Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

indication of why no gain is realized. Presumably the rationale is that the transfer is a gift, and therefore excepted from the recognition of gain.

7.8 Putting it All Together

Here are planning principles that emerge from the discussion in this Chapter:

1. If a client wants to make charitable gifts as part of his estate plan, consider using retirement benefits as a tax-efficient way to fund such gifts. ¶ 7.1.02 (B).

2. If part of the client’s IRA is to be paid to individuals and part to charity, and use of the life expectancy payout is an important goal for the individual beneficiaries, consider establishing separate IRAs, one payable to the charity and one to the individuals. ¶ 7.2.02 (C). 3. If benefits are left to a trust with individual and charitable beneficiaries, determine which is more important, the life expectancy payout or the charitable gift. It may be necessary to sacrifice one goal to achieve the other, or establish separate trusts to achieve both. ¶ 7.3.03 . 4. If benefits are to be left to a charity through a noncharitable trust or an estate, take care, both at the drafting and the administrative stages, to assure that the trust or estate does not become liable for income taxes on the benefits intended to go to the charity. ¶ 7.4 . 5. Consider leaving retirement benefits to a public charity, a private foundation, a charitable remainder trust, a gift annuity, or a donor-advised fund; generally do not name a charitable lead trust or pooled income fund as beneficiary of a retirement plan. ¶ 7.5 . 6. Consider lifetime gifts to charity using NUA or ESOP stock, required distributions, or a series of substantially equal payments; if over 70½, use Qualified Charitable Distributions to satisfy all or part of your IRA minimum distributions; see ¶ 7.6 .