A Very Significant Asset

Retirement plan assets have replaced the home as the largest asset owned by the typical family. Because retirement assets may be substantial in size and because they may be subject to both income and estate taxes at death, they are often considered a preferred asset to give to charity. They may be donated at death to the Foundation, by beneficiary designation form, to fund an endowment, or they may be donated the same way to fund a charitable remainder trust for family. The agreements to receive these at-death gifts need to be prepared while living.

An illustration of a Trust for Family Funded with a Retirement Asset


Henry Thompson, a widower, is 72 and has been withdrawing his RMD or Required Minimum Distribution from his individual retirement account (IRA). He hopes to continue withdrawing just the minimum amount and then pass the remainder to his children. Henry is active in supporting benevolent causes through his church and would like to ensure that this ministry is provided for beyond his lifetime. He decides to meet both objectives by naming the foundation as the beneficiary of his IRA for the purpose of funding a 20-year-term Charitable Remainder Unitrust for his children. The Baptist Foundation assists his attorney in getting an unfunded trust agreement in place. At his death, the IRA assets will be transferred to the Foundation, and no income taxes will be owed on the gift. Because Henry’s estate is sizable and will likely be subject to estate taxes, the unitrust will provide needed estate tax relief for a portion of the gift. The trust will make sizable payments to the children for 20 years, and they are only taxed on the income as they receive it. He is able to pass significant assets to the children over time and also ensure that his support for Kingdom work will continue through a permanent endowment fund.

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