Maximizing Your Legacy: Gifting Life Insurance and Annuities to Barrow
For many donors, a life insurance policy or an investment annuity is an “invisible asset.” It is a contract you may have purchased years ago for a need that no longer exists—such as protecting a mortgage or providing for children who are now independent. By repurposing these assets, you can create a transformative gift for Barrow Neurological Foundation.
Why Gift Life Insurance to Neuroscience?
Life insurance offers a “leverage effect.” By paying relatively small annual premiums, you can eventually provide a six- or seven-figure gift to fund breakthroughs in neuroscience. Because life insurance proceeds are paid quickly and outside of probate, your gift goes to work immediately.
Three Ways to Gift Life Insurance
| Method | How it Works | Primary Benefit |
| Name Barrow as Beneficiary | You keep ownership but name Barrow Neurological Foundation as the recipient. | Maximum flexibility: you can change it later. |
| Transfer Ownership | You transfer the policy in its entirety to Barrow Neurological Foundation. | Immediate income tax deduction for the policy’s value. You can also make annual tax-deductible gifts to pay any remaining premiums. |
| Donate Dividends | You keep the policy but gift the annual dividends. | A simple way to give annually without using cash. |
Gifting Investment Annuities: The Tax-Wise Legacy
While annuities are excellent for providing guaranteed retirement security, they are often a “tax trap” when passed to heirs. Unlike life insurance proceeds, which are typically tax-free, the growth within an annuity is taxed as ordinary income to your beneficiaries—potentially stripping away up to 37% of the value before they see a dime.
- By naming Barrow Neurological Foundation as the primary beneficiary of your annuity, you can bypass this tax hit. As a nonprofit, the Foundation receives the full, pre-tax value of the account to fund neuroscience breakthroughs, and your estate may qualify for a significant charitable deduction.
- The “Inversion” Strategy: Financial advisors often recommend a “Tax-Inversion” approach—leaving tax-free assets (like life insurance) to your family and heavily taxed assets (like annuities and IRAs) to charity. This ensures your loved ones receive the maximum possible inheritance while your philanthropic impact remains undiluted by the IRS.
Step-by-Step: How to Name Barrow as a Beneficiary
- Contact your Provider: Request a “Change of Beneficiary” form from your insurance company or financial advisor.
- Use Our Legal Name: List the beneficiary as Barrow Neurological Foundation.
- Include Our Tax ID: Use 86-0174371 to ensure the gift is properly identified.
- Notify Us: While not required, letting us know about your gift allows us to acknowledge your generosity.
Frequently Asked Questions
What if the policy isn’t fully paid up?
You can still donate it! If you continue to pay the premiums on a policy owned by Barrow Neurological Foundation, those premium payments are generally tax-deductible as charitable contributions.
Do I get a tax deduction for naming Barrow Neurological Foundation as a beneficiary?
No. Because you retain the right to change your mind, there is no immediate deduction. However, the value of the policy is removed from your taxable estate upon your passing.
Can I donate a policy I am still paying for?
Yes. You can transfer ownership of a policy even if it has ongoing premiums. In this scenario, you continue to pay the premiums through Barrow Neurological Foundation. This turns your future premium payments into tax-deductible charitable contributions each year, allowing you to leverage a larger future gift at a lower annual cost.
What is the difference between naming Barrow Neurological Foundation as a beneficiary vs. transferring ownership?
The primary difference is control and immediate tax benefits.
- Naming a Beneficiary: You retain full ownership and can change your mind at any time, but there is no immediate tax deduction.
- Transferring Ownership: This is an irrevocable gift. You can no longer change the beneficiary or borrow against the policy’s cash value, but you qualify for an immediate federal income tax charitable deduction based on the policy’s current value (usually the “interpolated terminal reserve”).
How is the value of a donated insurance policy determined for my tax deduction?
For an outright gift of a life insurance policy, your deduction is generally equal to the lesser of the policy’s fair market value or your cost basis (the total premiums you’ve paid minus any dividends or loans). For most donors, this means the deduction aligns with the cash value or the total investment they’ve made into the policy over time.
Take the Next Step in Your Philanthropic Journey
Ready to explore which planned giving vehicle is right for you?
- Explore Our Technical Guides: For detailed gift descriptions, interactive calculation tools, and expert assistance, visit our dedicated gift planning portal at barrow.mygiftlegacy.org.
- Request a Personalized Illustration: See exactly how a gift would look for your tax bracket and estate plan. Contact our Philanthropy Officers today at (602) 406-3041.
- Join the Legacy Society: If you have already included Barrow in your will or trust, please let us know. We would love to thank you today and ensure your gift is directed exactly where you want it to make the most impact.
Barrow Neurological Foundation 100% of every donation goes directly to research and care. Tax ID#: 86-0174371.
