A private foundation, which can exist in perpetuity, extends a legacy of charitable work beyond the donor’s lifetime. And when a foundation is buttressed with a life insurance policy, funding for that charitable work can continue without tapping other assets that the donor might wish to convey to heirs, including the family home, business, and investment portfolio.
There are three key benefits for founders, heirs, and foundation board members of incorporating a life insurance policy into a private foundation.
A life insurance policy ensures that support for favorite charitable organizations and work on important issues continues long
after one’s death.
For Foundation Board Members
Unlike the value of other assets that could be contributed to a private foundation, such as real estate, securities, and private equity, the death benefit of some life insurance policies do not fluctuate over time. Knowing the fixed dollar value of the policy helps the board plan and budget for future grantmaking and operations.
Because a life insurance policy can provide the foundation with a dedicated source of funds, those funds need not come
out of the estate’s other assets, preserving them for the donor’s heirs.