A bequest is a gift that you make through a will or trust. A beneficiary designation is a gift you make through a contract (beneficiary designation form). Life insurance, investment accounts and retirement plans are examples of assets that pass by contract. If you don’t name a beneficiary of these contracts, then the assets will go to your estate and pass by bequest. When an asset passes through your estate, it is subject to probate. Though probate isn’t all bad, it can add costs and time delay to estate administration. Most people don’t like that so it’s important to complete and to regularly review your beneficiary designation forms.
In some cases, yes. A transfer for that purpose would generally be considered an unrelated use, reducing your charitable deduction. Be sure to consult with your advisors before making a gift decision.
For all gifts of personal property, especially worth more than $5,000, fair market value will be determined by an independent appraisal that you, the donor, will obtain.
- You receive an income tax deduction equal to the appraised fair market value of the property, with no capital gains tax due on its transfer to us.
- You can make a gift using property that you no longer need or are able to maintain.
Required Minimum Distributions (RMDs) are the amount of money IRA account holders have to remove from their IRA each year. If you do not take these funds out of your account, you will be taxed heavily on the amount remaining in your account. If you do take the funds out of your account, they will be subject to regular state and federal income taxes. If you were born between June 30th, 1949, OR are 72 years old, you must take the RMD.
You must be 70.5 or older to make a Qualified Charitable Distribution.
Yes! By making a QCD before you need to take an RMD, you can potentially lower your RMD in the future. Plus, these gifts are always tax-free, even if you don’t need to take the RMD.
In 2020, the Required Minimum Distribution (RMD) was waived as a result of the volatile stock market at the beginning of the coronavirus pandemic. On January 1st, 2021, the RMD was reinstated. However, if you did not remove any funds from your IRA, your RMD is likely larger than it was in 2019.
- You escape the income and estate tax that will both be levied on the remaining balance of your retirement plan if you leave it to heirs. (Income in Respect of Decedent (IRD) tax).
- You can give us the most-taxed asset in your estate and leave more favorably taxed property to your heirs.
- You can continue to take withdrawals from your plan during your lifetime.
- You can change the beneficiary if your or your family’s circumstances change.
- You can make a gift using an asset that you may have overlooked: paid-up policies whose coverage your family no longer needs.
- You can create a gift that will benefit us in the future, at little cost to yourself today.
- If you donate a policy during your lifetime, you receive an immediate income tax deduction for its current value.
- If the policy is paid-up (i.e., no more premiums are due), or you have made some premium payments but not all of them, the charitable deduction will be the lesser of the policy’s fair market value (which is approximately its “cash surrender value”) or the total of your net premium payments.
- To qualify for a deduction, you must make us the irrevocable owners as well as beneficiary of the policy. If you name us beneficiary but retain ownership of the policy, the IRS holds that you have not made a “completed” gift and therefore cannot claim a deduction.
- Similarly, there is no deduction for taking out a new life insurance policy, even if you make us irrevocable owners. You can claim a deduction for gifts you make to us that offset our ongoing premium payments on the policy (since we’re the owner, we pay the premiums).