Back to basics: Retirement plans and life insurance can fuel meaningful bequests

February 9, 2021

Your client’s fund at Greater Cincinnati 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 because GCF is tax-exempt. This means the funds flowing directly to a client’s fund at the Greater Cincinnati Foundation from a retirement plan after your 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 GCF 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 their fund at GCF, a tax-deductible gift of the cash value of the policy occurs at the time of the transfer. A gift like this can ease your client’s income tax burden, especially if the GCF owns the policy and your client makes annual tax deductible gifts to cover the premiums.  
 
And we are happy to help with the required legal documents, including beneficiary designations of retirement plans and life insurance policies. Please contact us for the exact language that will ensure alignment with your client’s intentions. 
 
Keep in mind that even after a client has executed estate planning documents or beneficiary designations, in many cases they can update the terms of their fund at GCF designated to receive the bequest. Clients love the ease and flexibility and certainly will appreciate your bringing this technique to their attention.