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If you have Charitable Intent in your Estate Plan, don’t overlook your IRA!

By December 29, 2022Estate Planning, Wills

If you have Charitable Intent in your Estate Plan, don’t overlook your IRA!



If you have charitable intent in your estate plan, don’t overlook your IRA. 

We often see people come in and want to leave, say, twenty-five or fifty thousand dollars to a charity of their choice, and they think the right way to do that is by leaving it to them in their Will. 

That could be a good way and it could be their only way, but if you have an IRA, it might make more sense to leave that money to the charity from the IRA. 

That is because the charity doesn’t pay taxes. If you leave fifty thousand dollars of your IRA to your favorite charity that whole fifty thousand dollars goes to the charity. If you leave that fifty thousand dollars to your child through your IRA and your child is a high earner they could pay up to twenty thousand dollars in tax on that fifty thousand dollars. 

It would make more sense to funnel cash to your heir and IRA money to the charity. This is all within the confines of what you want to give away. In this case, you can maximize your giving by either giving more to the charity or more to your child and less to the IRS.

Mike Garry

Author Mike Garry

Michael Garry is a CERTIFIED FINANCIAL PLANNER™ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

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