The Jewish Foundation recently advised donors to leave 100% of their estate to their children. There was a caveat. Using specific strategies, it was possible to leave an additional 25% to the community.
Over 100 people took advantage of the opportunity to learn those strategies, presented in two sessions by Alain Levesque, a planned giving specialist from Sherbrooke, Québec.
Alain illustrated the possibilities by handing a golf ball to a participant. “How far could you throw this ball?” he asked.
“Maybe 50 yards,” the participant responded. Alain then handed him a golf club. “Using this tool, how far could you hit the ball?”
“300 yards … on a good day.”
“The golf ball is your money,” Alain said, “and the golf club is life insurance. Using the tool of life insurance, it is possible to make your money go much further!”
Alain then illustrated a variety of strategies. One example: Ida, a 65-year-old widow is comfortable living on her pension and has assets worth $1,000,000. She would like to give 25% of her estate to the community through the Jewish Foundation of Manitoba (JFM), but does not want to penalize her two children. If she leaves her wishes in her will, $250,000 would go to JFM upon her death and $750,000 to her heirs. Instead, she could take $70,000 of her assets today and purchase a life insurance policy worth $250,000, making JFM the owner of the policy. Since JFM is the owner, she receives a tax receipt for the $70,000 and resulting tax credits of $32,480 (using Manitoba’s maximum tax credits of 46.4%). With those tax credits, she purchases an additional personal life insurance policy worth $100,000. Upon her death, the JFM will still receive $250,000 (the proceeds of the life insurance policy), and her heirs will receive $1,030,000 (the $930,000 balance of the assets + the $100,000 life insurance policy). In this way, she has still made her desired gift to charity without penalizing – in fact enhancing - the amount left to her heirs.
This is a strategy that illustrates how a donor can leave 100% of their estate to their heirs – and leave an additional 25% to their community! |
