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Benefit Your Family and Tallahassee Memorial HealthCare

Make the Most of Your Retirement Plan Assets With a Charitable Remainder Trust

Did you know that retirement plan assets are subject to income and possible estate taxes when given to your family? The income tax bill alone can reduce your retirement plan value by as much as 39.6 percent. If your estate is subject to estate tax as well, more than half could be whittled away.

Although there are ways in which spouses (and, to a lesser extent, other heirs) can defer taxes on these assets when they postpone the date they are to receive the funds, they, too, are subject to income tax when they make withdrawals.

To eliminate taxation of these assets, many people use their retirement plan assets to make gifts to tax-exempt charitable organizations such as Tallahassee Memorial HealthCare Foundation, Inc..

A Charitable Solution
If you would like to benefit your family in a tax-wise manner after your lifetime and also support Tallahassee Memorial HealthCare, consider naming a charitable remainder trust as the beneficiary of your retirement account.

This is a type of trust that provides income to beneficiaries of your choosing for life or a term of years (not exceeding 20 years). The remainder goes to a qualified charitable organization such as Tallahassee Memorial HealthCare Foundation, Inc..

Charitable remainder trusts are exempt from income tax and you receive a charitable deduction for the value of the remainder interest.

Example: Steve's Story
Steve has a large estate that includes an IRA valued at $3 million. He wants to control the distribution of principal while providing for his wife, Sandy, during her lifetime and making a charitable contribution to Tallahassee Memorial HealthCare. To meet his goals, he names a charitable remainder trust as the beneficiary of his IRA.

The trust provides payments to Sandy for her lifetime. Steve's estate will receive a federal estate tax charitable deduction for the remainder interest going to our organization and a marital deduction for the trust payments to Sandy. The entire value of the IRA avoids federal estate tax and there is no income tax owed on the IRA at Steve's death. During her lifetime, Sandy will report the taxable income disbursements from the charitable remainder trust each year. After her lifetime, the remaining principal will be distributed to us.

If you are interested in the tax-wise benefits of funding a charitable remainder trust with retirement plan assets, please contact Paula S. Fortunas at 850-431-5752 or for more information. We would be happy to provide you with a free illustration.

Copyright © The Stelter Company, All rights reserved.

The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.