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Life insurance

There are several ways to use your life insurance policy as the basis for a charitable gift to the Masonic Homes of California (MHC) or the California Masonic Foundation (CMF):

Designate Masonic charities as beneficiaries of your life insurance policy
You may wish to designate the MHC or CMF as the beneficiary, or contingent beneficiary, of your life insurance policy, as a way to make a sizeable future gift. You retain lifetime ownership of the policy, keeping the right to cash it in, borrow against it, and change the beneficiary. A gift of this nature is treated similarly to a bequest made through your will. Because you retain the ownership of the policy, you will not receive an income tax charitable deduction for this future gift or for premium payments made during your lifetime. The policy's proceeds will be included in your gross estate, enabling your estate to take an estate tax charitable deduction.

Making a gift of your policy
You may wish to transfer ownership of a policy to MHC or CMF, or to purchase a new policy that names either MHC or CMF as its owner and beneficiary. Designating MHC or CMF as the owner and beneficiary of a policy entitles you to certain tax advantages, such as a charitable tax deduction.

Wealth replacement using life insurance
You may make a current gift of cash or other assets to MHC or CMF and receive a charitable tax deduction. At the same time, you may purchase life insurance to replace the donated amount. Often this concept is used to replace the amount after estate tax that beneficiaries would have received. Depending on your circumstances, the potential tax savings and any life income resulting from the current gift may defray the cost of the wealth replacement insurance premiums.

Creating a life insurance trust
You may want to set up an Irrevocable Life Insurance Trust (ILIT). An ILIT removes the life insurance from your estate to help reduce estate tax while providing other benefits. For example, upon one's death, the proceeds of the life insurance policy may remain in the trust to provide income for the surviving spouse, but stays outside of the spouse's estate for tax purposes. Alternately, the trust can be used to distribute proceeds to children of a previous marriage.

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