Retirement plan assets can be the most heavily taxed of all your assets if left to heirs. Following your death, these assets may, in fact, generate income in respect of a decendent and subject family members to income and estate taxes. In some situations, you can increase the amount passing to heirs, meet your philanthropic goals and improve your overall tax situation by making a gift of retirement plan assets to a charitable organization, such as the Augusta Nature Education Center.
For example, a widow wants to make a charitable bequest to us in her will, with the balance of her estate passing to her only child. If our organization is named the beneficiary of the retirement plan assets, her child will benefit by inheriting more assets that are free of income taxes like real estate and stock instead of an inheritance that is subject to heavy taxation.
This area of estate planning is relatively complex, so you should seek professional advice before making a gift of your retirement plan assets. Dividing your assets between family and charitable interests, however, may be the best option for all involved.
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