8 comments

  1. I don’t see any of these as problems. These issues exist for all estate gifts. But, IRD assets are still the best assets to give from a tax perspective.

  2. The problem of donors not properly filing beneficiary designation forms (or lost forms) is something estate attorneys have talked about for years but I haven’t deal with it personally. But, the issue of IRA custodians waiting for beneficiaries to claim their accounts took me by surprise – hopefully not the norm but you would be shocked at the name of the firm with the policy of not notifying beneficiaries that sparked the blog post.

    I agree that it is the best asset from a tax perspective but fundraisers in particular need to pay some attention to these details.

  3. I’ve had some occasions where I had to be very persistent with IRA administrators (as well as insurance companies and executors for estates) in order to get a distribution.
    While I don’t doubt that there’s a policy (official or not) not to part with assets easily, it helps to demonstrate to such administrators that you are not going anywhere and that you wil persist in carrying out the donor’s wishes to support your organization.

  4. Great discussion. I would like to add a third problem that I uncovered in a book by Ed Slott but never hear discussed. If both a charity and children are listed as beneficiaries, the IRS does not allow the people to utilize the normal “stretch” provision. The solution is to split the IRA into two separate IRAs, one for charities and one for people.
    I also like to advise donors always to add the designation “per stirpes” after the name of their children. There are two benefits. You don’t disinherit one child’s children in case you and one child die simultaneously. Also, a wealthy child can disclaim the inheritance and let it pass directly to his/her children, possibly avoiding 39.6% tax and creating a great legacy for some of your grandchildren.

  5. Great question about the potential problem of naming both charitable and non-charitable beneficiaries! I could not find an answer even though I thought that issue was fixed some time ago. Look for a follow-up blog post on this topic.

  6. HI Jon,

    Funny we were discussing this very subject at the Master’s Forum at PPGGNY yesterday.

    Great topic!

    Vikki Jones, CFRE

  7. thank you for helping me to do my job better! two excellent points; not obstacles, just diligence! this tracking is necessary for all planned gifts, i encourage my clients to do this through dababase mgt (not just a manual spreadsheet) that will survive beyond the comings-and-goings of MGOs/PGOs.

  8. In my experience it is often the case that with married couples, unless an ILIT has been put in place, the charity is usually made the contingent beneficiary with the spouse understandably being primary. The challenge then, is to make sure that there is follow-through with the surviving spouse so that beneficiaries are named again when the IRA is inherited. Some spouses will want to honor the intent of their deceased spouse, while others may decide it is their right to name their own charities and that may or may not be the same one(s). With the frequent turnover of development staff it is entirely likely that a new staff member may not catch up to the need to be in touch with the surviving spouse to continue to steward the gift intention. Also makes the case for being involved with both spouses, and perhaps children, when charitiy is initially named as a beneficiary. Everyone needs to understand the donative intent.

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