A Bequest to Save Taxes
Paul told his attorney he wanted to leave a gift to Oakland Symphony in his will. Paul's estate included stocks, real estate and an IRA. His attorney recommended that he give the appreciated stock and real estate to his children and leave his IRA to charity.
Paul: My attorney told me that if I gave the stock and real estate to my children, these assets would receive a step up in basis at my death. My children could then sell them without paying capital gains tax. However, if I gave my children my IRA, the IRA would be subject to estate and income tax. After paying all of these taxes, very little would be left for my family. By giving my IRA to Oakland Symphony, I can make a nice gift and avoid any additional tax for my estate and children.
Paul contacted his IRA account holder and completed a beneficiary designation form. He designated Oakland Symphony as the 100% recipient of his IRA account. Paul's attorney then specified his will that Paul's children would receive his other assets. Is designating Oakland Symphony as the beneficiary of your IRA right for you?
It is easy and convenient to include a bequest in your will or living trust. This link includes sample language you can use in your will.
You might find it helpful to print this page and the sample language to give to your attorney. If you or your attorney have any questions, please contact us.