Thomas was a widower who had a great love for a particular ministry. As one who had witnessed that organization in action, Thomas wanted to further their mission with a gift from his estate.
Thomas told his attorney he wished to make a bequest to that ministry. Thomas' estate included some stocks, real estate and an IRA. Thomas' attorney recommended he give the appreciated stock and real estate to his children and leave his IRA to the ministry.
Thomas: My attorney told me that if I gave the stock and real estate to my children, these assets would receive a step-up in basis at my death. My children could then sell them without paying tax. However, if I gave my children my IRA, the IRA would be subject to IRD (Income in Respect of a Decedent) and income tax. After paying all of these taxes, very little would be left for my family. By giving the IRA to the ministry I wanted to support, I could make a nice gift and avoid any additional tax for my estate and children.
Thomas contacted his IRA custodian to obtain a beneficiary designation form. He filled out the form and designated the ministry he loved as the 100% recipient of his IRA account. Thomas' attorney then specified in Thomas' will the bequest of his other assets to his children.
Thomas: I was so impressed with my attorney's advice that I named him executor of my will!
Thomas called and notified the ministry of his beneficiary designation. Thomas was pleased that, because the ministry was a tax-exempt institution, it would receive the full amount of the IRA value when he passed away, enabling them to bring help and hope to many more people.
Please note: The story, names and image above represent an example of the benefits of this type of estate-planning tool. They do not represent actual donors to GFA.
If you have made a bequest to the ministry of GFA in your will or as a beneficiary of your IRA, 401K or other retirement plan, life insurance policy or investment, savings or checking account, please let us know. We would like to thank you and include you as one of our Legacy Partners.