From Our “Ask a Question” Mailbag: “As part of my estate plan, I want to give a gift to my temple. How Can I Make a Charitable Contribution to My Temple?”
Peter Klenk, Estate Planning Lawyer.
How Can I Make a Charitable Contribution to My Temple?
Making a charitable gift at your death is a kind gesture. You are no longer here, but your hard-earned wealth can continue doing good works. Let explain three simple ways you can contribute to your Temple at your death.
Three Simple Ways to Make Charitable Contributions at your Death.
The Classic, Make a Provision in Your Will.
At your death, assets in your name without beneficiary designations pass according to your Will’s terms. Though most states obligate you to leave a portion of your estate to your spouse, you otherwise decide where your assets pass at death. In your Will, you can name a charity as beneficiary. You can leave a specific dollar amount, a particular asset, or even a percentage of the total value of your assets at death.
For example, your Will can state, “I give Temple $5,000.00.” A specific dollar amount is direct and straightforward. Your Will could also give particular assets such as, “I give Temple my house.” Offering real estate to a charity is popular with people who don’t want their family to have the bother of preparing the house for sale. This way, the charity gets the money, but they are responsible for the house’s sale.
Another example would be giving the charity “5% of my residue.” A percentage over a set dollar amount has an advantage. If you provide a specific dollar amount, and your estate shrinks before your death, the charity may receive the entire estate. A percentage helps ensure that your charity and other heirs receive some amount. The negative of giving a percentage is that the charity now is involved in reviewing all your executor’s expenses. Each expense reduces the charity’s share so that they can question the Executor’s every action.
Further, in some states, the Attorney General’s office oversees all charitable gifts. Now the Attorney General also watches the Executor. This additional oversight can make probate more expensive.
Transfer at Death (TOD) Accounts.
Another way to address your question, How Can I Make a Charitable Contribution to My Temple, is to make your Temple the beneficiary of a TOD account. This gift can take many forms, such as a bank account, brokerage account, or even an annuity.
For example, you can use your bank’s forms to name the Temple TOD beneficiary of your savings account. It will not affect any of your other accounts. At your death, the charity takes your death certificate to the bank and claims the account. Simple! Further, your Executor now doesn’t need to involve the charity (or the attorney general) in the Probate process.
Name The Charity Beneficiary of Your IRA or other Qualified Plan.
Consider the tax implications of your gifts. Charities do not pay income, estate, or inheritance taxes. Unless your IRA is a Roth IRA, each distribution is subject to income tax. These same taxes are due whether you or your heir take the distribution. Therefore, if you leave an IRA to your child, the child pays all inheritance tax, estate tax, and income taxes. Under the right circumstances, this could reduce a $100,000 IRA to less than $50,000 of actual money your child receives.
In the alternative, if the $100,000 IRA names the charity, it receives $100,000. The gift avoids all taxes. The advantages are obvious.
For more detailed information about Estate Planning, see my article, “Estate Planning: Everything You Need to Know.”
In Conclusion: How Can I Make a Charitable Contribution to My Temple.
I hope you found helpful this short article addressing the question, How Can I Make a Charitable Contribution to My Temple. 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.
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