How to Best Leave an IRA to Charity
Charitable giving can become messy when it involves multiple beneficiaries and retirement and nonretirement assets.
Note: This article is part of Morningstar's 2018 Guide to IRAs special report. A version of this article appeared on Aug. 12, 2017.
Question: I want to leave my estate, which includes a substantial IRA and other assets, to a collection of individual and charitable beneficiaries in varying percentages. Some of the charities are big and some are small churches or 501(c)(3)s. It would make sense to fund the charities' shares with the retirement benefit asset (the IRA) because the charities will pay no income tax on the IRA proceeds, whereas if the individuals' shares are funded with IRA assets their net inheritance will be reduced by income taxes. Is there a way to accomplish this?