Consider Naming Charity as Beneficiary of Your IRA to Save Estate Taxes and Heir’s Income Tax

If you plan to leave a significant amount of money or assets to a charity, consider making the charity the beneficiary of an IRA account. If an amount is left to the charity from your estate, the income from the IRA will be included in the income of the estate. However, if you make the charity the beneficiary of an IRA directly, the income is not taxable to the estate or the charity. Leaving an IRA to a charity will also reduce the minimum distribution requirements and related income taxes your heirs will face. In order to accomplish this, you may need to roll large IRA accounts into smaller ones to designate certain amounts for specific charities. If you need help with these rollovers, contact your financial advisor.