A Legacy of Giving Back

When it comes to insurance and financial planning, giving takes on several meanings depending on what is important to you.

​How are you giving peace of mind to your family with proactive planning and protection? How are you paying it forward through intentional charitable planning?

Keeping all this mind, I would like to share a personal story about my veteran husband, Tony, and his family. 

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My husband’s parents came to America with his two sisters from Cairo, Egypt, with nothing more than their suitcases and a little money to start their journey. They came here to give their children greater opportunities and possibilities. Staying in Cairo meant a very tough way of life. They wanted safety, security, and freedom for their family and decided to make the journey to America. 
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Tony’s father, a chemist, had done consulting work for the U.S. Navy in Cairo, and it was a Naval Officer who helped the family relocate here to the United States. There were many obstacles at the time in coming to this country and they had to leave everything behind. Once arriving to the U.S., Tony’s father worked two jobs to support the family including sending money back to Egypt for other family members.

Giving Peace of Mind

As a first generation American, Tony was raised to believe strongly in his country with gratitude for the freedom the family was able to experience after their relocation to the United States. His sense of duty compelled him to serve, and he signed up for ROTC at the University of Tennessee, joining the Army to become a Combat Engineer. Later he continued his duty as a civilian and spent many years in Joint Warfare Analysis.

When he got out of the military in his 20s, he was approached by a financial advisor to purchase term life insurance. While he did not have a family of his own, he saw the value in having protections in place for the family he would have someday. A few years later, he still didn’t have his family, however, liked the idea of growing cash for the future while having the umbrella of protection in place. He converted the policy to a variable universal life policy at the age of 29. Fast forward to today, and his “peace of mind” planning is bringing security to me and his daughters. The permanent policy has realized strong cash values enabling him to purchase another policy that tripled the death benefit while keeping the premium the same. With college planning and other expenses to consider with a growing family, his astute decision even before having a family put him in a strong position once his family was a reality. 

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Leveraging Savings to Pay It Forward

A recent client in his 70s and in good health with no immediate family had saved significantly and wanted to leave a legacy. We opted for him to purchase a life insurance policy as the most efficient way to leverage his savings for a higher payout. Putting $200,000 into the policy the first year, and $100,000 into each of the 2-10 years to build a death and cash value benefit of $1,660,000 for his $1,100,000 invested, this will leave his charity of choice a nice endowment that is significantly more than his savings alone would allow.

Knowing Your Giving Goals

Whether it is giving peace of mind to your family, or a legacy to a deserving charity, the key factor is what is most important to you in why you are giving and what the giving will accomplish financially, emotionally, and for the short-term or long-term. 

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5 Key Questions – Charitable Planning

1. Is there a charity that is meaningful to you? A life insurance policy naming the charity as the benefactor may be an option to consider, leaving your assets for distribution to your loved ones. You can name the charity as the beneficiary, transfer an existing policy to the charity or foundation, or arrange a charity-owned life insurance policy by paying the equivalent of the premium amounts as cash gifts to the charity. Before transferring or purchasing a policy for this purpose, reach out to the charity to confirm any requirements prior to any final arrangements being made. CLICK HERE for a Forbes article on donating a life insurance policy. 
2. Do you have beneficiaries? Are there close family members you would like to bequeath your assets and personal property and eliminate any concern of handling your affairs after you are gone? A life insurance policy could be a measure of peace of mind for covering everything from funeral expenses to paying off debt so that your family is not strapped with the burden should something happen to you. 
3. How do you want to be remembered? What impact would you like to have even after you have departed? Do you want the family name to be remembered and recognized? Do you want to continue to give to a charity that has been important to you after you are gone? Legacy planning is not just for the ultra-rich and can be a difference everyone can make at any income level. According to an article in The American College of Financial Services, legacy planning is not just about passing on money; it’s about passing on values. Sharing with your family what your intentions around charitable giving are now and in the future is the first place to start to demonstrate that it is important to you. 
4. Should you consider a charitable trust?  Placing your assets into a trust designating the charity as the trustee may be an option. There are two types of trusts including charitable remainder trusts and charitable lead trusts.  Key factors dictating which one is best are when you want the charity to receive your gift, the type of assets you are donating, and your overall goals for estate planning and wealth preservation. Tax laws that went into effect in 2018 have made charitable trusts more appealing, according to Forbes, specifically a charitable remainder unitrust (CRUT). 
5. Are there specific assets you would like to donate to a charity? Direct cash savings are not the only options for charitable giving to consider. When a tangible asset such as real property is being given away to a charity, the charity would be able to sell the asset without any tax consequences as a tax-exempt entity, and then use the proceeds for their charitable purposes. Stock shares can also be donated to a charity for inclusion in their foundation financial portfolio. Designating a specific asset to be donated to a charity can allow you to include charitable giving into your estate planning while also taking care of those you love. 

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Knowing your options is the first place to start in determining your next steps. This article from The Balance provides a great overview on the Types of Charitable Giving. Then assemble your advisory team to help you make the most astute decisions.

 For Your Future,

Lori Capozza Zeind
www.lczconsulting.com

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