When most people think of making an estate gift, they think of a bequest. Nice and tidy, but considering U.S. tax laws, not really very efficient. Another option for making a gift, one that magnifies the size of your gift by rearranging rather than increasing the cost to the donor, is through a life insurance policy. (See example in table below.)
Mel Lechner is a huge advocate of using life insurance policies as a way to support charities. After many years of running an accounting firm and having been the budget director of New York City, he knows what he is talking about. He also holds a Ph.D. in economics.
Mel and his wife, Helga, have been residents of South Florida for more than 30 years. They first became acquainted with Lynn University through the annual Tanglewood Outreach Concert hosted at Boca West Country Club, which features the Lynn Philharmonia. Mel has worked with many charities over the years and has served on more than three dozen boards. He stresses the importance of focusing fundraising efforts on building a charity's endowment fund through life insurance.
In addition to sponsoring the annual Tanglewood Concert and supporting the building of Lynn's Keith C. and Elaine Johnson Wold Performing Arts Center, the Lechners in 2008 made a planned gift in the form of a life insurance policy, naming the Lynn University Conservatory of Music as the beneficiary. Mel continues to emphasize the importance of these types of gifts to Lynn University and hopes that other donors will consider how giving life insurance policies can magnify the amount of any gift.
$1 Million, Second to Die Policy
|Age||Annual cost||Policy amount|
|Female 57, male 60||$7,800*||$1 million*|
*Numbers are for illustration only.
In this example Lynn University receives the gift of $1 million from the life insurance policy instead of from your estate. The donor makes annual gifts of $7,800 (depending on the amount of the policy) and Lynn University pays the insurance premium with the annual gift. The donor receives a tax receipt for their annual gift in the amount allowed by law.
The whole process is extremely simple and the donor does not need a lawyer and can use any insurance agent.