Gifts through Contracts
Changing beneficiary designations or ownership of a life insurance policy is easy and costs nothing. Often a donor can simply download a form from the insurance company’s website, fill in the name of the charity as a beneficiary, and send it back.
You can easily make AMS a beneficiary of a life insurance policy (or one of the beneficiaries) or make AMS the owner of a paid-up whole life policy (and receive a tax deduction for this gift).
Example: Harold owns a paid up insurance policy he bought when he was 25, with a death benefit of $50,000 and a current cash value of $45,000. He long since finished making premium payments on the policy and no longer needs it. He can give the policy to AMS and receive a tax deduction for roughly the $45,000 cash value.
Example: Pete has a life insurance policy with a $100,000 death benefit. His children are the primary beneficiaries, and he wants them to benefit from the policy, but he also wants to leave a legacy. Thus he designates AMS as a 10% beneficiary of the policy, guaranteeing a $10,000 gift at his death.
(an IRA or a 401(k) or 403(b): Retirement plans are often one of the largest assets people have in their estate. If a donor leaves a portion of a qualified plan, like an IRA or a 401(k) to anyone other than a spouse, that person may have limited rights about withdrawing the money and will have to pay income tax on any money withdrawn. A nonprofit, however, pays no tax. Naming AMS as a partial beneficiary of a retirement plan is easy, often involving no more than changing a beneficiary on-line.
Example: Mary, who would like to make a gift through her estate, has an IRA worth $500,000. She can designate a percentage of her IRA to AMS. She saves all the potential income tax on the amount she gives without reducing her retirement income.
Example: Malcolm has a $500,000 403(b) that he has accumulated over the years. He would like to make sure his children can have the income from what is left in the plan after his death, but he does not want them to pay income tax on their inheritance. By designating a charitable trust the beneficiary of the plan and his children the income beneficiaries of the trust, he can avoid the upfront income tax, provide an income to his children, and make a long-term substantial gift to AMS.