Charitable Remainder Trusts
25. Life Insurance: Inexpensive Way to Replace Asset
Next, for most people, life insurance is the least expensive and quickest way to replace the asset you transfer to the charitable remainder trust.
For example, based on their ages and health, it would cost Max and Jane only $93,258* in premium to purchase $500,000 in life insurance. That's enough to replace the FULL value of the asset transferred to the charitable remainder trust.
You can see that life insurance provides excellent leverage. For every dollar they spend in premium, the Brodys can generate almost $5.40 in life insurance proceeds for their children.
And remember, with life insurance, the proceeds are available immediately. So, even if both Max and Jane die tomorrow, their children would receive the full $500,000, without probate, and completely free from income and estate taxes.
*NOTE: Premium (for a male, age 65 and a female age 63) is based on a second-to-die policy, using all whole life, from an AAA rated insurance company.