While most people would like to care for family members after they are gone, the problem with giving your unspent retirement savings to your family (other than your surviving spouse) is that the majority of your savings will be taxed. First, the asset will be included in your estate and may be subject to estate tax.  

Family members will pay tax at their ordinary income rate resulting in very little of your remaining money actually going to your family.

The better solution is to give your family the assets that step-up in basis at death such as stock and real estate. Unlike your retirement assets, these assets may be received and sold by your family without paying any tax. If you are looking for ways to save on estate tax, your retirement assets actually make a better gift to charity. This is because a charitable organization like ours can receive the entire asset tax-free and make use of it to further our mission.  

Kenneth Kossoff, an estate planning attorney and longtime CscVvsb board member, agrees:

"I explain to clients that if they want to name a charity, it's a good idea to name the charity on a retirement account, so the charity gets 100% of the money, and to name family members or other non-charities on the assets which will not be subject to income tax when distributed after death. Gifts to charities are a wonderful way to leave a legacy - even if you want to do so anonymously. It is a lasting and powerful to say thank you to a charity which has helped us, or which we know helps other people." 

Want to learn more? Click here for a brochure on the advantages of using retirement assets to leave a legacy of support. 

For information on the many Planned Giving options available to you, click here.