Wealth Replacment Trust

Perhaps you would like to make a sizable contribution tothe Education Founation now, but you don't want to reduce the estate you will pass to your family. The solution? Purchase life insurance. The income tax savings from your charitable gift may be enough to cover the premium cost, based on your age, health and tax bracket.

If you own the insurance policy, ultimately the proceeds will be included in your taxable estate. The remedy: If your sole heir to the policy value is a responsible adult, make him or her the policy owner and beneficiary. Then give that individual a yearly amount adequate to pay the premium, utilizing your annual gift tax exclusion.

For multiple heirs or a larger gift, take advantage of an exceptional plan called a "wealth replacement trust" and name your spouse, children or other individuals as trust beneficiaries. The trustee is the owner of the policy and eventually will receive and manage the proceeds. The trust is irrevocable, and if designed correctly, the insurance will be excluded from your taxable estate. You transfer enough money to the trust each year so that the trustee can pay the policy premiums.

To avoid any gift tax (or use of your estate and gift tax credit) on yearly gifts to the trust over the annual gift tax exclusion, the trust agreement must give your beneficiaries the temporary right each year to withdraw these funds. However, should your beneficiaries exercise this power, the insurance may lapse due to insufficient funds to pay the yearly premium. Together with you and your attorney, the Education Foundation can help design a plan that preserves your estate's value while fulfilling your desire to benefit the Education Foundation.

If you plan to designate the CCIM Education Foundation as the beneficiary of an existing or newly created life insurance policy., please let us know by completing a Declaration of Intent.