It is not uncommon to learn by doing. When working with clients on their estate planning needs, I have often asked a simple question: “if you were to die today, would you want to donate some of your estate to any particular charity?”.
Oftentimes, that question does not trigger a response. That is not surprising. However, one time, it did.
The client’s answer was simple: “I had not given it much thought”. Yet, the conversation did not stop there. My question - if you were to die today, would you want to donate some of your estate to any particular charity - led to a different response: an exchange. After some talking, we made a plan, and that plan led to action. Eventually, we figured out the desired outcome, and she changed her will. Within six months, she had passed; and, a charity received a big cheque.
We often don’t think about what would happen once we pass. However, for just a second, imagine that you could give a gift of several thousand dollars to a charity - like an endowment, a memorial scholarship, a hospital, a religious institution or an educational facility - yet only pay for about 10% to 15% of that gift. This act is called planned giving, and with a life insurance policy it is a simple and easy way to donate money.
By planning during a donor’s lifetime, this gift, this legacy, can be a sizable charitable contribution to a charity, and that donation will be fully realized at a future date or upon death. A donation which you can get a tax receipt for, either while you are alive or after you have passed.
Also called legacy giving or deferred giving, this type of integrated philanthropy can easily maximize one’s long-term financial, retirement, and/or estate goals. This strategic approach is wonderful because it gives donors the option of making significantly larger gifts than would be possible if they used their standard disposable income alone.
Now, let’s be clear: while charitable bequests (i.e. gifts specified in a will or trust) make up the vast majority of planned donations, traditional cash retainers are rarely the most efficient way to give. Whether your heart lies with supporting churches, schools, charities, medical research, or community hospitals, leveraging life insurance as a vehicle for planned giving transforms a modest financial commitment today into a powerful, tax-sheltered legacy tomorrow.
Given that donors are the lifeblood for these institutions, it is important to think about how you maximize the impact of your donation, and go beyond simply writing a yearly check.
If you are looking to put a portion of your wealth toward charitable endeavours, using life insurance can be an impactful way of making a difference, and it doesn’t have to be hard. You can reuse an existing life insurance plan, or create a new one for a tailored purpose.
If you would like to have a conversation about how you can make a planned gift, please call or contact me.
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