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It’s all about Charitable Giving

According to a newly released report from the Atlas of Giving1, charitable giving in the United States totaled $323.86 billion in 2010, up 6.6% from 2009. With planning, you can maximize your impact on your favorite charity.

Everyone has personal motives for making charitable gifts. It could be generosity, religious belief, gratitude or to benefit your alma mater. Regardless of the cause, the true meaning of your gift is to make the lives of others better.

Benefiting your favorite cause can offer more than just self-fulfillment and aid to others; by carefully crafting your charitable giving plan to include life insurance, you can protect those who depend
on you and achieve your philanthropic goal.

What are a few of my options?

  1. Designate a charity as beneficiary of life insurance or annuities;
  2. Gift a life insurance policy to charity;
  3. Establish a Charitable Gift Annuity; or
  4. Establish a Charitable Remainder Trust.

You can use life insurance and annuities to shape your charitable gifts and to ensure your generosity does not have an adverse effect on your family’s resources. By working with a financial services professional, you can develop and manage a plan to maximize your charitable gift while simultaneously providing advantages to you and your heirs. It starts by choosing a plan of charitable giving that best fits your vision and financial circumstances.

Designate a charity as beneficiary of life insurance or annuities:

A simple method of using life insurance or annuities for charitable giving is to designate a charity as the beneficiary of the life insurance policy or annuity contract. By naming the charity as the beneficiary, you remain the contract owner with the ability to change the amount that is passed on to the charity at any time. Using this method, you also have access to any cash value available. You will not receive an income tax deduction because you can still use the cash values and change the beneficiary arrangement.

Gift a life insurance policy to charity:

You may have life insurance that is no longer needed for family protection. In this instance, you can benefit a charity by making a gift of the policy to that organization. Because the charity receives all of the policy rights, including rights to any cash value, you may receive a current income tax deduction equal to what you have put into the policy.

Establish a Charitable Gift Annuity:

Another option would be to purchase a Charitable Gift Annuity (CGA). In a CGA, you provide cash or property to a charity in exchange for the charity’s promise to pay you an annuity or fixed payment for life. To create a CGA, you should work with a charity that already has or is willing to set up a Charitable Gift Annuity program. A CGA is easy to establish, however, you must give up ownership and control of your property. You may receive an income tax deduction equal to the value of the property gifted less the present value of your expected annuity stream.

Establish a Charitable Remainder Trust:

You may wish to set up a Charitable Remainder Trust (CRT) to provide an income stream to you or family members while ultimately benefiting a charity. After creating the CRT, property is gifted to the trust which may be sold without incurring an immediate capital gains tax. The trust will pay income to you or your beneficiaries for life or a specified term. The amount remaining in the trust at the end of that period
is paid to the charity. The use of a charitable trust can provide a stream of income to you, similar to a Charitable Gift Annuity, and will ultimately serve to benefit the charity.

Aside from those listed above, there are various other gifting strategies that may be utilized in an effort to accomplish your goals and objectives of “giving back.” For more information on charitable giving or any life insurance products and annuities, please contact a financial advisor.

– Article compliments of MassMutual Financial Group. Contact: Todd Friedman, Financial Services Professional, 2121 N. California Blvd. STE 395, Walnut Creek, CA 94596 www.financialguide.com/todd-friedman (925) 979-2342 tfriedman@financialguide.com

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