Submitted By: Howard
Answered: December 30, 2016 2:04 pm

If I leave my IRA to charity, will that be taxable in my estate?

Charitable contributions are fully deductible for estate tax purposes. Unlike donations for income tax purposes, there are no adjusted gross income percentages or other limits.

However, be sure to note some issues when donating IRAs to charity. If you have a single account for which there are multiple beneficiaries that include individuals (e.g., your child, grandchild) in addition to the charity, this can impact the required minimum distribution rules for the individuals. A better option is to split the IRA into separate accounts, creating one account for charity and separate ones for each of the individuals. Alternatively, if you want to continue with a single account, make it clear to the person you’ve named as executor, and to the individual beneficiaries themselves, to split the account after your death, but no later than September 30 of the year following the year of your death. Splitting the account will allow each of the individual beneficiaries to spread out required minimum distributions over his or her own life expectancy.

Tax Glossary

Home equity debt

Debt secured by a principal residence or second home to the extent of the excess of fair market value over acquisition debt. An interest deduction is generally allowed for home equity debt up to $100,000 ($50,000 if married filing separately).

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