Leaving Gifts through Wills, Trusts, IRAs and more
Foggy Bottom West End Village (“FBWEV”) gratefully accepts bequests from Wills, Trusts, IRAs, Life Insurance, and other instruments. People who remember The Village in their estate recognize that non-profit organizations depend upon the generosity of others to perpetuate their mission. For a young organization such as FBWE Village, this is especially true. All gift amounts are confidential.
Things to Consider
There are many ways to bequeath money. Which option you select may depend upon your marital status, your financial circumstances, how much you wish to leave to family members, and other considerations. You should ask your estate planner or lawyer which is best for you.
How to Leave Money to FBWEV
No matter which vehicle you chose, your bequest should name Foggy Bottom West End Village, Tax ID: 46-1760040, as the beneficiary. You do not need to notify us of this bequest; however if you wish to be honored in the FBWEV Legacy Society (see below), we need to be notified of your intentions. We will hold in confidence any supporting documentation you send.
Regardless of your financial circumstances, one of the best ways to leave money to non-profits is through a Traditional IRA (not a Roth IRA). It’s easy to do, and it’s very tax efficient.
There are no legal fees involved. Simply go to the financial institution that manages your IRA and ask for a beneficiary form. Add FBWEV to the list, assign it a percentage of the total, and you’re done.
A Traditional IRA left to an individual is taxed. Possibly twice. Or even three times! All of these are avoided if it is left to a tax exempt organization.
Example: You want to leave $100,000 to a family member, so you designate her in your IRA beneficiary form. While she pays no tax when she receives this IRA from your estate, at the time she withdraws from it she pays ordinary income tax (about 28% today, depending on the recipient’s tax bracket) on 100% of the value. So she has only $72,000 remaining. The better way to leave money to a family member is through a Will or Trust, as the recipient usually pays no tax on the bequest. Instead, use the IRA vehicle for bequests to non-profit organizations.
Furthermore, if you live in D.C., the city currently imposes a tax (up to 16%) on estates that exceed $1.0M.* And if you have an estate over $5.4M** it’s taxed at 40% under federal statutes. Combining the taxes paid by the estate and by the beneficiary, only $16,000 of the original $100,000 remains!
Naming FBWEV as the beneficiary of your Traditional IRA keeps the money out of your D.C. and federal estate tax calculations, AND it reduces the recipient’s tax liability.
Who Should Consider Leaving Money to FBWEV Through an IRA?
- Anyone intending to leave money to a charity in their estate. This is especially true for single people. However if the remaining spouse doesn’t need to live off all the principal of the IRA, then it makes sense for them as well.
- Alternatively, if you’d like to give money now, but you need to live off your capital, naming FBWEV on your IRA beneficiary document is an excellent solution.
Talk to Your Retirement Professional
There are many factors to consider in estate planning, so please talk to a professional. Because FBWEV accepts bequests from just about every estate instrument, you and your advisor have many options to choose from. For many people, Traditional IRAs are a smart way to remember FBWEV in your estate.
* there is a proposal to make the DC threshold the same as the one for federal
** there is a proposal to reduce the federal threshold to $3.5M
FBWEV Legacy Society
FBWEV recently established the FBWEV Legacy Society to thank and recognize those who name our organization in their estate plans…those who believe in our mission to help members live independently at home as long as possible. No bequest is too small to be recognized, and all manner of bequests (IRAs, Will, Trusts, etc.) qualify. Please reach out to us by using the contact information below.
The FBWEV Legacy Society members will be recognized on our website and in our annual report. The size of each bequest will be confidential, and individuals can be listed as “Anonymous” if they prefer. In addition, members will be invited to attend a special event. More on that will follow.
Many societies are social, some economic. Many are inclusive, others elitist. We consider ours an honorary society of the highest order, recognizing those who choose to give back to our wonderful community. We hope you’ll consider joining this very special group.