The Easiest Gift You May Ever Make: Beneficiary Designations

When you hear the term “planned giving,” what comes to mind? Many people think of a gift that takes a lot of time or is complicated or requires professional help. That’s true of certain types of gifts, but there are planned gifts that almost everyone can do, and it’s easier than you think!

The easiest type of planned gift to set up is called a “beneficiary designation.” In many cases, it can be done literally in minutes, at no cost today, and without outside help.

Old hands typing on laptop.

What Is a Beneficiary Designation?

A beneficiary designation controls who receives the proceeds from certain accounts, contracts, or policies upon the death of the owner (or, in the case of life insurance, the insured). It normally can be completed either by filling out, signing, and submitting a paper form, or—more quickly and easily—by completing an online form from the financial institution holding the account or policy.

A retirement account (IRA, 401(k), 403(b), 401(a), etc.) or life insurance policy usually is the easiest, most cost-effective way to make a planned gift to MNHS. For many people, retirement accounts and life insurance policies represent a large part of their overall wealth, and the Minnesota Historical Society can be named a beneficiary of a percentage or all of an account or policy simply by filling out a new beneficiary designation form and submitting it to the plan administrator or financial firm. In many cases, these online forms often can be completed in just a matter of minutes.

What Information Is Needed and How to Do It

To complete a beneficiary designation gift to MNHS, you’ll often need a few pieces of information about the organization:

  • Legal name: Minnesota Historical Society
  • Address: 345 West Kellogg Boulevard, Saint Paul, MN 55102
  • Federal Tax ID Number (TIN/EIN): 41-0713907
  • Phone Number: 651-491-5684

Then, enter the percentage of the account value (1-100%) you want MNHS to receive and click submit (or sign and mail a hard copy of the completed form to the appropriate address at the financial institution). Congratulations: You’re a planned gift donor, and we welcome you to the Minnesota Legacy Society!

When Can I Use a Beneficiary Designation?

Beneficiary designations most often allow you to name MNHS as a beneficiary of:

  • IRA, 401(k), and other retirement plan accounts
  • Life insurance policies
  • Some annuity contracts
  • Bank or brokerage accounts with payable-on-death (POD) or transfer-on-death (TOD) options
  • Remainders of Donor Advised Funds (DAFs)

Tax Advantages of Retirement Account Beneficiary Designations

Beneficiary designations of traditional IRAs, 401(k)s, and other qualified retirement plan accounts usually are the most tax-smart way to make charitable gifts in an estate plan. When there is a choice to be made about what property to leave to family and what to leave to charity at death, tax-deferred retirement accounts almost always are the best asset to leave to charity, leaving other assets for family, primarily for income tax reasons.

This is because, when family members or other individuals take distributions from non-Roth retirement accounts, they will have to recognize ordinary income on the full amount of the distribution, meaning that significant portions of the amount withdrawn will go to taxes instead of the family member. When those accounts are given to MNHS or other charities, though, the charity doesn’t have to pay income taxes on the distribution because MNHS and the other charities are tax-exempt. The lesson is: generally, it’s best for most people to make charitable gifts first from beneficiary designations on their tax-deferred retirement accounts, and leave non-taxable assets (like most gifts in a Will or from life insurance) to individuals.

Why So Many People Love Beneficiary Designations

Beneficiary designations have many attractive features:

  • Quick and easy to set up
  • Revocable and easy to change
  • No cost or effect on finances today
  • Allows you to support both family and charity in the most tax-smart way

Beneficiary designation gifts are flexible and powerful. They are vital to MNHS in helping ensure that we can continue preserving and sharing Minnesota’s stories well into the future. It’s a simple step that you can take today!

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Want More Information?

If you have questions about how beneficiary designations work or how they can benefit MNHS, please reach out to Jennifer Pogatchnik, VP for Advancement, at jennifer.pogatchnik@mnhs.org or 651.491.5684, or visit our main Planned Giving page to learn more.

Note: MNHS does not give legal, financial, or tax advice, and urges supporters to seek advice from their own professional advisors about how a particular idea may affect their specific circumstances.