Did you know that the funds your clients hold now (or may establish in the future) at the Kalamazoo Community Foundation (KZCF) can be an ideal recipient of estate gifts? Learn more about the surprising benefits of giving through a will or trust, or through a beneficiary designation on a qualified retirement plan or life insurance policy.
#1 Retirement bequests are tax smart
Bequests of qualified retirement plans can be extremely tax-efficient. This is because charitable organizations like the Kalamazoo Community Foundation are tax-exempt. This means funds can flow directly from a retirement plan to a KZCF fund after your client’s death without being reduced by income tax. An added benefit: the assets will not be subject to estate tax.
#2 Life insurance can be a great way to give
Life insurance might not be the first thing that comes to mind when thinking about deferred gifts, but advisors and clients alike are often impressed by the benefits. Not only can your clients designate a fund at KZCF as the beneficiary of a life insurance policy, but they may also elect to transfer actual ownership of certain types of policies.
Imagine that your client decides to make an irrevocable assignment of a whole-life policy to a fund at KZCF. At the time of the transfer, a tax-deductible gift in the policy's cash value will occur. This gift can in turn reduce your client's income tax burden. This is especially effective if KZCF continues to own the policy and your client makes annual tax-deductible gifts to cover the premiums.
#3 You're not alone in planning with your clients
The community foundation makes it easy for attorneys and other professional advisors to draft bequest terms in legal documents, including beneficiary designations of retirement plans and life insurance policies. Reach out! Our donor relations team can help provide the exact language that will ensure alignment with the greatest needs in and around Kalamazoo, and with your client’s intentions.
Keep in mind that even after you have executed estate planning documents or beneficiary designations for your clients, they can often update the terms of the fund at KZCF that is designated to receive the bequest upon their death. The ease and flexibility of working with KZCF on fund updates can benefit both you and your clients.