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FUNDING FOR GIFTS TO INDIVIDUALS

The use of life insurance is not limited to benefitting family members and related trusts and charities. Life insurance can easily be used to benefit anyone the donor specifies. The motivation could be friendship, long-term loyalty, respect for another�s accomplishments, support of a common endeavor, or any other commitment about which the individual feels strongly. The intended recipient can be made beneficiary of a life insurance policy or a beneficiary of a trust funded by life insurance proceeds.

One of the strong factors favoring life insurance policies is that the proceeds do not generally go through probate and are not a matter of public record. The proceeds are payable quickly and directly to the beneficiary. Complications of settling or managing the estate have no bearing on nor do they delay the payment of proceeds under a life insurance policy unless the proceeds are payable directly to the insured�s estate. In estates large enough to have a federal estate tax liability, therefore, it is generally not a good idea to have life insurance proceeds payable to the insured�s estate.

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