Supporters of Annandale Village, often times, purchase life insurance policy(ies) to assist loved ones in case something happens to themselves. Commonly, though, the policies take a back seat in our minds. Here’s an idea: use this “buried treasure” as a charitable asset. Indeed, gifts of life insurance offer you an opportunity to make a contribution to Annandale Village, perhaps even more than you ever thought possible! Unfortunately, it is an often overlooked and underestimated gift.
- You may be surprised to learn that your surplus, paid-up life insurance policies can be used to fund a gift to Annandale Village. If, for instance, you acquired several life insurance policies when your family was younger, with the children now grown the coverage may be more than you need.Tax Benefit: If you donate a policy, your charitable deduction will be the lesser of the fair market value of the policy – we can guide you in determining this – or your cost basis, which is the total of your net premium payments.
- Alternately, your annual income may be healthy, but you know that ongoing family obligations will make it difficult for you to accumulate capital. You want to make a significant gift to Annandale Village but wonder how you will gather the resources to do so. If you take out a new life insurance policy naming us as owner and beneficiary, you can deliver a large benefit to us from income rather than capital.Tax Benefit: You will make deductible annual gifts to Annandale Village in the amount of the premium payments; we will, in turn, pay the premiums to the insurer.
- Or you can also transfer ownership of an existing policy which is not yet paid up.Tax Benefit: Your charitable deduction will be determined in the same way as if you had given us a paid-up policy. We reserve the right to surrender your policy or to keep it in force; you can make deductible gifts to offset the premium payments if we elect to continue the policy.
It is important that you name Annandale Village as the irrevocable owner of the policy and not just the beneficiary if you intend to deduct your premium payments. The IRS does not allow deductions for your premium payments if you retain ownership of the policy.
If you have borrowed against a life insurance policy, a subsequent gift of the policy will create taxable income for you – the difference between the loan balance and the fair market value of the policy.
Annandale Village reserves the right to cash in any policy it owns at any time at its sole discretion. Of course, you may designate Annandale Village as the revocable beneficiary of a life insurance policy at any time. Such a designation will not, however, provide you with any immediate tax benefits.