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Insuring the Future


By Shawn C. Mackey CLU


Charitable planned giving vehicles come in many shapes and sizes.  One that is too infrequently considered is life insurance. It can provide a significant gift of endowment for a fraction of the cost and effort.  As an appreciating asset, it has a leveraging effect on a donor’s generosity and the additional possibility of both estate and income tax advantages.  A donor may gift an existing policy or purchase a new policy specifically for Five Acres.  Here are examples of both:

Bob, 37, and his wife Mary have young kids and are not able to make large lump sum donations yet. The ability to make a substantial gift using life insurance appealed to them, and they contribute to it on an “installment” basis of $1,000 annually. The policy insures Bob for an initial face value of $57,807 with Five Acres as both the owner and beneficiary of the policy.  In a new policy such as Bob’s, the income tax deduction is equal to the amount of the premium contribution.*  Over the years, the face value of the policy grows, and a cash value is created which can be accessed by Five Acres along the way.  In 20 years the policy’s face value is expected to be $96,035 and the cash value $36,429. If Bob contributed to the plan until age 65 (installments totaling  $28,000) and then lived to age 75, the policy proceeds of $224,144 would be paid to Five Acres income tax-free.  Of course, there is flexibility should Bob and Mary want to change their plan later on.  

Sam and Allison are in their early 60s and plan to retire soon. After a recent estate planning review they became aware that significant life insurance held in their estate was now creating additional tax liability, so their attorney recommended a gifting strategy. Sam and Allison gifted the majority of their insurance to an irrevocable insurance trust with their children as beneficiaries. They also gave one paid-up policy to Five Acres with a death benefit of nearly $100,000 and a cash value of almost $45,000.  Sam and Alison enjoyed not only great personal satisfaction but a current income tax deduction.*  (Generally, the value of a gift of an existing policy is limited to the lesser of the taxpayer’s basis in  the contract or the policy’s gift tax value, which is roughly its net cash value.)  Five Acres will ultimately receive the policy proceeds income tax-free and can also use the cash nearer term if need be.  

In summary, life insurance is a flexible charitable giving tools.  Donors at all levels can increase their charitable dollars by establishing substantial gifts and contributing on an “installment” basis. The arrangement is private, and no publicity is involved unless the donor desires it. 

*Please check with your tax consultant regarding the tax treatment of any gift.  

Shawn C. Mackey, CLU works for Northwestern Mutual Life and serves on Five Acres’ development committee.

For information about the scholarship fund or ways to remember Five Acres in your estate plan, please contact Cynthia Nickell at (626) 798-6793 Ext. 2250 or email her.

 

 

“Maybe You and I”

Frank Brill's Story:


Every Monday afternoon in Five Acres’ dining room 85-year-old Frank Brill reads with a child. On the weeks students are on vacation Frank sends his student a note on a greeting card. Frank began tutoring in 1996 after a visit to Five Acres with his friend and former resident Grace who told him, “You should be here every week.”

Frank was born in Brooklyn and when he was six years old began a career in show business that continues to this day from telegram deliveries in a Phillip Morris uniform to dancing for tips in the Catskills, to MCA and ABC to Las Vegas, Tahoe and Atlantic City Frank has worked with some of the biggest names in show business.

His heart, however, belongs to the children.  Beginning with Grace.

When Frank’s friend Beth Uffner was frustrated by the adoptions system, he introduced her to a judge who was consulting with Frank on a television show about juvenile delinquency. The judge put Beth in contact with a social worker who brought her to Five Acres where she found Grace and adopted her.  

Frank couldn’t be prouder of Grace if he were her father. On a wall in his home dedicated to her and his association with Five Acres is a poem Grace wrote for him at age 13. Its refrain is “Maybe you and I” and concludes:  “Maybe you and I were just meant to be.”

Frank’s commitment to children like Grace and his young students motivated him to provide for their future support through his estate plan. “I feel rewarded being part of an organization that helps society’s most vulnerable children.  It’s not an obligation.  I personally feel good helping the children.”

For information about ways to help Five Acres’ children and families in your estate plan, please contact Cynthia Nickell at (626) 798-6793 Ext. 2250 or email her.