Your Complete Retirement Planning Road Map by Ed Slott

Author:Ed Slott [Slott, Ed]
Language: eng
Format: epub
ISBN: 978-0-307-49356-9
Publisher: Random House Publishing Group
Published: 2008-11-19T00:00:00+00:00

ask Ed…

Q: Instead of naming a charity (or charities) on my beneficiary form and separating accounts so my family doesn't have to do it, wouldn't it be much easier for me just to leave my account to my estate and make all my charitable bequests in my will?

A: It might be easier, but it will be much more costly because a tax could be triggered in the estate. That's because the bequest of a specific dollar amount in your will—like a $10,000 bequest to a charity—is known in tax terms as a “pecuniary bequest,” and if you satisfy a pecuniary bequest with, for example, an IRA, you trigger immediate taxation on the IRA in the estate under Section 691(a)(2) of the Internal Revenue Code. It's as if you took the retirement plan money out, paid a tax on it, then made the bequest. That defeats the tax benefit of leaving the account to charity.

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