For those producers interested in helping their clients with charitable planning — and who have clients who are, in turn, looking to be more philanthropic with their money — plenty of products can help them achieve that goal.
Here, ASJ offers a guide to charitable giving using your portfolio of products, which we’ve put together with the help of The American College.
Product: Life insurance
How it can be used:
- Owned by the donor; paid to charity. No deduction is available for premiums, but the donor can access cash values.
- Owned by charity; the donor writes a check to the charity for the premium, which is tax-deductible as allowed by law.
- Donor makes a gift of the paid-up policy when they no longer need it.
- Owned by an irrevocable life insurance trust to replace gifted assets.
- Owned by a trust to purchase an asset, such as a business interest, from an estate. The donor’s children receive the asset, and the cash goes into the estate, and then to the charity.
- To create a specific inheritance for children, and then have the bulk of estate go to charity.
- To insure the donor as a key person for the charity (i.e., “endow the gift” and replace the donor’s talents).
Product: Deferred annuity
How it can be used:
- Owned by the donor with the charity named as the beneficiary. No deduction is available, but it can serve as a bequest substitute.
- Owned by a net income with make-up charitable remainder unitrust, or “spigot trust,” for retirement income.
Product: IRA or qualified plan
How it can be used:
- Paid to the charity at donor’s death; avoids income with respect to decedent, as well as estate taxes.
- Take money from IRA to use as premium and pay the income tax. Donor can use insurance to replace the IRA for their children, with the IRA itself going to a charity upon the donor’s death.
Product: Single premium immediate annuity
How it can be used:
- As an investment by a charity to “reinsure” gift annuities.
| 7 More Ways to Get Involved in Charitable Planning |
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Producers can also use their own skills to get involved in charitable planning with their clients. These include:
- Do an estate plan with a charitable twist for key donors.
- Work with business owners to help them with exit planning and wealth transfer planning. Include philanthropy.
- Use financial planning routines to demonstrate to donors how much more generous they can be without impacting their other goals.
- Volunteer, get engaged, serve on boards, give, and work with other givers for the charity.
- Serve as a speaker for events.
- Write articles for the charity’s newsletters.
- Find your “inner giver” before seeking the giver in the client.
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| To learn how one agent incorporates charitable planning into his business, visit Charitable Planning: How One Agent Does It. | |