03/25/2025
Beneficiary Designations – an Easy Way to Make a Lasting Legacy
Kaliff
Matthew A. Kaliff | SPECIAL TO THE CJN
Article reprinted with permission from Cleveland Jewish News
One of the most tangible ways to create a lasting, meaningful impact on your community is through a charitable bequest. While wills and trusts are the most common methods for doing so, beneficiary designations offer a simple and effective complement to these estate planning tools.
A beneficiary designation allows you to instruct the custodian of a financial account to pay all or a portion of the assets to one or more charitable organizations upon the account owner’s death. This method works independently of a will or trust and avoids the probate process. Most people have at least one type of asset that they can readily use to make a legacy gift through a beneficiary designation. Consider these examples:
Retirement Accounts
A retirement account such as an IRA or 401(k) can be an excellent resource for a bequest to charity. Many people will not use all their retirement assets during their lifetime. If you leave your retirement account to heirs other than your spouse, they may have to pay a significant amount of income tax on the amounts they receive. Charitable organizations, in contrast, can receive the same assets as a bequest without tax consequences. Thus, the full value of the be-quest from a retirement account can go to support the good work of the charity of your choice. Meanwhile, you might consider nonretirement assets for heirs, which may be more tax-efficient for them.
Bank Accounts, Investment Accounts, U.S. Savings Bonds
Payable on death accounts allow you to instruct the financial institution to pay all or a portion of the account balance to a charitable organization after your lifetime. This format typically applies to checking and savings accounts, CDs, and U.S. Savings Bonds. Similarly, transfer on death accounts let you tell brokerage institutions to contribute securities and other investment assets in an account to a charitable organization.
Life Insurance
If you have a fully paid life insurance policy that has outlasted its original purpose, you can designate a charity to receive all or some of the policy benefit. You can also contribute the policy directly to a charity during your lifetime, which may qualify for a charitable tax deduction.
How to Make A Designation
In each of these examples, you simply need to fill out a beneficiary designation form from the appropriate institution. Most institutions make their forms available online. Periodically review your beneficiary designations to ensure they are correct and reflect changed circumstances.
Always consult with your legal, financial, or tax professional before making important financial decisions. Letting the charitable organization know you have named it as a beneficiary will en-sure your bequest is administered according to your intentions.
Matthew A. Kaliff is senior director of endowment development and supporting foundations at the Jewish Federation of Cleveland in Beachwood. This article is for information purposes only. Consult with your own financial or tax advisers when making financial decisions.
