help you make adjustments as your needs change in the future.

Advantages of Donating Life Insurance Proceeds 

Charitable giving is a chance to help your church, school, or favorite cause and gain personal satisfaction in the process. Life insurance provides a way to help you multiply the value of your gift beyond what you might be able to give outright.

Say you want to donate a certain amount of money to your alma mater. If you were to use the money instead to pay the premiums on an appropriate life insurance policy and named the school as the beneficiary, the death benefit may be worth more than the amount you had originally intended to give. The larger amount might help create a scholarship in your name or help the school pay construction costs for a new building.

Using life insurance as a gift can help preserve your other assets for your heirs. Premiums can easily be paid from your annual or monthly budget. This way, any major assets that you intended to benefit and provide for your heirs can remain in the family while your desire to make a large donation can be met as well.

Provided you kept the policy in force during your lifetime, the death benefit usually is paid quickly, with minimum delays to the beneficiary. Life insurance proceeds typically are not subject to probate or estate settlement costs.

If a qualified, non-profit organization purchases the policy but you pay the premiums, some or all of your premium payments may be tax deductible (laws vary from state to state, so it's a good idea to consult with your legal and tax advisors). Plus, the death benefit typically will not be counted as part of your estate for estate tax purposes. When you retain ownership of the policy, the policy’s proceeds are included in your estate, but the amount paid to charity may be deductible as a "charitable bequest" if your heirs owe estate taxes.

If your selected charity purchases a permanent life insurance policy with you as the insured, the charity may be able to borrow some of the policy's cash value, which typically builds up over time, but the loan will reduce the available death benefit if not repaid before your death.

When you make the gift of life insurance, no one has to know about it except you and the charity. Not even your family has to know, if that is what you desire. When a death benefit is paid, the courts typically are not involved, there may be no public record of the gift, and it is extremely difficult for surviving heirs to dispute it.

To learn more about legacy planning, contact us today.