When clients come to meet with me, they often have charitable goals included in their estate plan. While they usually plan to leave the bulk of their assets to family, some may want to leave a percentage of their estate or a specific amount of assets to demonstrate their passion for a cause or organization.
Most clients also come to me already having a 401(k), an IRA or other retirement asset. These are great vehicles to save money for the future and you get to deduct any contribution you make from your taxes. However, when you or your beneficiary(ies) make withdrawals, the entire withdrawal is reported as ordinary income on your tax return. So, leaving a $100,000 IRA to your children is really leaving about $65,000 to your kids and $35,000 to the government in taxes.
Herein lies the opportunity!! If you name a charity as the beneficiary, the charity gets 100% of the dollars! In fact, some clients find when they reach 70 ½ years old and must start taking distributions from their retirement account, using their distribution as a tool for charitable giving is easy and makes tax reporting simple. As an added benefit, it is easy and free to change beneficiaries if your inclination changes or you learn about the great work of a different organization.
Come and meet with me to update your estate plan and see how charitable giving can fit into your family’s future.