Charities as Beneficiaries of IRA’s
I have more than one client with large IRA’s and are charitably inclined. Do you have any recommendations on wording the beneficiaries so that it is clear that the charities get paid out first, then the “regular” people heirs?
Permalink Submitted by Alan - IRA critic on Mon, 2024-04-22 20:19
I don’t think an IRA custodian would accept such a custom beneficiary designation because it could lead to RMD delinquencies. As long as the charity is notified of the death, it would be very rare that they would not proceed rapidly for a lump sum distribution of their share. The individuals should create separate inherited IRA accounts by the deadline and if so they would not be negatively impacted by any delay in the charity receiving their distribution.
This may be more if an issue if the IRA is going to the estate and under the control of an executor, who might be a barely competent family member. But it’s rarely advisable to leave an IRA to the estate.
Permalink Submitted by Bruce Steiner on Fri, 2024-04-26 19:59
It’s complicated. Make sure you’re working with a good trusts and estates lawyer.
To minimize the complexity, I would suggest leaving percentage or fractional shares of the IRA to charity, topping the charities off in the Will, and updating the percentages or fractions periodically.
Bruce Steiner