Sam is a widower. He and his wife loved attending Allentown Symphony concerts.
Sam wanted to leave a bequest to the Allentown Symphony Association as part of his estate plan, but he had made a promise to his late wife that he would leave everything to their children. Sam's estate included some 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 the Allentown Symphony.
Sam: 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, which means 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 the Allentown Symphony Association, I could make a nice gift and avoid any additional tax for my estate and children.
Sam contacted his IRA custodian to get a beneficiary designation form. He filled out the form and designated the Allentown Symphony Association as the 100% recipient of his IRA account. Because the Allentown Symphony Association is a nonprofit, we are exempt from paying taxes and will receive the full amount of Sam's IRA when he passes away, allowing Sam to leave a sizable gift and a lasting legacy.
It is easy and convenient to include a bequest in your will or living trust. Click here for sample bequest language that can be included in your will.
You might find it helpful to print this page and the sample bequest language to share with your attorney. If you or your attorney have any questions, please contact us.