Retirement accounts (or any assets subject to income tax, like U.S. Savings Bonds) are great choices for charitable bequests because they can be so heavily taxed in an estate. Naming a non-profit such as YMCA Camp Tecumseh as the beneficiary of a qualified retirement plan is becoming an increasingly popular way to give.

Because of taxation of qualified plans, a large portion of the assets in the plan may end up going to the government rather than family members or beneficiaries at your death. For federal estate tax purposes, the value of qualified retirement fund assets are included in your gross estate and are also taxed when received by the beneficiaries as income.

Funding a charitable gift to YMCA Camp Tecumseh with these assets generates an estate tax charitable deduction and as a charitable 501 C 3 organization, YMCA Camp Tecumseh will not have to pay income tax on the assets when they are received. Using retirement plan assets as a gift to Camp Tecumseh and other assets for family members can be beneficial to all. The transfer must be carefully planned, so be sure to talk to your professional advisor.

Mrs. Smith, and her husband, before his death, carefully saved throughout their working years in their retirement accounts. Mrs. Smith also has other investments and a house. Luckily, the retirement accounts have grown large enough so that Mrs. Smith has more than enough to support her through retirement. She plans to leave most of her estate to her children and make bequests to several charities she cares about, including YMCA Camp Tecumseh. Her advisor has told her that any assets left in the retirement accounts after her death will face both income and estate tax - her children may get little more than 20% after taxes. If she leaves the retirement accounts to charity, charitable deductions eliminate all the tax on the accounts.

A logical choice for Mrs. Smith is to change the successor beneficiaries of the retirement accounts to YMCA Camp Tecumseh and her charities of choice, leaving her other, less heavily taxed assets to her children. Everyone benefits including campers for generations to come.