Charitable Donation Strategies with Life Insurance | Presented by Annie Bokova

1. Insured Donation Strategies Presented by Annie Bokova, M.Sc., CFP, CLU, FMA, FCSI Estate Planning Specialist (604) 831-7777 Annie.Bokova@cibc.ca June, 2015

2. Insured donation strategies Life insurance allows a person of modest means to provide a much larger gift to charity for a relatively small annual cash outlay. Life insurance allows a person of wealth to provide a much larger gift to charity as a part of an overall wealth management plan.

3. Insured donation strategies • Basic strategies • Strategy 1: Gift existing life insurance policy • Strategy 2: Gift new life insurance policy • Strategy 3: Gift by beneficiary designation • Strategy 4: Insured lifetime gift • Strategy 5: Insured estate replacement

4. So many options!

5. Gift existing life insurance policy • Benefits: • Donor makes a donation today • Donor can offset current taxes • Charity controls the policy • Policy may be self-funding if sufficient cash values • Charity receives total death benefit upon death

6. Gift new life insurance policy • Donor purchases a new life insurance policy and gifts the policy to the charity • Charity becomes the owner and beneficiary • Donor gets a non-refundable tax credit based on future premiums paid into the policy by the donor

7. Gift new life insurance policy • Benefits • Donor makes a donation today • Donor can offset current taxes • Charity controls the policy • Charity has access to cash values • Charity receives total death benefit upon death

8. Gift new life insurance policy • Donor, age 50, buys a $500,000 insurance policy, gifts policy to charity • Annual premium (10 years) $20,000 • Tax benefit on premiums $8,700 • Death benefit at life expectancy $867,325

9. Gift by beneficiary designation • Donor either owns or purchases a life insurance policy and names charity as the beneficiary • Proceeds paid directly to the charity following death • Donor’s estate gets a non-refundable tax credit based on the total death benefit

10. Gift by beneficiary designation • Benefits • Donor makes a substantial donation following death to offset estate tax liabilities • Donor’s estate obtains tax benefits based on the total death benefit • Donor controls the policy • Charity receives total death benefit upon death

11. Insured lifetime donation • Donor purchases a life annuity and a life insurance policy in an amount equal to the premium for the annuity • Donor donates the annual annuity income less the insurance premiums to charity • Donor’s estate receives the insurance proceeds following death

12. Insured lifetime donation • Benefits • Donor makes a guaranteed lifetime income which can be donated each year to charity (after payment of the insurance premiums) • Donor receives enhanced rate of return • Donor’s estate receives total death benefit

13. Insured estate replacement • Donor gifts property to charity today: • cash, • public company shares, • land, etc. • Donor uses the net tax benefits to purchase a life insurance policy to replenish the estate • Charity receives property with value today and can convert that property to cash today

14. Insured estate replacement • Benefits • Donor makes a substantial donation today and can offset current tax liabilities today • Charity receives substantial donation today • Family receives recognition for the gift today • Donor funds estate replacement insurance using net tax benefits • Donor’s estate receives total death benefit funded by the donation tax benefits

15. Insured donation strategies summary

16. But wait… When should I get insurance? Can I wait? Am I medically eligible? What happens on January 1, 2017?

17. We can help!

18. Thank You!

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