Tax-deferred retirement accounts that pass to your heirs are subject to federal and state income taxes that could run as high as 50 percent upon withdrawal. While many other assets that pass to your heirs escape income and/or capital gains taxes, your qualified retirement assets do not. Because charities do not pay income tax on donations they receive, it is a good strategy to leave a percentage of retirement plan assets to a charity and utilize other assets for your heirs. Advantages of Estate Tax Planning for Retirement Assets
Tax-deferred retirement accounts that pass to your heirs are subject to federal and state income taxes that could run as high as 50 percent upon withdrawal. While many other assets that pass to your heirs escape income and/or capital gains taxes, your qualified retirement assets do not. Because charities do not pay income tax on donations they receive, it is a good strategy to leave a percentage of retirement plan assets to a charity and utilize other assets for your heirs.