Charitable Bequests and Beneficiary Designations
Summary of Gift Plan
The donor designates a charity to receive a specific, general, percentage or residuary bequest from his or her will or revocable living trust, or names a charity to receive part or all of life insurance proceeds or remaining principal in his or her retirement, brokerage or financial accounts.
Income Tax Deduction
There is none for the donor, but estates and trusts may deduct income distributed to charities under Code §642(c), including income in respect of a decedent (IRD), if authorized under the donor's will or trust.
Capital Gains Consequences
Capital gains taxes are avoided 100%.
Federal Taxation
There is no change in taxation of the donor on income from assets revocably designated for charity. But bequests of income in respect of a decedent (IRD), such as US savings bonds and retirement accounts, avoid income taxes for the donor's estate or heirs.
Transfer Taxes
The value of the property is included in the donor's gross estate, but a 100% estate tax charitable deduction shelters bequests of any amount.
Tax Returns
Form 706 must be filed for estates subject to federal estate tax.
Best Funding Assets
Any assets, including cash or property will work, but ideally one should leave taxable assets such as IRAs and other retirement accounts, savings bonds, accounts receivable, renewal commissions of insurance agents, deferred compensation, stock options, and installment obligations.
Special Considerations
Testamentary transfers can be shared between charity and family members through any of the gift techniques described above. Partial estate tax deductions reduce taxes on the estate.
The donor designates a charity to receive a specific, general, percentage or residuary bequest from his or her will or revocable living trust, or names a charity to receive part or all of life insurance proceeds or remaining principal in his or her retirement, brokerage or financial accounts.
Income Tax Deduction
There is none for the donor, but estates and trusts may deduct income distributed to charities under Code §642(c), including income in respect of a decedent (IRD), if authorized under the donor's will or trust.
Capital Gains Consequences
Capital gains taxes are avoided 100%.
Federal Taxation
There is no change in taxation of the donor on income from assets revocably designated for charity. But bequests of income in respect of a decedent (IRD), such as US savings bonds and retirement accounts, avoid income taxes for the donor's estate or heirs.
Transfer Taxes
The value of the property is included in the donor's gross estate, but a 100% estate tax charitable deduction shelters bequests of any amount.
Tax Returns
Form 706 must be filed for estates subject to federal estate tax.
Best Funding Assets
Any assets, including cash or property will work, but ideally one should leave taxable assets such as IRAs and other retirement accounts, savings bonds, accounts receivable, renewal commissions of insurance agents, deferred compensation, stock options, and installment obligations.
Special Considerations
Testamentary transfers can be shared between charity and family members through any of the gift techniques described above. Partial estate tax deductions reduce taxes on the estate.
