Making sure our financial houses are in order is a priority for most of us. It’s normal to assume, and to act as if we will always be around, but now is the time to consider how you, your spouse and family can continue to support, after your passing, the local charities and foundations you have given to during your lifetime, or want to support afterwards.
In this blog, I’d like to talk with you about how those local charities and foundations may be designated as beneficiaries of insurance, brokerage and non-retirement accounts as secondary beneficiaries; these are also called Transfer on Death (TOD) designations.
Our spouses are usually designated as our primary beneficiaries and inherit communal assets without tax implications. After the passing of the surviving spouse, the secondary beneficiaries inherit. Certain assets to secondary beneficiaries bypass probate and are immediately transferred after death documentation is presented.
By using beneficiary designation forms, you and your spouse can declare your intent for some parts of your estate without a lawyer. And yes, you can change these plans later on as your circumstances change. Designation forms are available on most investment and insurance websites and generally do not need to be witnessed or notarized.
You can do it today, from your home. Just in case.
Life Insurance Policies: Life insurance policies allow you to choose multiple beneficiaries and what percentage of funds should go to each – 100% to a charity(s), or 80% to your family and 20% to charity, or any combination you’d like. Naming a charity as a beneficiary is simple: you write in the charity name(s) on your beneficiary designation form.
Non-Retirement, Brokerage and Bank Accounts: As with life insurance policies, you may designate multiple beneficiaries and specify the percentages of funds to charities you wish to receive support after your passing. If you are married at the time of death your spouse will most likely be the primary beneficiary of these funds, even if other beneficiaries are named, but a TOD designation will provide a transfer to secondary beneficiaries upon the surviving spouse’s passing. Banks may also ask you to designate beneficiaries for the accounts you maintain with them.
Tax laws around Individual Retirement Accounts (IRAs) and other retirement instruments are complicated and may be taxed at inheritance. I’m not going to write about them here, but I do want to point out that unless this is a critical part of your inheritance, speak to your tax advisor about donating these to a nonprofit organization.
It’s important to keep copies of the beneficiary verification documents you receive from your insurance company and financial institutions. It is also a good idea to notify intended charitable beneficiaries of your intent.
You may choose to designate Pacific Community Foundation (SPCCF)
as a beneficiary. We would be happy to work with you to create your personal
giving plan.
When your donation comes to us as a named beneficiary, we do our best to fulfill your intentions, if we know what those intentions are. If you have not indicated a specific intent for your disbursement beforehand, we will place your gift in our endowed Community Fund.
Peace of mind is knowing that local organizations you supported during your lifetime will receive continued support after you are gone.
DISCLAIMER: As always, we suggest that you speak with your financial or legal advisor before making significant changes to your estate planning. None of the information discussed here is given in lieu of conferring with a professional investment manager, estate planner, or attorney.
Kathleen Sayce, with editorial help from Marcia Scholl, photo by Jerry Macy
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