Beneficiary designation

Beneficiary designation

A convenient gift option that makes a powerful difference

Are you considering making a substantial gift but hesitate to commit the assets right now? With a change-of-beneficiary form, you can easily name Indiana University as the recipient of certain common assets that do not pass under your will, including:

  • Life insurance policies
  • IRAs and other retirement accounts
  • Some donor-advised funds

This flexible gift lets you maintain control of your assets during life, change your gift if necessary, and eventually make a big difference at IU.

You can choose to name the IU Foundation as:

  • the sole beneficiary
  • a percentage beneficiary (along with one or more heirs or other charitable beneficiaries)
  • a contingent beneficiary (to receive the assets only if the primary beneficiary cannot)

See it in action

Decades ago, Diego established an IRA. When he later began participating in a company-sponsored retirement plan, he stopped making further IRA contributions. Now, at age 73, Diego discovers that this “forgotten” IRA is worth more than $40,000. Diego’s daughter, Alma, is the IRA beneficiary.

If Alma receives the IRA upon Diego’s death, she will owe income taxes on all distributions. (Remember, the money has been in a tax-deferred account.) However, if Diego names the IU Foundation as the IRA beneficiary, we will receive the full $40,000 exempt from income tax. Diego can leave other assets to Alma (such as appreciated stock or cash) that will not be depleted by income tax liabilities. In fact, the appreciated stock will benefit from a step up in basis when Alma inherits it.

Other assets can be transferred directly to us, too

A few assets that don’t use beneficiary designations can be donated in a similar way using a payable-on-death or transfer-on-death designation. These assets include bank accounts, stock and mutual fund shares, and even real estate (in some states).