Life Insurance
You can make a significantly larger charitable
gift than may be possible from your current
assets by designating World Education as
the beneficiary of a new or existing life
insurance contract.
If you irrevocably transfer your life insurance
contract to a World Education, you can claim
a federal income tax deduction for the contract's
cost basis or cash surrender value, whichever
is less. For such gifts, you may deduct up
to 50 percent of your adjusted gross income
on your federal income tax return. If you can't
take the entire deduction in the first year
because of this limitation, you may carry the
balance forward into the next five years.
If you make World Education the owner of your
life insurance contract and continue to pay
premiums, you can deduct the premiums as you
pay them. If you would rather retain the right
to change beneficiaries on the contract and
don't care that you will not be able to deduct
the premiums, you can maintain ownership over
the contract and simply name World Education
as partial, sole, or contingent beneficiary.
Because a few states do not permit charities
to own life insurance on an individual, ask
your professional advisor about the laws that
apply in your state and other details relating
to gifts of life insurance.
Retirement Assets
You can designate all or a certain percentage
of your retirement assets to World Education.
Distributions from certain kinds of retirement
assets—such as individual retirement
accounts (IRAs), tax-sheltered annuities, and
401(k) and 403(b) plans—are subject to
income tax and may be subject to generation-skipping
taxes and estate taxes. However, gifts of these
assets will not be taxed if they are paid directly
to a charity as beneficiary.
In order to mitigate income tax liability when
making a gift of IRA assets to charity, you
must withdraw the assets, recognize the distribution
for income tax purposes, and contribute the
funds before claiming your income tax charitable
deduction. (Note: There may be penalties for
early withdrawal of your IRA assets).
Consult with a professional advisor to determine
how your retirement asset distributions will
be affected by naming World Education as a
beneficiary.