The most tax-efficient way to fund a charitable gift can be with retirement plan assets. The simplest way to accomplish this is to designate Carleton as a beneficiary of all or a portion of your retirement funds at death. This gift will escape all taxes. The cost of such a gift may be as little as 30 cents on the dollar.

Maximizing Your Heirs' Inheritance

Example:

Sarah has $1 million in retirement plan assets plus other assets worth $3 million. She would like to make a testamentary gift of $1 million to Carleton and leave the rest of her estate to her two children. How she structures her gift to Carleton can affect the size of her children's inheritance.

Option 1: IRA assets to children

---

Total estate	$4,000,000
Gift to Carleton	-$1,000,000
Federal estate tax (2007)*	-$450,000
Federal income tax on IRA**	-$206,800
Total Tax	-$656,800
Total estate assets to children	$2,343,200

---

Option 2: IRA assets to Carleton

Total estate	$4,000,000
Gift of IRA to Carleton	-$1,000,000
Federal estate tax (2007)*	-$450,000
Federal income tax	0
Total Tax	-$450,000
Total estate assets to children	$2,550,000
Net increase in childrens’ inheritance	$206,800

* Federal estate tax at 45% will be assessed on assets over $2 million in 2007; rates and estate tax exemptions will change several times between now and 2011.

**Income taxes are assessed on retirement plan asset distributions to any individual.

For more information

To learn more about making a gift of retirement assets to Carleton, please contact our Office of Major and Planned Giving.