Charitable Beneficiaries on an IRA
Hi,
I have a client that is listing several charities and individuals as the contingent benes on his IRA. His wife is his primary bene.
He wants to know if there is anyway for there to be strings attached as to how charities spend his IRA money if they inherited. He is listing 8 charities and 3 individuals as the contingents. For example, he wants some of the charities to spend the IRA $ on specific goals/projects within the charity and not used for salaries, administration or education.
We don’t have a place on our IRA bene form to get this specific/descriptive. Is this even possible to accomplish? One thought I had is whether the successor trustee could send a letter to those charities when my client and his wife die stating that it is their desire that those IRA funds be used by the charity in a specific manner.
Any thoughts?
Permalink Submitted by Alan - IRA critic on Tue, 2022-12-06 02:23
IRA custodians only have a duty to make sure that distributions are only made to beneficiaries that submit documentation showing that they are the IRA beneficiary. Custodians are not in a position to accept beneficiary language that would expand on this duty and their responsibilities. The client may consider using QCDs after 70.5 where he can investigate the charity currently, and determine their operations and overhead, then make the QCD donation before things change at the charity, such as losing a key director. Client should also be aware that charities do have legitimate overhead and operating expenses to be efficient and deliver real assistance, therefore a charity with little overhead might reflect inefficient business practices. Since money is fungible after donation, the charity could easily allocate his donation to his specified activities, then allocate other money away from those save activities leaving those activities funded the same as before the donation. Client may also consider leaving a part of the IRS to a donor advised fund, whereas a QCD cannot be directed to a DAF.