One popular option with life insurance is naming your favorite charity or charities as the beneficiary. This can be a powerful and leveraged strategy to leave a legacy as well as provide a windfall for organizations that you care about. You can leave a percentage of the benefit and don’t have to leave 100%. For instance, many people will leave a majority to their family like 90% and 10% to their charity or to their church. You write the small checks to the insurance company and they will write a big check to the charity upon the insured’s death.
This is not only a strategy for the wealthy, but a strategy that can be used by anyone. It is important to make sure you have all of your wills and insurance information properly structured. We suggest to our clients that they consult with a good estate planning lawyer and a CPA.
A charitable remainder trust (crt) can be used as a planning tool as well. This type of trust allows a person to donate an asset to charity and basically have that asset annuitized back to them. For example, you donate a stock portfolio worth 500,000 dollars and in return get a stream 0f income from the charity. The amount that you receive will be based upon your age and the option you choose for payment. You can choose lifetime payments or get payments that last for you and your spouse’s lifetime. Like an immediate annuity if you select the option that lasts for you and your spouse’s lifetime, the payment is slightly lower than the straight lifetime option. With the donation of the asset, life insurance can be used to replace all or part of the asset donated.