Beneficiary Designations – The Simple Way to Leave a Legacy

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Article reprinted with permission from the Cleveland Jewish News.


Bequests from wills are the most common source of legacy gifts to charitable organizations. However, “gifts by beneficiary designation” are increasingly popular. They are simple and you can do them on your own.

With a gift by beneficiary designation, you instruct the custodian of your account(s) to pay all or a portion of the account’s assets to one or more charitable organizations upon death. It is often as easy as completing a form in the comfort of your home or at your computer. A beneficiary designation works independently of a will or trust and is paid without going through the probate process. In fact, most everyone has at least one type of account that they can readily use to make a legacy gift through a beneficiary designation.

Here are some examples:

Bank accounts, certificates of deposit, U.S. Savings Bonds

A pay on death account instructs the financial institution to pay all or some of the account balance to a charitable organization upon the account owner’s death. This format typically applies to checking and savings accounts, certificate of deposits 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.

Insurance policies

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

Retirement accounts

Designating all or part of the balance in a retirement account, such as your IRA, 401(k), 403(b), pension or other tax-deferred plan, is another option for legacy giving. Many people will not use all of their retirement assets during their lifetime. In addition, heirs who receive certain retirement assets may have to pay income tax on the amounts they receive. Charitable organizations, in contrast, can receive the same assets without tax consequences.

In each of the examples above, you simply need to request a beneficiary designation form from the appropriate institution and follow their instructions. 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 ease the administration of your gift according to your intentions, as well.

A gift by beneficiary designation can be a simple way to turn your existing accounts into a meaningful charitable legacy. Of course, always consult with your legal, financial or tax professional before making important financial decisions.

Matt Kaliff is assistant managing director of endowment development at the Jewish Federation of Cleveland in Beachwood. For more information, contact mkaliff@jcfcleve.org or 216-593-2831.

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