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A Bequest to Save Taxes

A Bequest to Save Taxes
Margot was a widow who had a great love for the Jewish Federation. As an individual who had directly benefited from its work, she wanted to thank the Federation with a gift from her estate.

Margot told her attorney that she wished to make a bequest to the Federation. Her estate included some stocks, real estate and an IRA. Margot's attorney recommended that she give the appreciated stock and real estate to her children and leave her IRA to charity.

Margot: My attorney told me that if I gave the stock and real estate to my children, these assets would receive a step-up in basis at my death. My children could then sell them without paying tax. However, if I gave my children my IRA, the IRA would be subject to estate and income tax. After paying all of these taxes, very little would be left for my family. By giving the IRA to the Federation, I could make a nice gift and avoid any additional tax for my estate and children.

Margot contacted her IRA custodian to obtain a beneficiary designation form. She filled out the form and designated the Federation as the 100% recipient of her IRA account. Margot's attorney then specified in Margot's will the bequest of her other assets to her children.

Margot: I was so impressed with my attorney's advice that I named him executor of my will!

Margot called and notified the Federation staff that she had designated the Federation as beneficiary of her IRA. Margot was pleased that because the Federation is a tax exempt institution, it would receive the full amount of the IRA value when she passed away. The proceeds will be used to fund a Lion of Judah Endowment fund in Margot's name, creating a legacy for the future. The Federation recognized Margot in its Book of Life and presented her with a certificate that she proudly displays for her children and grandchildren to see. Her gift will demonstrate to them the importance she places on nurturing and sustaining the Jewish community.

If you don't have any qualified retirement savings, you may want to include a bequest in your will. Contact your local Federation for bequest language. To find your local Federation, you may search via our Federation Finder. If you live within The Network of Independent Communities and are considering a bequest to The Jewish Federations of North America (JFNA), you can find bequest language here. You might find it helpful to select the "print" button at the top of the screen and give a copy to your attorney. He or she can contact us with any questions by phone at 212.284.6639 or by e-mail at gail.gordon@JewishFederations.org.

Review sample bequest language here.

*Please note: The name and image above are representative of a typical donor and may or may not be an actual donor to JFNA, a Jewish Federation or a Jewish Community Foundation.

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Any tax consequences described on this page are based on U.S. federal tax law. Charitable deductions from state and local taxes or from Canadian and provincial taxes may not be available to the same extent as from U.S. federal taxes. The Jewish Federations of North America (JFNA) does not provide legal advice. Donors are encouraged to seek independent tax and legal counsel. You may read JFNA's charitable solicitation disclosure statement here and important information about endowment gifts and bequests to JFNA here.