Insurable Interest for Foundation

[scagnt83]

Thank you for the responses.

Beneficiaries of the policy would be threefold; the individual's chosen family member, the church to which the individual attends, and the aforementioned foundation.

The foundation would hold the policy and be paying the premiums.

What you are describing is both a Goodman Triangle, and STOLI.

Assuming that a carrier would even accept a STOLI arrangement these days, the DB would be taxable (as a Gift) for both the family and the church.

Also, as a Goodman Triangle, any premiums over $14k/y (gift tax exclusion) would be taxable. This probably would not effect any parishioners... but it would certainly create a taxable event annually for the actual churches. And if the church's accountants did not realize this, that could mean A LOT of fines/penalties/headaches with the IRS.


Long story short it is a horrible idea on many levels.

If they want donations, have an "endorsed" agent who the members can go to and buy their own policy and make the church/organization a bene. That is the proper way to do it.

 

[VolAgent]

What you are describing is both a Goodman Triangle, and STOLI.

Assuming that a carrier would even accept a STOLI arrangement these days, the DB would be taxable (as a Gift) for both the family and the church.

Also, as a Goodman Triangle, any premiums over $14k/y (gift tax exclusion) would be taxable. This probably would not effect any parishioners... but it would certainly create a taxable event annually for the actual churches. And if the church's accountants did not realize this, that could mean A LOT of fines/penalties/headaches with the IRS.


Long story short it is a horrible idea on many levels.

If they want donations, have an "endorsed" agent who the members can go to and buy their own policy and make the church/organization a bene. That is the proper way to do it.

Remember, the church is a non-profit. I doubt it would be a taxable event for them, but it certainly would create more paperwork for the churches and their accountants.

I'm certainly no expert, but I believe as long as the money is used towards their charitable and non-profit endeavors, it would not create a taxable event for the church.

 

[scagnt83]

Remember, the church is a non-profit. I doubt it would be a taxable event for them, but it certainly would create more paperwork for the churches and their accountants.

I'm certainly no expert, but I believe as long as the money is used towards their charitable and non-profit endeavors, it would not create a taxable event for the church.

Ah. Forgot about that. Not sure what the rules are for a non-profit when its a goodmans triangle. Maybe Brandon knows.