Bequeathing IRAs: The Case for Charitable Remainder Unitrusts

February 8, 2016
Tax Notes

Types : Bylined Articles

I. A Bold Claim

For most healthy adult children of upper-middle-income families, the after-tax amounts to be received over a lifetime from an inherited IRA will be equivalent to the after-tax distributions made by a charitable remainder unitrust (CRUT) that receives the same IRA for their benefit. Conventional wisdom holds that the “stretching” an IRA — taking only the required minimum distribution (RMD) — produces an unbeatable tax deferral advantage. However, bequeathing an IRA through a CRUT is often a superior plan because distributions from a CRUT can be taxed at capital gains rates.


This article was originally published in the February 2016 issue of Tax Notes. Please click here to download the PDF and read the full article.



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