The 3 Easiest Ways to Leave Your Legacy
Although many people think of a will as the easiest way to transfer assets after their lifetime, it doesn't cover everything. In fact, retirement plans, IRAs, life insurance and commercial annuities are not controlled by the terms of your will, but instead use separate beneficiary forms to determine who receives them. These beneficiary designations pass outside of your will, making them effective and easy ways to leave a legacy.
1. Retirement Plans and IRAs
A retirement plan or IRA is typically the largest source of assets that generate taxable income when paid to a beneficiary. Therefore, if you are considering a gift to our organization after your lifetime, it is usually better to leave taxable assets to us and give nontaxable assets (such as stocks and real estate) to your loved ones.
To complete your gift, simply contact your retirement plan or IRA administrator (or visit their website) and complete a beneficiary designation form naming our organization as beneficiary and the percentage you'd like us to receive (1-100). Then mail it back to the plan administrator and keep a copy for your records. Beneficiary forms are filled out on your terms and can be changed at any time.
Example: Dan would like to leave our organization his $100,000 IRA after his death. If he names us as the beneficiary for 100 percent of his IRA, we would receive the entire $100,000 to help fulfill our mission. By comparison, if Dan leaves the IRA to his sister, she will owe a sizable amount of the IRA to income taxes.
Compare the Tax Consequences
$100,000 IRA Left to Dan's Sister vs. Our Organization
|Chosen Beneficiary||Sister||Our Organization|
|Value of Dan's IRA at his death||$100,000||$100,000|
|Federal income taxes (assumes 24 percent marginal income tax bracket)||$24,000||$0|
|Net amount to beneficiary||$76,000||$100,000|
2. Life Insurance Policies
Maybe you once needed life insurance for your loved ones, but now your family's requirements have changed. Why not use the insurance policy to help advance our mission? Not only will you make a substantial gift at a relatively low cost, but it is revocable at any time should you need to change your plans.
You can designate our organization as the beneficiary for a percentage of your life insurance policy's death benefit. You choose whatever percent you desire. To complete your future gift, you can either contact your insurance company or agent and request and complete a beneficiary designation form or download the form from your provider's website. Then mail it back to the insurance company. Keep a copy for your records.
3. Commercial Annuities
Commercial annuities are tax-heavy assets to own, similar to retirement plans and IRAs. They carry an income tax burden when paid to your named beneficiary. The income tax is due on the growth of the annuity—in other words, what its value is worth when you die over what you paid for it. The tax burden makes these assets another popular choice to leave to a tax-exempt organization like ours.
Similar to the process for making gifts of retirement plan assets and life insurance, to complete a gift from your insurance annuity, contact your insurance company or its agent for a change-of-beneficiary form for the annuity. Decide what percentage of the annuity's value you would like us to receive and name us along with the stated percentage on the beneficiary form. Then mail it back to the insurance company and keep a copy for your records.
How to Obtain Beneficiary Forms
(if you prefer not to download from their website)
Retirement plans and IRAs. Contact the administrator of your retirement plan or IRA.
Life insurance. Contact the life insurance company or your agent.
Insurance annuities. Contact the insurance company or your agent.
The Importance of Updating Your Designations
Beneficiary designations can be modified at any time to meet your changing needs. Your assets may never reach your intended recipients if you've failed to keep the beneficiary designations up to date. Experts suggest reviewing them every two to three years when you review your entire estate plan. Also be sure to notify the beneficiaries so they can claim the proceeds.
We want to work with you to create a gift that best fits your circumstances and our needs. To learn more about the benefits of designating our organization as beneficiary of your retirement assets, life insurance or insurance annuities, please contact us today.
- Contact Jesse D. Pisors at (361)570-4829 for additional information on beneficiary designations and how they can help support University of Houston-Victoria with our mission.
- Talk to your financial or legal advisor to learn which assets will or will not trigger taxable income when paid to a beneficiary.
- If you name University of Houston-Victoria in your plans, please use our legal name and Federal Tax ID.
Legal Name: University of Houston-Victoria
Address: 3007 N. Ben Wilson, Victoria TX 77901
Federal Tax ID Number: 74-6001399
The information on this website is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.