Planting Your Legacy Tree
In 1921, Ernest and Elsie Hiller bought a lake house way out in Oakland county as a summer home for their family. They had thirteen children and wished to keep them occupied by living on the lake in the summers. One of the first things they did was to plant an oak tree on the property. The property did not have a lot of trees, and none close to the lake. Ernest and Elsie knew that they would never really get to enjoy the tree, but they would nurture it and watch it grow, as they did their children. One day, they envisioned, it would be a mighty oak tree. By 1965 Ernest and Elsie had passed away, but the home was still in the family and busy every summer with Hiller grandchildren. The small tree from 1921 had become the mighty oak that provided much-desired shade and a tire swing that the grandchildren could play on. The Hiller children, now adults themselves, sat in Adirondack chairs under the tree and enjoyed the shade and the cool breeze from the lake. This is what Ernest and Elsie dreamed of the day they planted the tree–that the generations that followed would benefit from their faith in the family and the permanent gift of the tree.
This is a true story, and I share it today because many people don’t realize that they have the ability to create their own legacy of giving for generations to come through the Catholic Foundation. Our goal is to help those who wish to leave a legacy and show them how it can be easily done through a program of charitable gifting. You might be a candidate if you have excess income through social security or Required Minimum Distributions (RMDs) from retirement plans that can be redirected to create a legacy of giving.
Our goal is to help those who wish to leave a legacy and show them how it can be easily done through a program of charitable gifting.
Recently we helped Nancy* set up this program. She has worked hard her entire life and has managed to save enough so that she enjoys a comfortable and secure life. She shared with us that though she is required to take her annual RMD, she did not need that money to live on, and she sought our guidance about how to invest these funds. In our conversation she shared about her strong Catholic faith and the charities she already supports. Nancy desired to create a legacy plan that would continue her funding of these charities even after she was gone.
She decided to take out a life insurance policy owned by the Foundation and insuring Nancy, so that once she is no longer here, the policy will pay out to the Catholic Foundation and create her charitable fund. The premium amount is paid by Nancy to the Catholic Foundation which creates a tax deduction for her, so it is really a “win-win” for everybody. This endowment fund created by the life insurance will continue her annual contributions for years to come to the charities that are important to her.
The fund created by the life insurance will continue her annual contributions for years to come to the charities that are important to her.
Ernest and Elsie saw the benefits of planting a tree for their children and grandchildren to enjoy. The Catholic Foundation believes that the strategy of taking out a life insurance policy to create an endowment fund as one that “plants a tree” for the future. It allows a generous, faithful donor to continue to fund the charities that are so important to them and the community, long after they are gone. Consider if we each planted a tree; we would have a forest.
By William Barnett, CPA
To learn more about how you can implement a similar strategy in your legacy planning, contact Angela Moloney at the Catholic Foundation at 248-204-0332 or email@example.com.
*The donor’s name has been changed.
About the Author
William Barnett is an Executive Director of Financial Planning at Michigan Financial Companies and is a Preferred Professional Advisor with the Catholic Foundation. He can be reached at 248-663-4745 or firstname.lastname@example.org.
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The main purpose of a permanent life insurance (whole, universal, indexed, or variable universal life) policy is to provide a death benefit. It is not a short-term savings vehicle nor is it ideal for short-term insurance needs. It is designed to be long term in nature and should be purchased only if you have the financial ability to keep it in force for a substantial period of time. Life insurance coverage needs may change if your personal situation changes. For example, if you get married, have a child or get a promotion, you may want to increase your coverage. Make sure that these strategies and products are suitable for your long-term life insurance needs. Also, make sure you are able to continue premium payments so your policy doesn’t lapse if the market declines. There are fees and charges for life insurance coverage, including a cost of insurance based on characteristics of the insured person, such as gender, health and age. It is important to note that qualifying for life insurance often requires a medical evaluation. Based on the results of this evaluation you may qualify for a lower or higher rate or you may be denied coverage entirely.