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Life Insurance proceeds

  • 1.  Life Insurance proceeds

    Posted 9 days ago
    Good morning,

        We have an odd situation that I'd like your advice on. Many years ago, we had a donor sign over his life insurance policy to us. He recently passed and we have received the proceeds. The wrinkle in this is that the value of the policy was never booked into the database or counted anywhere. The donor paid the premiums on the policy and was given gift credit for those. My question is can we now count the proceeds minus the premiums paid?

    Thanks for any help!

    Trisha
    --


    Trisha Ayers
    Assistant Vice President of College Advancement
    Bates College
    2 Andrews Road, 203 Hathorn Hall
    Lewiston, ME 04240
    (207) 786-6253
     
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  • 2.  RE: Life Insurance proceeds

    Posted 9 days ago
    Life insurance policies do not have a gift value other than the premium payments made after ownership is transferred.  The exception is when the policy has previously had premiums paid.  In that case, upon transfer, there is an interpolated terminal reserve value.  That amount CAN be recorded as a gift.

    If this was a new policy and no terminal reserve, then there was nothing to count then or now.  If there was a terminal reserve that you failed to count, I would go back to the original transfer of ownership papers to obtain that value and record that as a gift now.  You should not, however, count the proceeds.

    John


    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987