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Question of Life insurance gift and Form 712

  • 1.  Question of Life insurance gift and Form 712

    Posted 21 days ago

    A donor made us the owner of a life insurance policy, but didn't make us the beneficiary.  As owners, we made ourselves beneficiary (at a later date). The insurance company sent us the Form 712, and our name is listed as the donor on the form.  The insurance company told us they can't change this to be the original donor's name, because the form was done at the time of the change of beneficiary date, not the time of the change of ownership date, therefore the form was correct at the time it was created.  Are we okay to proceed as follows? Any concerns with this:

    • We go ahead and receipt the gift from the donor, as of the date we became beneficiaries, using the value listed on the Form 712, where we are the owner & beneficiary
    • We send a copy of the Form 712 to the original donor along with the tax receipt, even though our name is in the Donor line on the form
    Thanks!

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    Gwen Donev
    Director of Advancement Services
    Gustavus Adolphus College
    gwendonev@GUSTAVUS.EDU
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  • 2.  RE: Question of Life insurance gift and Form 712

    Posted 21 days ago
    Who was the beneficiary when you were made owner?  And why would you accept a policy when you were not the beneficiary?  I've not seen a gift acceptance policy that allows acceptance when both conditions did not exist?

    Did the donor have the policy appraised when they named you as the owner?  They cannot claim a deduction without that unless the policy is of a nominal value.  Form 8283 is also required.

    As to Form 712, you should not have received this unless the donor is now deceased.  I'd send the form to the insurance company and not the donor.  A receipt would have been necessary only back when the policy was given to you and you were named beneficiary.

    You probably need to talk to your CFO.  But here's some useful information:  What Is Tax Form 712 Used For? (zacks.com)

    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