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GiftLaw Pro Home   >  Chapter 4 - Specific Property Gifts  >  4.4 Insurance  >  4.4.5 Insurance to CRT or CGA  >  Basic Quiz

Basic Quiz - 4.4.5 Insurance to CRT or CGA

1. Under most state law, it is generally permissible for a donor to transfer a life insurance policy to a charitable remainder trust.
           
2. Under most state law, it is generally permissible for a donor to transfer a life insurance policy in exchange for a charitable gift annuity.
           
3. To complete a transfer of an insurance policy, the donor will need to contact the insurance company and fill out the proper change of ownership forms.
           
4. A gift of a life insurance policy will produce a charitable income tax deduction based upon the lesser of the policy's value or the donor's basis in the policy.
           
5. If an individual decided to surrender his or her insurance policy, the individual would realize taxable ordinary income equal to the excess of the policy's value over the cost basis.
           
6. The transfer of a life insurance policy to charity should not trigger any income tax liability.
           
7. If the donor transfers ordinary income property in exchange for a gift annuity, part of the prorated gain he or she reports from the gift annuity will not be taxed as capital gain, but will instead be taxed as ordinary income.
           
8. If a gift annuity is funded with life insurance and the donor does not know his or her cost basis, the donor can just guess the policy's cost basis.
           
9. It is very common for charitable remainder unitrusts funded with life insurance to pay out tax-free, or tier three, income.
           
10. In the case of a charitable remainder unitrust that will last for the lives of individuals, all named individuals must be alive and ascertainable at the time the trust is created.