Name The Children’s Room In Your Will or Trust
It can be costly to pass retirement plan assets on to your heirs. This is because retirement plans are typically pre-income tax assets, as they have not yet been taxed, but will be taxed when distributed to your heirs. Retirement plans are also included in a person’s taxable estate for estate tax purposes. This means there is a potential double tax when leaving a retirement plan to an heir.
However, when a retirement plan is gifted to a charity at the time of a person’s death, the charity does not pay any income tax on distributions, nor is the plan included in a person’s taxable estate for estate tax purposes.
Given the above, retirement plans can be an ideal gifting vehicle to consider if you wish to include a charity in your estate plan – the ability to provide for your heirs, pay less tax, and have more of your estate go to support your charitable goals.
By naming The Children’s Room as a beneficiary of a retirement plan, you maintain complete control over the asset during your lifetime to provide for your life-time needs. At the time of your death, the balance (or a percentage) of your plan passes to The Children’s Room free of both estate and income taxes.
Because individual circumstances differ, we encourage donors to seek advice from their own legal and financial advisers. If you wish to discuss any of the options above in greater detail, please contact Kim Cayer, Philanthropy Director, at (781-641-4741, extension 333) or by email at [email protected].