Strategy Snapshot: Charitable Planning

Case Scenario

Olivia is a financial supporter of the Community Youth Orchestra. She wants to continue her financial support of this program at her death. Olivia is the owner of a whole life insurance policy she initially purchased to provide income protection for her family. Olivia’s children are now adults and financially secure, so she does not need the death benefit for her family. However, she would like continued access to the cash values¹ for possible supplemental retirement income. She has other estate assets that she will leave for her family.

Her Goals

Use death proceeds to provide continued financial support of the Community Youth Orchestra program.
Maintain access to life insurance policy cash values¹ during her lifetime for financial emergency or supplemental retirement.
Transfer other estate assets to family at her death.

Naming a charity as a
revocable beneficiary of a life
insurance policy allows the owner
to retain control of the cash value
and benefit the charity.

A Possible Solution

Designating the Community Youth Orchestra as revocable beneficiary of a whole life insurance policy would allow Olivia to preserve other estate assets for her family while retaining control over the policy values during her life. At her death, the youth program would receive the death proceeds from the policy. Olivia would not receive an income tax deduction for her premium payments because she retains control of the policy.

The death proceeds would be included in her estate. However, she has a $13,990,000 estate exemption (2025). If her estate value exceeded the estate exemption, she would receive an unlimited estate tax charitable deduction for the amount going to the charity. Olivia should consult her personal tax and legal advisors before implementing any strategy.

For more information, contact a MassMutual Financial Professional.

Additional Resources

¹ Access to cash values through borrowing or partial surrenders will reduce the policy’s cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured.

Any examples provided are hypothetical and for illustrative purposes only. Examples include fictitious names and do not represent any particular person or entity.

Participating whole life insurance policies are issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.

* The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.

NOT A BANK OR CREDIT UNION DEPOSIT OR OBLIGATION • NOT FDIC OR NCUA INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT GUARANTEED BY ANY BANK OR CREDIT UNION