Beneficiary Designations – Easy Way to Create Legacy

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Article reprinted with permission from Cleveland Jewish News

You want to leave a meaningful legacy but don’t know how. Your answer will reflect your personal values, priorities, family and less importantly, your financial situation. A charitable bequest is perhaps the most tangible way to express your values while leaving a lasting impact on your community and the organizations that mean the most to you. While you can certainly use a will or trust to provide a charitable bequest, a beneficiary designation may be an even better and easier choice.

Most people have at least one type of asset – some examples are retirement plans, bank or stock accounts or insurance policies - that they can readily use to make a legacy gift through a beneficiary designation. They are simple and you can do them on your own. With a gift by beneficiary designation, you instruct the custodian of your account to pay all or a portion of the assets to one or more charitable organizations upon death. It is often as easy as completing an online form. A beneficiary designation works independently of a will or trust and is paid without going through the probate process. Consider these examples:

Retirement Accounts

A retirement account such as an IRA or 401(k) can be a great resource for a bequest to charity. Many people will not use all their retirement assets during their lifetime. If you leave your IRA or 401(k) to heirs other than your spouse, they may have to pay income tax on much of the amounts they receive. Charitable organizations, in contrast, can receive the same assets as a bequest without tax consequences. Thus, the full value of the bequest from a retirement account can go to support the good work of the charitable beneficiary.

Life Insurance

If you own a fully paid life insurance policy that has outlasted its original purpose, you can designate a charity to receive all or some of the policy benefit.

Bank Accounts, Certificates of Deposit, U.S. Savings Bonds

“Pay on death” accounts enable you to instruct the financial institution to pay all or a portion of the account balance to a charitable organization upon the account owner’s death. This format typically applies to checking and savings accounts, CD’s and U.S. Savings Bonds. Similarly, “transfer on death” accounts tell brokerage institutions to donate securities and other investment assets in an account to a charitable organization.

In each of these examples, you simply need to request and fill out a beneficiary designation form from the appropriate institution. Most institutions make their forms available online. It is a good practice to periodically review your beneficiary designations to ensure they are correct and to adjust for changed circumstances. Letting the charitable organization know you have named it as a beneficiary will ensure they administer your bequest according to your intentions. They will appreciate knowing that you are helping them ensure that their important work will continue, and will want to show their appreciation.

A beneficiary designation is an easy method to turn your assets into a meaningful charitable legacy. Of course, you should always consult with your legal, financial or tax professional before making important financial decisions.

Matthew A. Kaliff is the senior director, endowment development & supporting foundations at the Jewish Federation of Cleveland in Beachwood.

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