Estate planning is the process of anticipating and arranging the disposal of an estate.
Required minimum distribution: at 70 1/2 must start taking distributions from your IRA. The required amount is calculated by using your IRA balance as of the preceding December 31 divided by a life expectancy figure (at age 70 this number is 27.4). The RMD is taxable and can also cause your Social Security to be taxed.
Strategies to reduce the tax effects of the RMD:
Donor advised funds: a donor advised fund (DAF) is a vehicle which allows you to get an immediate charitable deduction while continuing to control the disbursement.
Strategies for using a DAF include:
When is the best time to donate?
While you're alive: you get a tax deduction for the contribution; you get the satisfaction of watching your money work; the Foundation gets the opportunity to use the money sooner to continue the work of the foundation.
Upon your death: the money passes through your estate which allows you to keep control of your money while you're alive.
Which is better to give retirement money or non-retirement money upon your death? If you give retirement money to a charity there will be no income taxes paid by beneficiaries. If you have an equal amount of money that you want to leave to a charity and to your beneficiaries it might make sense to donate the retirement account.
In summary: there are numerous opportunities for you make a contribution to the Foundation while you're alive or upon your death. Just know that no matter how big or small the donation it will be put to good use. You can designate what you want your donation to be used for (called restricted use) or you can just donate without any restrictions.
DISCLAIMER: This information is provided with the intention of providing informative materials of a general nature only and is not intended to provide legal or tax advice. Please consult with your legal or tax advisor to determine the legal and tax effects of your personal circumstance.