A woman opening a present given by her partner, he can be seen standing behind her.

Gift Giving

By Greg Jizmejian, Insurance Planning Specialists

The idea of giving something of value to people you care about during Christmas, birthdays, wedding anniversaries or any other special occasion is universal. The challenge is to give something the recipient values, with the hope that when they use it, wear it, or look at it, they will be reminded of your love and care for them.

There are several creative ways to use insurance instruments to give far more effectively and creatively to children and grandchildren.

Here are a couple of them:

  • As a reminder of their love, an annual gift of cash is provided to grandchildren on their birthday after the grandparents have passed. This is done through a combination of joint last life insurance on the lives of the grandparents with an annuity as the settlement option. The insurance benefit is paid out as an annuity, payable at Christmas each year or on the birthdate of each grandchild. They could even arrange to have a letter drafted to accompany each of those gifts.
  • A permanent whole life policy can be taken out on each grandchild, funded over a set number of years, to be held by the grandparents.

These policies would eventually be gifted to the grandchild when they are mature enough. The transfer does not cause any taxes, even though it is a disposition. The grandchild would have a head start on their own life insurance planning and have equity from a young age. If they draw out funds before starting to earn other income, little or no taxes are paid for that direct withdrawal. Instead of cashing out from the policy directly, they could use it as collateral for a car loan, help with wedding costs, the purchase of a home, or finance the start of a business. Ultimately, they can name their own children or grandchildren as beneficiaries. What a fantastic way to be remembered at life’s milestones and by future generations.

Speak to your Raymond James financial advisor or contact one of us in the FiTT team to explore these gift giving ideas.


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