Charitable Legacy Plan

There are many ways of giving to charity and many reasons for doing so. Before adopting any charitable giving program you should consult with your financial advisor(s) about your intentions. In fact, for our charitable legacy program you are required to have your financial advisors work with our attorneys and CPAs in order to match up the choices with your desires and ability.

When making a gift to charity, the donor should consider several questions:

What Percent Goes to Charitable Purposes?

What percentage of the gift goes toward funding the charitable activities versus going for administration, fundraising, etc.? Before giving to a charity, you should know the answer to this question and feel comfortable that the charity or charities you select will spend your money wisely and appropriately. Charity Watch rates charities for this and other criteria. See www.charitywatch.org/.

What's in it for Me?

While thinking about yourself when being charitable may seem incongruous, there are questions you should consider in making charitable gifts. Do you want more than a warm feeling inside for doing good, such as a tax deduction? Could you give more if you could give pre-tax dollars rather than after-tax dollars? Or if you had enough verifiable income to live on the rest of your life?

How Can My Gift Have the Desired Impact?

There are several ways of creating a greater impact with your charitable gift. Various legal structures can be used for such gifts, including gift annuities, donor-advised funds, charitable remainder trusts, etc. These should be considered by you and your advisors in determining the ideal way for you to give.

Would you like to be able to designate one charity one year and another charity the next? Or to apportion your gifts among multiple charities?

Multiplying Your Charitable Donations

When charities are raising money, frequently they find a large donor who agrees to match donations up to a certain limit. For example, a large company may provide a challenge grant that will match up to $500,000 in donations received by a charity during a limited time period. At worst they are out $500,000, but the charity can now approach other donors and advertise the ability to double donors' pledges in order to raise more money.

Life insurance provides another way to multiply your charitable gift. Instead of give $500,000 to a charity, you could purchase a paid-up life insurance policy that will provide $1.5 million to the charity at your death.

Charitable Giving on Steroids?

What if you could layer these concepts upon each other? Or, in the example above, what if you could give $500,000 toward a life insurance policy with a matching $500,000 coming from another donor? This would increase the amount paid at death to $3,000,000, 6 times the original gift.

The Charitable Giving Program

The Zermatt Insurance Group, Inc. Charitable Giving Program goes a step further and delivers even more bang for the buck than the 6 to 1 result described above!

Rather than utilizing a matching donor, we have arranged for a bank to pay up to 100% of the premiums on a life insurance policy. And, the $500,000 is not required to be gifted to the charity, it only needs to be pledged as collateral to guarantee the premium loan for the first 7 years (estimated, until the policy's cash value provides 100% of the collateral required by the lender). The funds may remain in your chosen investment.

Here's How it Works

  • We use only highly-rated life insurance companies, chosen from among the top handful of insurers in the world based on all factors (solvency, stability, customer service, etc.). We use an insurance policy that has been specially created by insurance actuaries for the purpose of maximizing investment performance inside the policy, and includes guarantees as to interest rates, mortality charges, service fees, etc.
  • The lender pays the first 7 years of insurance premiums. No premiums will need to be paid after the first 7 years, and the policy will stay in force for the rest of your life (and payable to the charity at your death).
  • The premium loan will be provide for a very low rate of interest.
  • The insurance policy will be the primary collateral for the loan. Your investments will provide secondary collateral until after 7 years at which time the policy's cash value is expected to be sufficient to guarantee the loan. At that point your investment funds will be fully released from the assignment.

Too Good to Be True?

Is such an arrangement possible? Or is this too good to be true? The arrangement is, indeed, possible, but it is not for everybody. However, it can work for you if you meet the following criteria:

  1. You must have a verifiable net worth of $10 million USD and/or an annual income of $500,000 USD.
  2. You must be in good enough health to qualify for a life insurance policy (not necessarily at preferred or standard rates).
  3. You are required to pledge assets (approximately 1-2% of the policy face amount) as collateral for 7 years or so, until the policy's cash value exceeds the then loan balance (with interest).
  4. Due to the complexity of arrangement, your attorneys and tax advisors will work with our attorneys and advisors to make sure this is established correctly. For protection of both parties, we will not work directly with you without your advisors.
  5. The process will take anywhere from three (3) to nine (9) months to complete.

Who Can Use Such an Arrangement?

Does the charity want your $500,000 gift? Of course! However, we are offering you a way to make a gift of $25 to $50 million or more by simply pledging some investments for a few years. When the collateral is released, you can still give it away if you so desire!

We live in a time of great uncertainty. Those who can afford to plan for the future need to do so, not just for their future, but for their family, society and the institutions which will make the world a better place.

Using the Zermatt Insurance Group, Inc. Charitable Giving Program, you may achieve a maximum impact with your charitable gift. We are happy to discuss these concepts with your advisors and chosen charity.

This is a proven way that will enable you to leave a large legacy at a modest cost and do your part to make the world a better place.