GIFTS THAT MAY BE CHANGED IF NECESSARY
As we have already seen, gifts by will can be a flexible way to give and are easily changed if circumstances suggest that it is prudent to do so. There are several other ways to make gifts that can be changed in the future, if necessary. Because of the freedom these plans afford, you may be able to arrange larger gifts than you might otherwise make.
Life Insurance and Retirement Plans
Life insurance and retirement plans, such as 401(k)s, and others, are a primary means through which many Americans assure financial protection and security for themselves and their loved ones during retirement years and after their lifetime.
A hidden benefit in life insurance and retirement plans is the ability to use them as a “pocket” from which to make charitable gifts both now and in future years.
Life insurance policies that may have outlived their original purpose can be very valuable gifts. Life gifts of cash and other assets referred to earlier, gifts of “obsolete” life insurance policies can yield significant tax savings while allowing you to make gifts that might not otherwise be feasible. It is also possible to change the beneficiary provisions of your life insurance to include your donor advised fund.
You can provide for a specific amount, a percentage of the proceeds, or the remainder of the proceeds to become a charitable gift after distributing the majority of funds to your family and other loved ones.
As in the case of life insurance, retirement plans can include charitable beneficiaries in many cases. As the proceeds of retirement plans when left to your family and friends can be subject to both estate and income taxes, for many individuals the amounts left in their retirement plans will be the best property from a tax planning standpoint to use to satisfy their charitable wishes.
Just like bequests from wills or trusts that can be changed at any time, the beneficiaries of your life insurance and retirement plans can be changed any time. Often, all that is necessary is the completion of a simple form your insurance company or retirement plan administrator can provide you upon request.
