Today’s Smart Money Question:
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I had some clients in at the end of the year, and they recently updated their wills and beneficiaries. And they’re seriously considering reestablishing residency in another state. One of the things we discussed with their legacy plan is making sure their money is going to loved ones and charities in the most efficient way possible.
“As of right now, the tax code is very beneficial for charities on inheriting IRA type of retirement accounts,” said Matt.
Currently, charities are not going to pay taxes when they receive those funds. These clients have a traditional IRA, a Roth and an after tax investment account. They also have real estate. That means they have money in three different tax buckets. What’s the most efficient way to get those funds to the legacy choices my clients made?
Figure out how much money you want going to charities and individuals. It could be done by percentage or specific dollar amount.
“You want to mitigate taxes by how we want our legacy funds to go,” said Matt.
One of the main questions you have to ask is what is a reasonable amount to leave as a legacy? We see couples all the time who do not agree on this topic. It’s a personal decision, and we encourage couples to have a meeting to discuss this topic.
Listen to the full episode or use the timestamps below to jump to a specific section.
2:28 – Charities and individuals
6:00 – How much money should go to each?
9:50 – Moving to a new state
13:46 – Additional properties
16:35 – Question: What is a reasonable amount to leave as a legacy?
“You want to mitigate taxes by how we want our legacy funds to go.”
-Matt Hausman
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