Beneficiary Designations: A Legacy Made Simple

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Would you like to help support your favorite charity, without changing your will or parting with any assets now? 

You can do this by designating the charity as a beneficiary of certain assets or accounts you own. This "beneficiary designation" is one of the simplest ways to make a gift. It's literally as easy as filling out a form. 

You can name your favorite charity as the sole beneficiary of your assets or as one of several beneficiaries. For example, you can use some of your assets to make a legacy gift and use the rest to provide for family members or other loved ones.

There are many benefits of making a gift by beneficiary designation:

  • Flexibility: Assets remain in your control should you need them.
  • Easy to arrange: It doesn’t require a change to your will. 
  • Revocable: You can change your gift designation at any time.
  • Tax incentives: Funds passing by beneficiary designation to your favorite charity are not subject to income or estate tax. This means 100% of your gift is available for use by the charity.
  • Family-friendly: You can name family or other loved ones to benefit from some of the asset value, with the charity receiving the remaining portion.
  • Support your cause: Your gift will help your favorite charity fulfill it's mission and help future generations. That's a good feeling that is priceless. 

Assets to consider designating include: 

Retirement assets: These include IRAs (regardless of the type of IRA) and most qualified retirement plans, such as 401(k) and 403(b) plans. Request a Beneficiary Designation Form from your plan administrator and designate your non-profit of choice as a beneficiary of either a percentage of your plan balance or of a specific dollar amount.

Retirement assets can be taxed at rates as high as 50% to 70% if you leave them to someone other than a surviving spouse. This is because most distributions* to an individual from an IRA, 401(k), 403(b), or other qualified retirement plan are subject to both income tax and estate tax.

In contrast, retirement funds that pass to your favorite charity by beneficiary designation are not subject to either of these taxes. From a tax standpoint, a transfer of assets remaining in an IRA or other retirement account is the very best charitable gift.

Life insurance policies: Simply complete and return to your insurance company a form designating that the charity receive all or a portion of the death benefit associated with your life insurance policy.

Commercial annuity contracts:  A commercial annuity will sometimes have a remaining value at the end of the annuitant’s lifetime. You can name The Foundation to receive all or part of this amount by designating it as a beneficiary (sole or partial) on the appropriate form from the annuity company. 

Bank account: You can instruct your bank to pay to the charity all or a portion of what remains in your checking or savings account. Your bank can provide you with the appropriate Beneficiary Designation Form.

Investment account: You can instruct your investment company to transfer some or all of the investments held in your account at the time of your passing. Your broker or agent can let you know the process for doing this – it may be as simple as adding “T.O.D. to Charity X” after your name on the account.

* The only exceptions to the possible double-taxation are distributions from a Roth IRA or distributions attributable to contributions of after-tax dollars to other types of IRA.