Another Option to Support Your Community > Chautauqua Region Community Foundation

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Another Option to Support Your Community
Thursday, December 04, 2008

By Rose S. Prinzi

We salute the generous and dedicated residents of the Chautauqua Region. They are generous and dedicated people and we applaud them. The Chautauqua Region Community Foundation’s success can attest to that. The people of our area donate to the Foundation with a desire and passion we can be proud of. The legacy of giving is alive and well in the Chautauqua Region.

In these challenging economic times, however, you are probably wondering how you may be able to support your community but are squeezed financially to make a donation. An easy way of making a donation, in the future, may be through your life insurance. It will not cost you any additional money to make a donation to the Foundation for a charity of your choice.

You may consider a donation of a life insurance. It is an easy and flexible way to make an important gift to the Foundation for a charity or fund of your choice. Whether it is an old policy that has outlived its original purpose (such as for a spouse who no longer needs it, a child who is financially independent, or to protect a business that no longer exists) or a new policy purchased specifically to benefit a charity, a charitable gift of life insurance can allow you to leave a much larger gift to the Foundation than may have been possible during your lifetime.

There are different ways in which you can structure a gift of life insurance to the Foundation:

You can make the Foundation a beneficiary of an already existing life insurance policy. Upon your passing, the full face value amount of the policy will go to the Foundation. Although the proceeds from the policy will be included in your gross estate, the full amount received by the Foundation may be deductible as a charitable deduction. To make the Foundation a beneficiary of an already existing life insurance policy, you can simply request a beneficiary designation form from your employer or insurance company.

Another way is that you can make the Foundation the owner and beneficiary of an already existing paid-up life insurance policy. By doing so, you may be able to deduct an amount equal to the fair market value of the policy, or your cost basis, whichever is less. Since the Foundation becomes the owner of the policy, the proceeds will not be included in your estate for tax purposes.

A third way is that you can make the Foundation the owner and beneficiary of a policy on which you are still paying premiums. You may be able to deduct an amount equal to the approximate cash value of the policy or the policy's cost basis, whichever is less, in the year in which you make the gift. You may also be able to deduct any future premium payments, and the proceeds will not be included in your estate for tax purposes.

There is a fourth option whereby you can purchase a new policy and make the Foundation owner and beneficiary. Because the Foundation is the owner, you may be able to deduct premium payments as charitable contributions for as long as the premiums are paid, subject to state limitations. In addition, the proceeds will not be included in your estate for tax purposes.

These are just some basic ways in which you can use your life insurance policy to make a contribution to the Foundation. In doing so, you will have created a legacy for the future by establishing a fund supporting a charitable Purpose of your choice and in the three instances, not have a monetary out-lay above your present expenses.

The staff at the Foundation is available to help you with any questions you may have about creating a legacy through the donation of your life insurance to the Foundation to support charitable efforts in the community.

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