A Smarter Way for Families to Leave Charitable Gifts
With the 2025 tax act now extending the higher estate tax exemptions, fewer families will face immediate estate tax issues. But for many families, the real tax challenge remains: income taxes on inherited IRAs.
That’s why leaving your IRA to charity is one of the most powerful estate planning moves available.
- Heirs face steep income taxes. Under the SECURE Act, most non-spouse beneficiaries must withdraw the full IRA within 10 years. Those withdrawals are taxed as ordinary income—often pushing heirs into the top brackets.
- Charities receive 100% tax-free. Qualified charities don’t pay income tax, so your gift goes entirely to your chosen mission.
- Maximize what family keeps. Assets like real estate and stocks typically receive a step-up in basis at death, allowing heirs to sell them with little or no capital gains tax. By leaving IRAs to charity and stepped-up assets to family, you keep more after-tax wealth in the family.
- Planning flexibility. You don’t need to revise your will. Simply update your IRA beneficiary designation to leave a percentage or fixed amount to charity.
Key Takeaway:
Even with estate tax exemptions extended, aligning charitable giving with tax-smart strategies is critical. Leaving your IRA to charity ensures your causes receive the full benefit while your heirs inherit the most tax-advantaged assets, which means more after-tax assets to your family.
Ready to explore whether this strategy is right for you? Contact theKFORDgroup today to review your estate plan and learn how to maximize both your family’s legacy and your charitable impact.
