Chart for Life Insurance gifts (Irrevocable Ownership Transfer)

Step-by-Step Chart - Gifts of Life Insurance (Irrevocable Ownership Transfer)Approved by and/or signaturesDate completedNotes

Make the decision to accept insurance gifts involving irrevocable transfer of ownership.

Board of Directors

Develop gift acceptance policies.

Board of Directors

Learn about the different types of life insurance. Develop relationship with reputable life insurance advisor.

If such a gift is offered, determine the type of policy and its status.

For example, is it:

-fully paid?

-partly paid?

-a new policy?

Ensure the donor has obtained independent professional advice.

There can be tax consequences on gifts of policies having cash value.

Advise the donor to speak to his/her life insurance agent about signing papers to irrevocably transfer the ownership of the policy to your charity and irrevocably name your charity as policy beneficiary.

Donor, Donor's life insurance agent

Ensure the donor understands the gift is irrevocable and that they will need to continue paying the premiums on the policy. Give charity's correct legal name to donor and to agent.

After donor has signed the transfer papers, obtain letter from the life insurance company re: cash value (if any) of donated policy as of donation date.

Letter from life insurance company

Retain letter on file as proof of the policy's value (if any) when donated.

Obtain policy from the life insurance company and written confirmation that your charity is shown as the owner of the policy and as the irrevocable registered beneficiary of policy. Retain this material on your file.

Check to ensure charity's correct legal name has been registered in both instances.

If the policy had a cash value as of donation date, issue a tax receipt to the donor for that value, as per confirmation letter from the life insurance company. Retain confirmation letter and copy of tax receipt on your file.

Indicate on receipt that it represents cash value of the life insurance policy donated, with the insurance company's name and policy number.

Set up a calendar reminder system for premium payments. Remind donor before due dates.

Review and retain on file all statements from the life insurance company, as received. Check statements to ensure premium payments are being kept up-to-date by donor.

If any are missed, follow up immediately with the donor and the life insurance company.

Year end: At beginning of each calendar year, obtain letter from the life insurance company confirming the total amount of premiums paid by the donor during the previous year.

Issue an income tax receipt to the donor for annual premiums paid by the donor, as per the confirmation letter from the life insurance company.

State on the receipt that it represents [name year] premium payments, with the insurance company's name and policy number.

Retain confirmation letter and copy of tax receipt on your file.

Notify life insurance company of any charity contact or address changes.

On death of the donor, notify the life insurance company so they know the death benefit is payable (and where to send it).

Insurance company will require death certificate before releasing proceeds. Obtain through executor. No receipt is issued to donor's estate.

Follow acknowledgement procedures in a timely fashion.

Last modified: Monday, 4 February 2013, 9:54 AM