Estate Planning Back to Basics: Meaningful Bequests via Retirement Plans and Life Insurances

For advisors looking for effective solutions to maximize the value of their clients’ estate planning, a fund at Nevada Community Foundation can be an ideal recipient of estate gifts through a will or trust, or through a beneficiary designation on a qualified retirement plan or life insurance policy.

Bequests of qualified retirement plans can be extremely tax-efficient. This is because charitable organizations such as NCF are tax-exempt. This means the funds flowing directly to a client’s fund at NCF from a retirement plan after the client’s death will not be reduced by income tax. This also means the assets will not be subject to estate tax. 

Don’t overlook life insurance, either. Not only is your client able to designate a fund at NCF as the beneficiary of a life insurance policy, but your client also may elect to transfer actual ownership of certain types of policies. For example, when your client makes an irrevocable assignment of a whole life policy to the client’s fund at NCF, a tax-deductible gift of the cash value of the policy occurs at the time of the transfer. A gift like this can ease a client’s income tax burden, especially if the foundation continues to own the policy and the client makes annual tax deductible gifts to cover the premiums. 

Keep in mind that even after a client has executed estate planning documents or beneficiary designations, in many cases the client can update the terms of the fund at NCF designated to receive the bequest upon the client’s death. Clients love the ease and flexibility and certainly will appreciate advisors bringing this technique to their attention.

NCF makes it easy to draft bequest terms in legal documents, including beneficiary designations of retirement plans and life insurance policies. Please contact our team for the exact language that will ensure alignment with your client’s intentions.

Contact us at info@nevadacf.org or 702-892-2326 for more information.