AVENUES FOR giving
- University of Hawaiʻi Foundation
2444 Dole Street
Bachman Hall 105
Honolulu, HI 96822 - Phone: (808) 956-8849
Toll Free: 1 (866) 846-4262
Fax: 808-956-5115 - Send email >>
Planned Gifts
Beneficiary Designations
John Williams has an estate of $2 million, which includes an IRA of $200,000. John is a longtime supporter of the University of Hawaiʻi and, therefore, he wants to give one-tenth or 10% of his estate to UH. In particular, John wishes to create an endowed scholarship in the name of his mother, Betty Williams. John is thinking about including a charitable bequest in his will to accomplish his giving goals. Accordingly, at his death, his estate would distribute $200,000 to UH. John is in poor health and wants to implement this goal as quickly as possible.
As an alternative to amending his will, can John accomplish the same goals using a beneficiary designation gift? What are the benefits of this type of planned gift?
John can simply fill out a new IRA beneficiary designation form listing the UH Foundation as the primary beneficiary of his $200,000 IRA. It is important to remember that the beneficiary form -- not John's will -- controls the final disposition of John's IRA. Fortunately, the form is very quick and easy to complete, and it does not require an attorney. Thus, John can make the changes himself and submit the form directly to his IRA custodian.
The transfer of John's IRA to the UH Foundation at his death is also great from a tax standpoint. If left to John's family, the IRA is subject to both estate and income tax, which could be as high as 70%! However, if left outright to the UH Foundation, the IRA will not be subject to estate or income tax. Therefore, 100% of the IRA balance at John's death would be distributed to UH with nothing going to the government. The rest of John’s "good assets" will pass to his children. Accordingly, John takes care of his family financially while at the same time establishing an endowment to benefit UH in perpetuity.
Based upon all of these positives, John completes a new beneficiary designation form naming the UH Foundation as the 100% primary beneficiary. Not surprisingly, John feels a great sense of pride and comfort knowing that his IRA will benefit UH for many years. Additionally, from a tax standpoint, this solution is very effective since no income or estate tax will ever be paid on the IRA balance.
Beneficiary designation forms are a simple but powerful estate planning tool. For more information on beneficiary designation planning, please email giftplanning@uhf.hawaii.edu or contact Lani Starkey at 808-956-8034.