Three Charitable Strategies for Clients with IRAs and Retirement Plans

Jim Lange will describe and analyze multiple strategies that will offer your clients some exceptional incentives to leave more money to charity. They are tax-savvy. They will definitely benefit the charity and have the potential to benefit the family…all at the expense of the IRS.

The first innovative strategy compares the outcomes of (1) leaving an IRA or retirement plan to the children (or any non-spousal heir) and (2) leaving the same money to a charitable remainder unitrust (CRUT) with the heir as the “income” beneficiary of the CRUT.

Before the 2020 SECURE Act, CRUTs were rarely named as beneficiaries of IRAs. But with the income tax-nightmare provision in the SECURE Act mandating that IRAs must be distributed and taxed within ten years of the IRA owners’ death—subject to some exceptions--everything has changed.

CRUTs as the beneficiary of an IRA offer a key exception to the ten-year income tax acceleration nightmare. CRUTS come as close to the old “stretch IRA” as you can get. This strategy will significantly reduce the short-term income tax bill that the family would otherwise be forced to pay.

This strategy will not be broadly appropriate for all IRA and retirement plan owners. But it will be appropriate for many. We will examine some appropriate situations and provide the theory and math behind the decisions.

We will also review a simple strategy that is commonly botched: which dollars (IRA, investments, after-tax) to leave to a charity. Lange Legal Group has reviewed more than 1,000 estate plans drafted by other lawyers and it is rarely treated correctly.

The webinar will also cover charitable strategies for clients with children of different financial strengths. For example, it might make sense for a child in a high-income tax bracket to inherit a Roth IRA and/or after-tax dollars. A child in a lower tax bracket or a child who does not manage money well could be named as the “income” beneficiary of the CRUT. Often both children are better off. Once again, the loser is the IRS and/or potential creditors of the child with money management issues.

Finally, if time allows, we will review qualified charitable deductions (QCDs).