Opportunities to Maximize Your Charitable Gift – Part 2


As the holiday season approaches, many people begin to think about giving and helping others.  We typically get questions as to how to most effectively and advantageously give donations and charitable gifts.  Marshall has written a series of short stories that help describe how donors of all types and ages can maximize their benefits while benefiting others. 


In a conversation with a recently-retired client, we discussed a tax efficient way to leave a remembrance to a non-profit organization.  The client had saved diligently and was invested wisely so that he was not concerned with outliving his assets.  His primary concern was maximizing the bequests he would be leaving to his children and charity.  While the portion of the estate that would go to the charity would escape estate taxes, he was hoping for an opportunity to do more. 


A part of the client’s estate was held in deferred retirement accounts.  While these accounts were beneficial during the accumulation phase of his life, at this stage they posed a substantial tax liability as anything taken out of them would be taxed entirely as ordinary income.  This created a tremendous opportunity for his charitable gifting.  A qualified charity can liquidate a deferred retirement account from an estate without paying any taxes, whereas their children would have less buying power from the assets due to the taxes.


By creating an IRA with the qualified charity as the beneficiary, the client can segregate the amount of his assets that he wants to go to charity.  The estate will not pay taxes on the account donated, the qualified charity receives the value of the account, and the children receive the assets which provide them more after tax buying power.


-Marshall Rathmell-


Click here to see Part 3

Click here to see Part 1


*Before naming a charity the beneficiary of a deferred retirement account or any other charitable strategies consult with a competent tax and/or legal professional to understand the effects on your specific situation

Marshall Rathmell

Marshall Rathmell

Marshall Rathmell CFP®, CPA/PFS is the CEO, Shareholder and Financial Planner with BCR Wealth Strategies.