Prior to the increase in the gift and estate tax exemptions, the focus on reducing tax consequences was higher than in the present financial climate. The increased exclusions have reduced the drive for tax focused estate planning for the many estates that now fall below the exclusion. While this change has reduced the incentives for charitable planning to reduce estate tax, it has created a new trend, which is to donate life insurance policies to charity. This trend was created because the same tax incentives that fueled large charitable giving contributions also fueled the desire to create life insurance policies to cover the estate tax cost. This type of charitable planning can create beneficial results, but experts also caution that some insurance policy based donations can create independent tax consequences and should be considered carefully.
See Warren S. Hersch, Charitable Planning in 2015: Weighing the Pros and Cons, Life Health Pro, Dec. 11, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
