Skip to Content

We are a Veteran Owned Business, providing 20% discounts for Veterans, First Responders, Elementary and High School teachers. Please contact us to set up a phone or Zoom meeting. Taking care of you and your family, It's What We Do!

Can I use my IRA to Give My Church a Gift at Death?

Posted on Thu Dec 5, 2019, on Uncategorized

From Our “Ask a Question” Mailbag: “When I die, I want to give my church a gift. Can I use my IRA to Give My Church a Gift at Death?”

At Death, Can I Give My Church a Charitable Contribution Using My IRA

Peter Klenk, Estate Planning Lawyer.

Can I use my IRA to Give My Church a Gift at Death?

You can continue making kind gifts after your death by making a charitable gift.  Your church will need money after you go, and you can help. Donations can be made using your Will, TOD accounts, or your IRA.  Let me explain.

How Does an IRA Pass at Death?

An IRA, 401k, 403b, or any of the other qualified plans are “deals” you have made with the federal government.  The government wants you to plan for retirement. To encourage you to save, they created qualified plans.  Though they differ in subtle ways, they all have the theme of encouraging you to put money into the system, so your money grows tax-free.  Further, the plans provide creditor protection. In exchange, you promise to follow the rules. Excluding Roth IRAs, the deal includes the obligation to start taking mandatory distributions and paying back the deferred income taxes once you reach age 71.5.  Remember, the plan was saving for your retirement, not to avoid taxes forever. So you eventually take the money out and repay the “loan.”

If you die and leave the IRA to a human, the beneficiary must pay the deferred income taxes. The recipient can defer the payment somewhat, but they must pay the tax.

But, if you name a charity as beneficiary, a charity pays no income taxes. 

Option One; Give the Charity the Entire IRA.

You can give your entire IRA to the charity. A 100% gift avoids all income, inheritance, and estate tax on the IRA.  If you have several IRAs, you can earmark one for your church and leave the others to your children. The advantage being, even though the IRA goes up and down in value over time, you can reasonably predict the amount going to the charity. Further, your family avoids the complexity of dealing with an IRA. They may prefer receiving $100,000 in cash rather than $100,000 of an IRA on which they still have to pay income tax.

Option Two, Give the Charity a Portion of Your IRA.

You can name any number of beneficiaries for your IRA. If it better matches your plan, you can divide your IRA in any number of ways. For example, you could give your church 50% of the IRA and divide the other 50% equally between your children.  The disadvantage of this is that if you have a specific amount, you wish to leave the church, you will need to remember to monitor the IRA’s value. As it goes up and down, you will need to adjust the percentage of your gift. 

More Detail.

More options exist, such as using an IRA Trust, but these are beyond this short article. For more detailed information about IRA Trusts, see my article, “IRA Trusts Everything You Need to Know.” 

In Conclusion: Can I use my IRA to Give My Church a Gift at Death?

I hope you found helpful this short article addressing the question Can I use my IRA to Give My Church a Gift at Death. I have also included some links for more detailed information. If you are curious about Estate Planning, or other various planning techniques, contact us. Let our Estate Planning lawyers help walk you through what can be a confusing process. In fact, feel free to contact our office for a free consultation. 

Wills, Trusts, Probate, and Estate Litigation, It’s All We Do!

It’s What We Do!

Peter KlenkPeter Klenk

What Our clients are saying

Klenk Law Logo
Stars

Bill

I met Peter soon after he started his practice in Philadelphia, PA. He and his team have always been there for me and my various inquiries throughout my life-changing events, corporate relocations. I have lived in various cities throughout the nation, I have never had a problem in contacting Peter or a member of his team. He and his office responds quickly and returns calls to me to fulfill my requests for information or to revise my estate needs while posing relevant thought-provoking questions that I need to consider to secure my future. One of Peter's best qualities is his ability to answer clients complicated questions in a simple way to ensure comprehension.

Klenk Law Logo
Stars

Rocco D.

I have worked with Peter Klenk & his associates for some time now and I have found them to be ultra-qualified, knowledgeable and diligent about their work. I highly recommend them.

Klenk Law Logo
Stars

Peter J. Gutekunst, CFP®

I've worked with and known Peter Klenk and his associates for years. They are highly professional, diligent and truly experts in their field. By focusing on just wills, trusts, and estates, Klenk law has experienced every angle of estate planning and applied that knowledge to help prepare our clients with thorough and comprehensive documents.

Klenk Law Logo
Stars

Brian M.

Peter explained a complex subject very clearly, helped us to decide the best approach to managing our estate and then made it very easy for us to execute the required documents. He will be a valuable resource for years to come and clearly has a great understanding of estate law that will lead to innovative solutions for us. I would unhesitatingly recommend him for estate planning.

Klenk Law Logo
Stars

Qiana Wright

Great friendly staff

Let us put our expertise to work for you.

Free consultation within 24 hours.