Beneficiary Designations
Easy Ways to Leave Your Legacy
Many don’t realize that retirement plans, IRAs, life insurance, donor advised funds and commercial annuities are not affected by a will. These accounts are dispersed according to beneficiary designations. The forms are often easier to update than a will, making them simple ways to leave a legacy.
- Retirement Plan or IRA
Typically this is the largest source of taxable income when paid to a beneficiary. If you are considering a gift, it is usually better to leave taxable assets like retirement plans to the University of Nebraska Foundation and give other assets like stocks or real estate to loved ones. - Life Insurance
A gift of life insurance is a good way to maximize your impact. By naming the University of Nebraska Foundation as beneficiary, your small premium payments transform into a sizable gift. Plus, it is revocable at any time if your plans change. - Donor Advised Funds
A donor-advised fund (DAF) gives you flexibility to recommend how much and how often money is granted to the University of Nebraska Foundation and other charities. You can turn your DAF into a lasting legacy when you name the foundation as beneficiary. Simply contact your fund administrator and request a change in beneficiary form. For detailed information or help completing the form, please contact us. - Commercial Annuity
Annuities are tax-heavy assets. Income tax is due on the growth of the annuity — in other words, what its value is worth when you die over what you paid for it. The tax burden makes these assets another popular choice to leave to a tax-exempt organization like the University of Nebraska Foundation.
How to Make It Happen
Making the University of Nebraska Foundation the beneficiary of your retirement plan assets, IRA, life insurance or commercial annuities is easy:
- Contact the institution that controls the asset for a change in beneficiary form. Many have the forms on their website available for download.
- Decide what amount of the account value you would like the University of Nebraska Foundation to receive, between 1% and 100%.
- Name University of Nebraska Foundation as the beneficiary.
- Return or submit the form as directed by the institution.
- Notify the beneficiaries so they can claim the proceeds at the appropriate time.
Keeping Designations Up to Date
Beneficiary designations can be modified at any time. Experts suggest reviewing them every two to three years when reviewing your overall estate plan. This way you can ensure your assets reach the intended recipient(s), even as your needs change.
Consider This Example
Jordan would like to leave the University of Nebraska Foundation a gift after passing, but would also like to leave something for a family member, Pat. Jordan is trying to decide where a $100,000 IRA should go. Naming the University of Nebraska Foundation as the beneficiary for 100 percent means we would receive the entire $100,000 to help fulfill our mission. By comparison, if Jordan leaves the IRA to Pat, a sizable amount of the IRA would be subject to income taxes. Jordan should consider passing other assets — like appreciated stock — to heirs and gifting the IRA to charity.
| The value of Jordan’s IRA at death is $100,000. | ||
|---|---|---|
| Chosen Beneficiary | Pat | the University of Nebraska Foundation |
| Federal income taxes (assumes a 24% marginal income tax bracket) |
$24,000 | $0 |
| Net amount to beneficiary | $76,000 | $100,000 |