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Did you know that your assets could provide lasting support to others while still benefitting you and your family? Through careful planning today, charitable gifts can have a future impact far beyond your expectations. Through the tax code, our government encourages charitable giving by providing tax saving incentives designed to reward philanthropy.

You may have heard the term “planned giving” but have not made the connection to your own situation. A planned gift is a “now and later” gift made to a charitable organization.

The present value – the NOW – of the gift may take the form of:

• a charitable income tax deduction
• the avoidance of capital gains taxes
• the payment of income to you or other family members

The future value – the LATER – comes in the form of:

• reduced estate taxes for your heirs
• the ability to pass on charitable dollars to help your family carry on your philanthropic legacy

There are three broad categories that describe most planned gifts:

• Lifetime gifts and bequests
• Donor advised funds
• Charitable trusts

Within each of these broad categories, specific planning techniques are used depending on the goals of the donor and the types of assets utilized to fund the planned gift. Assets such as highly appreciated stock, low basis real estate, closely held stock (family business) and life insurance policies all can be used to great advantage in structuring a planned gift.

Planned Giving Through Life Insurance

Charitable giving through life insurance is an effective way to gift a certain amount to charity and pay for it with “leveraged” dollars. The death benefit is generally many times the amount of the premiums, and charitable gifts of life insurance usually avoid or reduce some combination of income, estate, gift and capital gains taxes.

A charitable remainder trust is an example of how a planned giving vehicle utilizing life insurance can benefit all parties involved: the donors, their families, and the charities.

Charitable remainder trusts are appropriate for donors who want lifetime income and an immediate income tax deduction for a portion of the gift. The donor or other named beneficiary receives income generally for his or her lifetime and the charity receives the “remainder,” or the amount remaining when the trust terminates.

Other Gifting Plans Using Life Insurance

Gifting an old policy to a charity:

Do you have a policy you no longer need? Perhaps it was purchased years ago for college education or mortgage protection. Your children have since graduated from college and your mortgage has been paid off for years. You should consider gifting that old life insurance policy to your favorite charity. Your federal estate is reduced by the face amount of the proceeds. In addition, you will receive an income tax deduction for the value of the policy and for any future premiums you continue to gift to the charity.

Gifting insurance policy dividends to charity:

This technique is appropriate for someone who is just beginning a charitable plan and who may not have assets to give. A gift can easily be established by requesting that dividends be paid in cash. The cash dividends can then be donated annually to a charity. These cash gifts are income tax deductible up to 50% of adjusted gross income.

Changing a life policy beneficiary to a favorite charity:

This simple technique is also easily established. The policy owner names a favorite charity as the beneficiary, for either the entire proceeds or a portion. This charitable plan allows the policy owner to retain control of the policy because the ownership is not changed. The donor’s estate will receive a full charitable estate tax deduction for the death benefit given to charity.

Buying a new life insurance policy for the charity:

A new life insurance policy can provide a very large gift in proportion to the amount of premiums paid. The life insurance death benefit will not be in the donor’s estate since the charity was the owner from inception and the donor never held any incidents of ownership in the policy.

Buying life insurance to finance a pledge or future donation to a charity:

The way to fund a large pledge or future donation is by purchasing a life insurance policy and naming the organization as the beneficiary.

Charitable gift planning should suit each donor’s needs for being charitable today as well as in the future; for helping the community as well as taking care of loved ones; and for addressing financial, tax, and estate planning needs as well as fulfilling philanthropic commitments.

In 2005, almost 80,000 charges of employment discrimination were filed with the Equal Employment Opportunity Commission alone. Add to this the thousands of lawsuits brought under other federal, state and local employment laws, and it becomes apparent that discrimination suits are one of the most common types heard in courts.

In spite of this emerging trend, many eligible companies resist purchasing EPLI. What would influence a business to remain exposed to potentially devastating legal action when they can purchase protection? The answer to that question lies in several common misconceptions about the nature of discrimination suits.

First, many business owners believe their company is somehow immune to discrimination litigation. Nothing could be further from the truth. In fact, many smaller companies do not have the human resources policies and procedures in place that would protect them from employment practices litigation. Consequently, this increases their exposure, making them well suited for EPLI coverage.

The second commonly held misconception is that if sued for discrimination, the business can absorb the cost of a lawsuit. Legal actions can be costly; money is just the tip of the iceberg. Management and professional staff members may be asked to testify, give dispositions, or gather information regarding the case. Instead of focusing on business operations, their attention is being diverted elsewhere and this can have a significant negative effect on the bottom line. Also, once the lawsuit is made public, the publicity can cause present customers to stop doing business with the firm and influence potential customers to take their business to the company’s competitors.

Court awards in a discrimination suit can be extremely large. In September 2005, Wachovia Corporation settled a suit for alleged compensation discrimination against more than 2,000 current and former female employees by agreeing to pay $5.5 million. In another 2005 case, Consolidated Freightways agreed to pay approximately $3 million to settle a racial harassment case involving 12 African-American dockworkers employed at one of their facilities. In February 2004, United Airlines was ordered to pay $36.5 million to settle a sex discrimination suit brought by 13 former flight attendants.

The last misconception has to do with business owners not fully understanding the protection offered by their current coverage. They may believe they’re already covered for employment-related risks. However, most business owner policies, workers’ compensation, general liability, and professional liability policies specifically exclude these types of exposures.

Even if an employer takes every precaution to prevent discrimination, legal action may still result. That’s why it is so important to have EPLI insurance. It protects a company against many kinds of employee lawsuits, including:

* Sexual harassment
* Discrimination
* Wrongful termination
* Breach of employment contract
* Negligent evaluation
* Failure to employ or promote
* Wrongful discipline
* Deprivation of career opportunity
* Wrongful infliction of emotional distress
* Mismanagement of employee benefit plans

EPLI will reimburse your company for the cost of defending a lawsuit in court, whether you win or lose. It also covers judgments and settlements. Policies generally do not pay for punitive damages or civil or criminal fines. Liabilities covered by other insurance policies are excluded from coverage under EPLI policies.

The cost of EPLI coverage depends on the type of business, the number of people employed and various risk factors such as whether the company has been sued over employment practices in the past.