Thou Shalt Not …

5. Thou shalt not recommend techniques that are ripe for IRS scrutiny.
Take care when dealing with techniques that aren’t IRS-approved charitable techniques. Being creative isn’t bad or wrong, but falling prey to “schemes” can be disastrous.

Most traditional life insurance gifts such as giving ownership of an existing policy to a charitable organization are legitimate planned gifts. But a recently promoted life insurance approach called “stranger-owned life insurance” is much different. A trust or someone with no relationship or giving history to the charity owns a policy or multiple policies on large donors. Many commentators argue that the arrangement violates insurable interest standards and public policy, which has attracted congressional attention.