Leave Us Your “Tax-Burdened” Assets

Certain assets may be heavily taxed if you leave them to family members. These items will produce so-called income in respect of a decedent (IRD) and may cost heirs both income taxes and “death taxes.” We are a tax-exempt organization, of course, and would keep 100% of the proceeds from these items, while another beneficiary might end up with only 30¢ or 40¢, after taxes. Here are some examples:

• Savings Bonds: Your Best Bequest. Many people have some U.S. savings bonds, tucked away in a bureau drawer or safe deposit box. Bonds are a savings tool used by millions of Americans – in part because income taxes on the interest are generally postponed until the bonds are redeemed. Bonds may be subject to heavy federal income taxes and state and federal “death taxes” in a person’s estate, however. Heirs will owe income tax whenever they cash savings bonds, and 45% estate taxes may take an even larger slice (on estates over $3.5 million). You can erase all taxes on savings bonds at death by changing your will or revocable living trust to specifically leave bonds for our benefit.

• Making the Most of Your IRA. People who own IRAs and other retirement accounts may be shocked to learn that 60% to 70% of their accounts can be lost to taxes. A combination of “death taxes” and income taxes can nearly confiscate your savings, with little remaining for your heirs. But you can make us the beneficiary of your IRA and escape taxes 100%. It’s also possible to use your IRA to benefit both family members and our future, with excellent tax results. Retirement death benefits can be transferred to a trust that would pay income for 10, 15 or 20 years to a beneficiary, with eventual benefit to our programs. The trust would greatly reduce state or federal taxes upon your death.

• Other Tax Burdened Assets. Here are some other IRD items that should be selected for charitable bequests: accounts receivable of a professional or business owner, renewal commissions of insurance agents, deferred compensation, last salary check, bonuses and distributions from employee benefit plans, accrued royalties under a patent license, a deceased partner’s distributive share of partnership income up to date of death, payments on installment notes, such as land sale contracts, commercial annuities and employee stock options.

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