Thomas was a widower who had a great love for his favorite charity. As an individual who had directly benefited from its work, Thomas wanted to say thanks with a gift from his estate.
Thomas told his attorney that he wished to leave a bequest to the charity as part of his estate plan. Thomas' estate included some stocks, real estate, and an IRA. Thomas' attorney recommended that he give the appreciated stock and real estate to his children and leave his IRA to charity.
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 estate and income tax. After paying all of these taxes, very little would be left for my family. By giving the IRA to this organization, 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 his preferred charity 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 charity of his bequest. He was pleased that because the organization was a tax-exempt institution, it would receive the full amount of the IRA value when he passed away, creating a legacy for the future.
Is a bequest right for you?
It is easy and convenient to include a bequest in your will or living trust. This link includes sample bequest language that can very easily be included in your will.
You might find it helpful to print this page and the bequest language to give this information to your attorney. If you or your attorney have any questions, please contact us.