When doing your estate planning, you have the chance to benefit those individuals and institutions that benefited you in your lifetime. Many charitable donors have shown their appreciation to different charities by making provisions for the organization in their wills or trusts.
Whether you have a large or small estate, it is very easy to make a simple charitable donation in your will or trust.
First, when doing your estate planning, you can inform your estate planning attorney that you want a certain percentage, or a specific amount, of your estate to be distributed to the particular charity (this can be a church, school, or other charitable organization). Your gift does not have to be large. Small amounts add up.
Your example of generosity and civic-mindedness, evidenced by a provision in your will or trust to provide for a specific charity, may be of more lasting value to your loved ones than the assets you actually leave them.
The simple process of leaving a certain percentage of your estate to the charity can be accomplished through a will or trust. The procedure should not increase the cost of your estate plan nor the estate administration.
Another very simple method to provide for a charitable bequest upon your death is to add the charity as a beneficiary of your IRA. The process would require you to visit with your IRA provider and request that a new IRA account be established with whatever amount you want from your existing IRA account. This new account (or existing account if you want to use the entire amount of your existing account) would name the desired charity as the beneficiary.
Giving the charitable organization a portion of your IRA has many tax advantages. Upon your death, the proceeds in the IRA would be paid directly to the charity. Significantly, no income taxes would have to be paid. If the IRA proceeds were distributed to your children or grandchildren, they would have to pay income tax on the distribution. Using an IRA to make a simple bequest to a charity greatly benefits the organization, and saves income taxes for your heirs. Additionally, it can save estate taxes as well.
This article gives a few simple techniques to help those who want to benefit a charitable organization. I hope these techniques can be of assistance to you.
WITH A SATELLITE OFFICE IN PANGUITCH. Jeffery J. McKenna is a local attorney serving clients in Utah, Nevada, and Arizona. He is a shareholder at the law firm of Barney McKenna and Olmstead. He is a founding member and former President of the Southern Utah Estate Planning Council. If you have questions regarding this article or if you have a topic you wish to have addressed in this column, you can call 435 628-1711.