When you name Kinship House as a beneficiary to receive your IRA or other retirement assets upon your death, rather than donating retirement assets during your lifetime, the benefits multiply:
- Neither you and your heirs nor your estate will pay income taxes on the distribution of the assets.
- Your estate will need to include the value of the assets as part of the gross estate but will receive a tax deduction for the charitable contribution, which can be used to offset the estate taxes.
- Because charities do not pay income tax, the full amount of your retirement account will directly benefit the charity of your choice.
- It’s possible to divide your retirement assets between charities and heirs according to any percentages you choose.
- You have the opportunity to support a cause you care about as part of your legacy.
How to designate a charity as the beneficiary of an IRA or 401(k)
When you’re ready, making Kinship House the beneficiary of your IRA or other retirement assets is typically straightforward: Fill out a designated beneficiary form through your employer or your plan administrator. Most banks and financial services firms also have beneficiary forms, or they can provide you with suggested language for naming beneficiaries to these accounts. Once the designated beneficiary forms are in place, the retirement assets will generally pass directly to your beneficiaries (including charities) without going through probate.
If you are married, ask the plan administrator whether your spouse is required to consent. If required but not done, this could result in a disqualification of the charity as your beneficiary.
Be clear about your wishes with your spouse, lawyer, and any financial advisors, giving a copy of the completed beneficiary forms as necessary.
TIP: If your goal is to support charity as part of your legacy while also leaving assets to family members, it may be more tax efficient to leave cash and appreciated assets to heirs, while making charities the beneficiaries of retirement assets upon your death.
If you require any additional information, please contact us by calling 503-460-2796, ext. 205.