Envision - Summer 2012 - (Page 10)

PL ANNED GI V ING A Tax-Wise Plan Source of bequests will affect whether beneficiaries end up paying higher taxes John Elbare, MBA, CFP, Healthcare Foundation Planned Giving Officer 10 s you decide to include charitable giving in your estate plans, be sure to consider the tax implications. Some gifts you might consider leaving to family members carry tax “time bombs” that can greatly reduce the value of the inheritance. If you are mindful of these consequences, you can avoid them and put together a plan that is truly tax-wise. Taxable inheriTance: If you name a child or other relative as a beneficiary of your IRA or qualified retirement plan, they must pay income taxes on the money they receive. These accounts are funded with pretax assets, and all money will be taxed when it comes out. This rule applies to traditional IRAs, 401(k) and 403(b) plans, and similar saving plans that are funded with pretax dollars. It does not apply to Roth IRAs, which are funded with aftertax dollars. Family members: While your IRA beneficiaries do not have to take any funds out immediately, they will need to take distributions sooner or later, and those distributions will be taxable. For example, if you name a child as your sole beneficiary on your IRA, and if you die with $100,000 in the account, your child will need to pay income tax on every dollar he or she withdraws. Depending on your child’s tax bracket, your $100,000 gift could be reduced to just $65,000 by income tax. A chariTable beneFiciary: On the other hand, if you name Sarasota Memorial Healthcare Foundation, Inc. as an IRA beneficiary, the Foundation will receive every single dollar and pay no income tax. This is because the Foundation, as a public charity, is tax-exempt. sTep-up in basis: The most tax-wise gift for children and other family members is often made from appreciated stock. If you own an investment portfolio of highly appreciated stock, your child can inherit them without paying any income tax. Even better, your child is entitled to a “step-up in basis” so that the cost basis of the inherited stock is reset to its value on the date of your death. Not only does your child avoid income tax on the inherited stocks, but he or she also avoids the capital gains tax that you would have paid if you had sold the stock. make The righT choice: Whenever possible, make your charitable bequests from IRA accounts, and make family bequests from non-IRA investment accounts. You will save your loved ones a lot of taxes and get your money where you want it to go. PHOtOGrAPH (BOttOM) By tHinkstOCk save on Taxes while saving lives For information about the Foundation’s legacy of life planned giving program, call 941-917-1286.

Table of Contents for the Digital Edition of Envision - Summer 2012

Envision - Summer 2012
Opening Thoughts
Contents
Health Beat
Setting the Table
Timing Is Everything
Planned Giving
A Most Welcome Assist
Community-Based Cancer Care
Earlier Diagnosis, Earlier Treatment
A Community Legacy
At the Frontier of Brain Research
A Roaring Good Time
Nutrition
News and Events

Envision - Summer 2012