When considering your legacy, thoughtful reflection of what is meaningful to you guides your decisions. Family, causes you care about and the places and people who have shaped your life are recognized and given significance as they have influenced you and your vision of the future.

But it is also important to consider how your assets are best used to achieve your goals. Giving the wrong asset to a beneficiary can lead to undue tax burdens and your gift may not have the impact you intended. By looking at your assets and the taxable implications for your beneficiaries together, you can create the most effective ways to give to those who are most important to you.

EXAMPLE

Mary is approaching retirement and is revisiting her estate plan. She wants to fund scholarships at her alma mater, and benefit her daughter, Sara, by giving each one half of her estate. She has $100,000 in her savings account and $100,000 in her traditional IRA. If she names Sara as beneficiary of the IRA, Sara will actually receive significantly less than $100,000, as she will need to pay income tax (federal and possibly state taxes, ranging from 10% to 39.6% or more) on the distributions she takes from the IRA. But if Mary leaves the IRA to her alma mater, there will be no income tax due and all $100,000 will fund scholarships. Sara can receive the $100,000 from the savings account and it will not increase her taxable income.

Beneficiary designations to charities are an easy way to achieve the maximum benefit of your giving. To make this kind of gift, simply request a Beneficiary Designation Form from your plan administrator and designate “Carnegie Mellon University, or its successor, Federal Tax Identification Number: 25-0969449” as a beneficiary for your IRA account, using either a percentage or dollar amount for your gift. You can also designate how you would like CMU to use your gift on the form as well. It’s that simple.

As always, ask for professional advice to make sure your plan is tailored to meet your needs. We welcome your tax and investment advisors and attorneys to join us in creating a comprehensive plan that is right for you.