Giving Via Beneficiary Designation

Many folks refuse to "go through the trouble" of redrawing their will to include their favorite charities. At the same time, nearly everyone is aware of cases where a person's procrastination and indecision led to confusion, disappointment, and even disputes among heirs.

Here is one possible solution: Call your banker, investment advisor, or human resources person at work and request a "Change of Beneficiary" form for your annuity, IRA, or company Retirement Plan. Fill out the form including your charity for some percentage of the account.

When choosing which asset to leave to charity, consider directing tax-deferred funds like an IRA, Tax-Deferred Annuity, or Retirement Plan to charities and other assets to individual heirs. The advantage is that the charity will not pay income tax on these monies whereas an individual heir would. (Up until 2001, it was inadvisable for an elderly individual to name a charity as beneficiary of an IRA or company retirement plan. This was due to the adverse impact such a designation would have on the minimum distributions the IRS requires a person over age 70 to take from his/her account. Forget this "adverse impact" as the required distribution rules have changed and are now blind to this issue. In short, this is no longer an obstacle to naming a charity as beneficiary of your IRA.)

The best part about this technique is its ease, but don't be fooled! If you fail to coordinate beneficiary designation planning with the terms of your will, it can get messy. You could, for example, duplicate a planned gift provided for via your will that, depending on the language in the will, might double the amount passing to charity. Your attorney should be notified of changes to your beneficiary designations and sometimes should actually complete the beneficiary designation form.