Recently I corresponded with Planned Giving attorney Carolyn Farren and PRBO Board member Rigdon Currie, to discuss the tax benefits of designating charitable organizations as beneficiaries of Individual Retirement Accounts (IRAs).>P>
|Carolyn Farren in Bhutan, at Tiger's Nest in the Himalayas, November 2002.|
Carolyn Farren is a certified specialist in probate, estate planning, and trust law with offices in Marin County and San Francisco. She has served on the boards of several nonprofit organizations in the Bay Area, including Audubon Canyon Ranch, and has graciously agreed to lend her expertise to PRBO and our members. Rig Currie has served as a member of PRBO's Board of Directors since 1998.
Observer: Rig, you've been a member of PRBO's Tern Society for 5 years. Why did you decide to include PRBO in your estate planning?
Rig: PRBO does unique conservation work. As a pragmatic conservationist, I believe that productive conservation must be based on solid, efficient research. And that is precisely PRBO's mission. I also like PRBO's focus on using bird activity as an indicator of the health of a habitat. I guess this approach appeals to my passion for birds. So my wife Trish and I decided to leave PRBO a significant portion of our estate.
Observer: Why IRAs?
Rig: IRAs left to heirs are taxed most heavily, not just with estate taxes but particularly with income taxes. These taxes can be avoided by leaving IRAs to nonprofits like PRBO and other assets to heirs. In fact, you can enable heirs to draw on IRA assets for a time, with the residual going to a nonprofit. That way, everyone wins.
Carolyn: Rig's correct: all Individual Retirement Accounts are subject to income taxation when they are withdrawn by an individual. However, charities such as PRBO do not pay income tax. By designating PRBO as the beneficiary of his IRA upon his death, Rig ensures that PRBO receives 100 percent of the value of the IRA and that all of those tax-deferred assets are used to carry out PRBO's important work.
Observer: Rig, how did you designate PRBO as a beneficiary of your retirement accounts?
Rig: The correct designation for naming PRBO as a beneficiary is: PRBO Conservation Science, Stinson Beach, California.*
Carolyn: There are a few other things to keep in mind regarding gifting IRAs. First, be sure to consult with your financial advisor, attorney, or accountant when you name a beneficiary for your retirement accounts. You should also note that you can always amend your designations with a name and new or different beneficiaries, should your circumstances change. It's also worthwhile to mention that you can choose to designate all or simply a portion of your IRA to charitable organizations.
Rig: One final thought about the importance of planned gifts is that the future of any dynamic nonprofit like PRBO will be dependent on planned giving. If enough of us who love the work PRBO does make it a vital part of our estate planning, PRBO's future will be assured. I can't think of a better way to leverage one's conservation dollar.
* Designating Point Reyes Bird Observatory will also suffice.