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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.

 

 

A Place in My Heart

Ed Pittroff's Story:


He’s the kind of volunteer most organizations pursue, the kind that stay committed long after their days of active participation.

Ed Pittroff’s first connection to Five Acres was at the opening of Beckham’s Place in the late 1970s. It was a fund-raiser for Five Acres, and Ed’s friend and Five Acres board president, Frank Hardcastle, invited Ed and then recruited him for the board of directors. Ed served two terms on the board for a total of 12 years, was honored twice both as the Volunteer of the Year and with the Special Recognition award, stayed on as a member of the finance committee for many years after that and is one of the original Ambassadors.

Through the family business, Login Printing, Ed and his son, Jim, took on all of Five Acres’ printing and helped create the format of this newsletter and the professional appearance of our annual reports. Ed’s wife, Maxine, recruited fellow members of the Sierra Madre Doll Club to create outfits for dolls as gifts to Five Acres girls.  Ed’s sister, Margaret Milligan, a philanthropist living in Oklahoma, shared Ed’s concern for children in need and made very generous grants through her foundation for many years.
 
Ed is deeply involved in organizations in addition to Five Acres such as the Tournament of Roses, the Pasadena Elks, the Pasadena University Club and USC – even though he graduated from the University of New Mexico. His support for Five Acres over 30 years, however, has never wavered.

“There is a need for Five Acres in our society because the need to take care of disadvantaged kids has grown greater. I still have a soft place in my heart for Five Acres.”

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