From The CPA Advisory Group —

The fall and holiday seasons of the year have traditionally been a time of increased charitable donations. Therefore, we thought it was appropriate to briefly discuss a charitable gift giving idea that has grown in popularity during the last few years.

A number of charities now ask their donors to consider donating life insurance policies rather than (or in addition to) cash to make substantially larger gifts than would otherwise be possible. The advantage to donors is that they can make a sizable gift with relatively little up-front cash (or even no cash, if an existing policy is donated). The fact that a charity may have to wait many years before receiving a payoff from the gift is typically not a problem because charities normally earmark these gifts for their endowment or longterm building funds.

If handled correctly, a life insurance policy donation can net the donor a charitable deduction for the value of the policy.

If handled correctly, a life insurance policy donation can net the donor a charitable deduction for the value of the policy. A charitable deduction also is available for any cash contributed in future years to continue paying the premiums on a policy that wasn’t fully paid up at the time it was donated. However, if handled incorrectly, no deduction is allowed.

A charitable deduction also is available for any cash contributed in future years to continue paying the premiums on a policy that wasn’t fully paid up at the time it was donated. However, if handled incorrectly, no deduction is allowed.

For this reason, we encourage you to contact us if you’re considering the donation of a life insurance policy. We can help ensure that you receive the expected income or transfer tax deduction and that the contribution works as planned.

If you have questions about the tax benefits of donating a life insurance policy to charity, contact the tax experts at Pinnacle CPA Advisory Group for help in navigating the process. You can reach our local offices by phone at (614) 942-1990, by sending an email to [email protected], or by just filling out the Contact Form at cpaagi.com/contact.