Page 18 - December 2019 Bar Journal

FEATURECHARITABLE GIVING

I LIKE SIMPLE THINGS …

LIKE LEAVING A CHARITABLE LEGACY WITH AN IRA!

BY RONALD F. WAYNE

or many of our clients, retirement simple option for charitable distributions. Making wise choices
assets represent a major portion Though traditional IRAs are highlighted, these If a client wants to leave most assets to family
of their accumulated wealth. I am alternatives are generally true of 401(k)s and members at death while also supporting a charity
certain you have read articles that other qualified retirement plans. of choice, it makes good sense to leave non-
F discuss how Qualified Charitable There are several ways to make charitable gifts retirement assets to family and retirement assets
Distributions (QCDs) provide a very tax- that take effect at death and generate substantial to charity. This is true because family members
efficient method for persons over 70-1/2 to income and/or estate tax benefits. Some of these will pay income tax on distributions received from
benefit a chosen charity during life. A QCD is methods are more complicated than others and the retirement assets while a charity does not. As
a direct transfer of funds from an IRA payable require sophisticated trusts prepared by an estate a result, 100% of the retirement assets received by
to a qualified charity. These distributions planning attorney. However, these trusts may the charity further its mission without reduction
count towards satisfying annual required incur annual administrative costs and require by income taxes. Smart planning with IRAs can
minimum distributions. However, using annual tax returns in order to reap the benefits. make a big difference to charities and our clients
IRAs as a simple and tax-efficient way to Sometimes there is a simple, cost-free alternative and their families.
make charitable bequests at death is another to accomplish a substantially similar result.
How best to do this?
It’s easy. Simply suggest that your client designate
GET ENGAGED! a favored charity or charities as percentage
beneficiary of their IRA. Better yet, rollover
a portion of their existing IRA or 401(k) to a
JOIN A SECTION new IRA in an amount they wish to leave to the
charity at death. Designate a spouse, children or
grandchildren as the beneficiary of the first IRA
and designate the chosen charity as the beneficiary
of the new IRA. A child beneficiary will most
likely stretch the required minimum distributions
from the first IRA over his or her lifetime (but see
Estate Planning, Probate & Trust Law below for limitations which may be imposed if the
Meets monthly, third Tuesday SECURE Act becomes law).
Here’s an example of how this works. Say
your client has a $100,000 IRA and would
ALLISON MCMEECHAN, Chair like to leave approximately $10,000 to a
Reminger Co., LPA charitable organization. Simply change the IRA
beneficiary designation to leave 10% to the
(216) 430-2105 charity and 90% to family members. Preferably,
amcmeechan@reminger.com however, the client would rollover $10,000
into a new IRA (without tax consequence),
name the charity as the beneficiary of the new
IRA and leave the remainder in the old IRA
for family members. This creates the greatest
flexibility by permitting the IRA owner to take
distributions from either or both of the IRAs,
For information on how to join a section, contact Melanie Farrell thereby changing the amount of the remaining
at (216) 539-3711 or mfarrell@clemetrobar.org. death time gifts simply by controlling the
withdrawals from each account.

18 | CLEVELAND METROPOLITAN BAR JOURNAL CLEMETROBAR.ORG