Continue Your Giving Easily
By: Darryl L. Edmonds
Historically, 70% of American families give each year to charity out of their annual income. However, only 6% to 7% of American families make any provision for charity in their estate plan. While there may be a number of reasons for this drastic difference, one big reason is that some people don’t realize how easily they can provide for charity after they are gone.
You can provide for First Presbyterian Church at your death without even changing your will. You can simply change the beneficiary designation of your retirement account. Few people understand that this is also one of the most efficient ways to give. Here’s why.
Retirement accounts accumulate pre-tax dollars. The pre-tax accumulation allows for the principal to grow quicker than if income taxes had to be paid each year. During retirement years, account owners use these assets for their living expenses, but income taxes have to be paid as withdrawals are made. Often, the retiree’s other income is reduced, so their tax bracket is lower. Therefore, the tax triggered by distributions from their retirement account may be in the lowest tax bracket (currently 10%).
Many times, retirement account owners pass away with large account balances. These balances are still pre-tax. Whoever receives a distribution will be required to pay the income tax, based on the tax bracket of the recipient, which is often higher than the retiree’s tax rate. In addition, the estate of retirement account owners may be subject to estate taxes. The combination of income tax and estate tax could cost over 80% of the account balance, meaning that possibly as little as twenty cents of every dollar in your retirement account may be available to your heirs.
Why not consider the option of leaving some, if not all, of your retirement account to your church? Every dollar that is passed to First Presbyterian Church at your death will benefit both you and the church at one hundred cents on the dollar. There will be no income tax or estate tax due on those assets and by making use of this simple technique, you will continue your generous support of your favorite charity by leaving the legacy you desire.
If you would like to explore further this or any other method of planned giving to continue your support of First Presbyterian Church through your estate, please contact me at _________________________.