There are several ways that you may make charitable gifts using life insurance policies.
This may be a good option if the existing beneficiaries of a policy have preceded you in death, or if you have beneficiaries for whom you have provided through other life insurance policies or assets. (The proceeds from group insurance as well as individually owned insurance can be given to PNB.) This designation can be changed if your circumstances change in the future. Any proceeds paid to Pacific Northwest Ballet will qualify for an estate tax charitable deduction.
Often, a person’s need for life insurance declines with age. A life insurance policy purchased years ago for family protection or to collateralize a loan may no longer be needed for that purpose. If so, ownership of the policy could be transferred to PNB. Because the gift is irrevocable, you receive an immediate income tax deduction. By making a gift of this essentially "idle" asset, you will receive a deduction and reduce your taxes.
You may have a policy that you have owned for a while but is not paid-up. You can transfer ownership to PNB and continue paying the premiums. You receive an immediate deduction along with additional deductions for continued premium payments. Or you can take out a new policy and deduct the premium payments. This is a way to assure a major future gift to PNB with minimal current financial outlay.
If you make a gift to PNB using other assets, you may consider using life insurance to replace the value of the donated assets, thereby preserving an inheritance for loved ones.
Years ago, Mr. P took out a $60,000 life insurance policy to protect his wife and young family. Now he is a widower and has other assets to leave his children. He names Pacific Northwest Ballet as his new beneficiary, with the proceeds going to support the PNB School, as he was a parent of a student for many years. He will receive an estate tax charitable deduction for proceeds paid to PNB.
To find out more about life insurance gifts, please contact Katie Johnson, Major Gift and Planned Giving Manager, at 206.441.3599 or email@example.com.