You have the option of naming one or more beneficiaries on many of
your assets including bank accounts, insurance policies, retirement
plans, and other personal property.
With some assets, such as bank accounts, you can create a Payable on
Death (POD) designation. A POD authorizes the transfer of specific
assets to another person after you die. One advantage of a POD is that
the transfer occurs without going through probate.
Other assets, such as insurance policies and retirement accounts,
allow you to name one or more beneficiaries who will receive the
remaining assets after you die. Again, the beneficiary listing is
valuable because the transfer occurs without going through probate.
Those who wish to make a charitable contribution through their estate
plan can use a POD or beneficiary listing as a way to designate a gift
for charity. There are three benefits to such designations: (1) you do
not have to change your will to make these designations; (2) beneficiary
designations can easily be changed if you wish to designate a different
charity in the future; and (3) your designated charity will receive the
donation quickly without the delays of probate.
Here are some examples:
Example 1: Pete
doesn't have a lot of wealth, he doesn't own a home, and no longer owns
a car. He has a number of CDs at the bank along with a checking account
and savings account. Since Pete has no heirs, he wants to leave his
assets to his church. To make things easy, he goes to his bank and
creates Payable on Death designations for each account. By doing this,
he maintains total control of his assets while alive, and then those
assets will transfer smoothly to his church after he dies.
Example 2: Randy
and Jean are not rich, but they have accumulated some assets over the
years. They want to create an estate plan that provides for their three
children, and they also want to give a charitable gift for their area
Lutheran high school. One problem, however, is that Randy's job requires
him to move frequently. Since they want to give their charitable gift
to the school in the area in which they live, they are fearful that they
will have to modify their will every time they move. After discussing
this concern with their professional advisors, they decide to use their
retirement plans as their charitable gift, and split the rest of their
estate among their children. Each time they move, Randy and Jean simply
change their beneficiary designations on their IRAs so they list the
school in their area. This does not cost them any money, and the Change
in Beneficiary form is easy to complete.
Example 3: Joe
and Betty are living on a fixed income and are very frugal with their
money. They have a fairly small estate, but they still hope to leave a
nice inheritance for their grandchildren and a gift for KML. Since the
death benefits from their life insurance policies are tax free, they
name their grandchildren as beneficiaries on those policies. They list
KML as the beneficiaries on their IRAs for two reasons: (1) those are
taxable benefits, but designating KML as the beneficiary, there will be
no tax consequence on that gift; and (2) this decision allows them to
make a charitable gift and still leave a nice inheritance for each
Beneficiary listings are easy to designate, they
provide direct distribution of assets without going through probate,
and they are handled without the need to modify your will. As with all
estate planning decisions, consult with your financial or
estate-planning professional before making any significant decisions
regarding beneficiary designations.
To discuss a planned gift to KML, contact your KML Estate Plan and Deferred Gift Counselor,
Paul Snamiska, at 262-677-4051 x1116 or email@example.com.
The information that is provided on this site is for educational purposes only. Consult your personal tax consultant, attorney, or financial planner for specifics that apply to your personal situation.