Life Settlement Charitable Giving

Life Settlement Charitable Giving

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Charitable Giving

Donors have a limited amount of dollars to allocate for charitable giving. As such charities have a dilemma in that they normally must choose between current gifts and planned giving. It is a difficult choice, but most of the time, current gifting is favored. Life Settlements capitalize on the hidden value of life insurance policies to free up cash for charitable donations. Life Settlements allow a donor to make a current gift while eliminating the liability of future required life insurance premiums. As with most charitable donations, a donation funded by life settlement proceeds may be eligible as a tax deduction.

Scenarios

  • Life Insurance policy owners can sell a policy and then donate the proceeds to a charity of their choice.
  • Charities who currently own policies previously donated can sell a policy to raise immediate funds.
  • One alternative to a Life Settlement for Charitable Giving purposes is to actually donate the life insurance policy itself to a charity. This option enables the charity to retain the full face value of the policy but this usually requires additional premiums to be paid by the charity which can be very difficult to fund in the future. This uncertainty creates a risk that a policy may lapse in the future because money to pay the premiums is not available.
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Charitable Giving Testimonial

Robert (75 year old) – Chicago, IL

“IMS Settlements helped me sell my life insurance policy for $362,000.00. I used the proceeds to make a charitable gift to my church for $200,000. I was able to pocket a considerable sum while contributing to our church’s new construction project.”

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Disclaimer

Any such statement herein was written to support the marketing or promotion of the transaction(s) or matter(s) to which the statement relates. IMS does not provide any tax advice. Any tax statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding any penalties. Each taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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