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". . . estate
planners and
financial advisors now have a
new wealth management
tool—life settlements—to assist
their clients in achieving
their
charitable giving objectives."
Society
of Financial Services Professionals, May, 2004
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CHARITIES, NON-PROFITS AND
EDUCATIONAL INSTITUTIONS
The secondary market also has a profound
effect on fundraising opportunities available to Charities, Non-Profits,
and Educational Institutions. Most of these organizations currently
solicit unneeded life insurance policies as a standard element
of their charitable gifting program. These policies provide the
organizations with a potentially valuable long term asset and enable
donors to
benefit from a current tax deduction for the cash surrender value
of the policy and ongoing deductions for any future premium payments
made on behalf of the charity/institutions.
But what happens when . . .
• Donor can no longer afford premium
payments.
• Institution/Charity can not afford
to maintain premium payments.
• Policy is in danger of lapsing.
• Institution/Charity needs cash to support
current programs.
Previously, the options were limited to . . .
• Reallocating other assets for premium
payments.
• Surrendering policy for the cash surrender
value.
• Allowing the policy to lapse.
. . . life settlements
now provide an attractive new option!
A Life Settlement Can:
• Provide cash
that can be applied immediately to today’s needs.
• Eliminate costly premiums and annual
management and review of donated policies.
• Reduce the need to spend down assets
tied to long term investments.
• Provide the opportunity to design new
planned giving campaigns that take advantage of the unique benefits
of
life
settlements.
New
Gifting Opportunities
Charities and institutions can communicate to potential donors
of unneeded, unaffordable or underperforming policies that a life
settlement
can create immediate
benefits
for both themselves and the institution/charity.
For the Donor:
• A settlement for a value greater than
the cash surrender value can increase the size of the gift and
the resulting tax deduction.
• A settlement will allow donor to
see donation make a difference—“Giving
While Living”.
• A settlement may also enable the
donor to use tax savings to purchase replacement coverage.
For the Institution/Charity:
• A settlement creates a gift of immediate
cash.
• A settlement will eliminate the need
for ongoing premium payments and/or policy management.
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