WEALTH REPLACEMENT STRATEGY

Donors frequently hear that their retirement plan is the most tax-hostile asset in their estate and should be the first asset donors use to create their charitable legacy. However, if no planning is done, the beneficiaries who inherit these assets may be subject to substantial income taxes. Wealth Replacement Strategy is a meaningful way to create a legacy at Saint Vincent Academy, while at the same time increasing a beneficiary’s net inheritance.

One example is naming Saint Vincent Academy as the beneficiary of the retirement plan upon the death of the donor and the donor’s spouse. To replace the value of the retirement asset for the children, the donor could establish an irrevocable life insurance trust (ILIT) to purchase a life insurance policy in an amount equal to the retirement asset. Upon the death of the second spouse, the intended recipients receive life insurance proceeds of equal value to the retirement asset, tax-free. Depending on the donor’s age, the annual insurance premiums may cost less than a comparable single-life insurance policy and can be funded using required minimum distributions (RMDs).

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Please note: the information presented on these pages is not offered as legal or tax advice. You are encouraged to seek the advice of your tax advisor, attorney, and/or financial planner to determine which planned giving option is best for you.

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