• Skip to main content
  • Skip to primary sidebar
Login / Register |
Cart empty

Santa Barbara Maritime Museum

Explore and Discover our Rich Maritime Heritage at SBMM

Login / Register |
Cart empty
Donate

Close

  • Visit
    • Hours & Directions
    • Outdoors SB Visitor Center
    • Group Visits & Guided Tours
    • SBMM Store
    • Munger Theater
  • Events & Lectures
    • Upcoming Events & Lectures
    • Watch Previous Lectures
    • Private & Corporate Events
  • Exhibits
    • Arthur Beaumont: Art of the Sea – New!
    • Love Letters to the Sea – New!
    • Dwight Brooks Model Collection – New!
    • Virtual Tours
    • Curator’s Log
  • SBMM at Home
  • Education
    • Educational Programs
    • Upcoming Events & Lectures
    • Watch Previous Lectures
    • SBMM at Home
    • The Deeper Dive Series
    • Group Visits & Guided Tours
  • Support
    • Donate Today
    • Membership
    • Navigators Circle
    • Bequests & Legacy Gifts
    • Corporate
    • Volunteer
    • Donate An Artifact
  • About
    • Contact Us
    • Board of Directors
    • Staff & Employment
    • Financials
    • The Deeper Dive Series
    • Our Logbook
    • Press Room
  • Museum Store
Donate

Estate Planning: Naming a Charity as Beneficiary of Your IRA

October 6, 2020

Due to recent changes under the SECURE Act, most IRA beneficiaries (accept for spouses) will now need to withdraw all funds from retirement accounts within 10 years of the account holder’s death. This change in the law limits the ability of most beneficiaries (other than a spouse, minor child, or disabled or chronically ill individual) to “stretch out” retirement account distributions, limits the ability to continue tax deferral, and compresses income taxes over a much shorter period of time. For IRA owners that are charitably inclined, there are some good options to consider when naming a beneficiary that can provide tax benefits as well.

It is simple to name a charity as beneficiary of all or a percentage of your IRA or company retirement plan. Because the charity is tax-exempt, after your death it can withdraw the assets from the retirement account without having to pay income taxes on the withdrawal. Any individuals named as beneficiaries of the retirement account must pay income taxes at ordinary rates on any distributions they receive from the retirement account. Hence, the best income tax result is to benefit a charity from the retirement account and your loved ones from other assets that will not be subject to income tax when they receive it. In addition, any amounts left to a charity at death would also receive an estate tax charitable deduction, thus reducing any applicable federal estate taxes.

Another option to consider, which could benefit both a charity AND a family member, is naming a Charitable Remainder Trust (CRT) as beneficiary of your IRA. An individual you choose will receive annual payments from the CRT for a period of time. A CRT can be either a Unitrust, in which case payments are based on a fixed percentage of the beginning-of-year CRT balance, or an Annuity Trust, in which a fixed payment is paid to the beneficiary. When the CRT terminates, the remaining amount is distributed to charities of your choosing. There are specific rules about how a CRT must operate, including how much an individual can receive from a CRT and how long he or she can receive it. In addition, the charities must receive a minimum percentage of the trust assets, based on the beginning balance of the CRT. Due to the various complexities of a CRT, an attorney is essential to create it properly.

The main reason to consider using a CRT is that the trust itself is tax-exempt during its existence (similar to a charity). When you name a CRT as beneficiary of the IRA, the CRT will receive funds from the IRA at your death and not pay any income taxes at that time. When the individual identified in the CRT receives annual payments, he or she will then owe income taxes on the amount received at that time. In addition, a partial estate tax deduction is allowed upon the IRA owner’s death.

These are a few of the many ways to benefit charities, either during your life or at your death. Which way you select can have different tax implications. Giving consideration to income and estate taxes with your charitable giving can ultimately increase the amount received by the charity and your family members/loved ones as well.

DISCLAIMER:

Mission Wealth does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

ARTICLE CREDIT: Greg Smith, CFP®, CLU®, ChFC®, CRPS®

Learn more about SBMM’s Flagship Society – Leave a Legacy through Bequests & Planned Gifts

Filed Under: News

Primary Sidebar

Recent Posts

  • Curator’s Log: Patti Jacquemain & SBMM’s Children’s Gallery Mosaic Mural
  • Curator’s Log: Arthur Beaumont: Art of the Sea │ A Curator’s View
  • SBMM’s Executive Director Greg Gorga presents History & Travels of Point Conception Lighthouse Lens
  • The Deeper Dive Series: Stearns Wharf, Historical Gateway to Santa Barbara with Neal Graffy, Episode 3
  • SBMM ANNOUNCES ITS NEWEST PROGRAM—NOW IN ENGLISH & SPANISH! MARITIME ON THE MOVE

Archives

Categories

  • Archive
  • Boats & Ships
  • Channel Islands
  • Cooking
  • Curator's Log
  • Diving
  • Events
  • Exhibits
  • History
  • Marine Life
  • News
  • Press Releases
  • The Deeper Dive Series
  • Uncategorized

113 Harbor Way, Ste 190
Santa Barbara, CA 93109
805 962-8404 • sbmm.org
501 (c) (3) Tax ID: 77-0392953

MUSEUM HOURS

Closed until further notice
Museum Store
Shop Online
Outdoors SB Visitor Center
Closed until further notice

MUSEUM INFO

  • Hours & Directions
  • Museum Exhibits
  • Upcoming Events
  • Education
  • About the Museum
  • Private Events
  • Museum Store
  • Become a Member
  • Make a Donation
  • Contact Us
  • Privacy Policy

Connect

Receive email updates on our exhibitions, events and more.
*All fields below are required.

© 2021 Santa Barbara Maritime Museum. All Rights Reserved.
NAVIGATION
  • Visit
    • Hours & Directions
    • Outdoors SB Visitor Center
    • Group Visits & Guided Tours
    • SBMM Store
    • Munger Theater
  • Events & Lectures
    • Upcoming Events & Lectures
    • Watch Previous Lectures
    • Private & Corporate Events
  • Exhibits
    • Arthur Beaumont: Art of the Sea – New!
    • Love Letters to the Sea – New!
    • Dwight Brooks Model Collection – New!
    • Virtual Tours
    • Curator’s Log
  • SBMM at Home
  • Education
    • Educational Programs
    • Upcoming Events & Lectures
    • Watch Previous Lectures
    • SBMM at Home
    • The Deeper Dive Series
    • Group Visits & Guided Tours
  • Support
    • Donate Today
    • Membership
    • Navigators Circle
    • Bequests & Legacy Gifts
    • Corporate
    • Volunteer
    • Donate An Artifact
  • About
    • Contact Us
    • Board of Directors
    • Staff & Employment
    • Financials
    • The Deeper Dive Series
    • Our Logbook
    • Press Room
  • Museum Store