An Important Gift You May Have Overlooked
August 3, 2009| By The Heritage Foundation
The 'Bequest' in Your File Drawer
Most people are aware that they can leave a bequest to charity, but when they sit down and make important decisions about their estate plans, some of the most effective and easily arranged gift opportunities are often overlooked. What few people realize is that virtually any gift allowing you to name a "survivor" or "contingent" beneficiary can be gifted to charity—often with very favorable tax consequences. Let's take a look at two of the most common of these.
Individual Retirement Accounts
You can name Heritage a sole or percentage beneficiary of your qualified Individual Retirement Account or "IRA" simply by requesting a change of beneficiary form from your IRA custodian. In doing so, you ensure that your gift will be effectively removed from your taxable estate. People commonly designate non-spousal beneficiaries such as children in their IRAs without realizing the severe double taxation that occurs on these assets. Not only will the proceeds be subjected to estate taxes, but heirs will be required to pay income tax as well. All told, it's possible that more than 70% of your well-intentioned gift will provide a far more generous inheritance to the federal government than your loved ones. Consider gifting your IRA to Heritage and make a tax-smart estate gift while leaving other assets to family.
Insurance
Do you have an insurance policy that is no longer as relevant or necessary as it once was? Why not use your insurance to "insure" the future of the country you love? Gifts of paid-up policies can be made during your lifetime with the added benefit of an immediate income tax deduction, or you can continue to pay premiums on a new or existing policy and name Heritage the ultimate beneficiary upon your passing. Because of your charitable intent, future premium payments will be tax deductible. Once again, all that is generally required to make such a gift is a simple change of beneficiary or ownership form. The next time you think about your estate plans, don't forget to consider these often overlooked alternatives to make meaningful gifts in support of your conservative values.
