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.
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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.