Generally, you can name anyone, even a charity, as the beneficiary of your life insurance policy or retirement account. You can leave the entire amount of your death benefit to a charity or designate that only a portion of the proceeds goes to the charity and the remainder to a family member or other beneficiary. The charity will receive money from your retirement account tax-free. You can always update your beneficiary designation form if you decide on another charity.
Confirm that the charity you want to list as a beneficiary of your life insurance or retirement plan qualifies as a 501(c)(3) organization so that any money you leave it will be a tax-deductible contribution. Although other categories of 501(c) organizations are exempt from paying federal income tax, contributions they receive as your beneficiary would be subject to estate or income taxes. Check an organization’s 501(c)(3) status by contacting the IRS or asking to see the charity’s tax-exempt letter from the IRS.
Contact the charity to verify that it will accept the proceeds of your life insurance policy or retirement plan as a charitable donation. Visit a charity’s website for contact information including mailing address, phone numbers and email addresses.
Request a beneficiary designation form from your insurance company or plan administrator. You may have the option of logging into your insurance or retirement account and updating your beneficiary information online. However, you need to complete a print beneficiary designation form if you've named an irrevocable beneficiary and need that person to sign a waiver. You cannot change an irrevocable beneficiary without the consent of the beneficiary you previously named. Federal law prohibits electronic signatures on waivers.
Name a charity of your choice as the beneficiary of your life insurance proceeds or retirement account assets. Identify the charity on the form by listing the organization’s full name, address and tax ID number. Indicate that the beneficiary is a charity on the designation form. Depending on the source of the assets, your estate may qualify to receive a tax deduction for your charitable gift.
Name the charity either as a primary beneficiary or contingent beneficiary. If you name additional primary beneficiaries, the charity will share equally in the proceeds unless you instruct otherwise. Indicate a benefit percentage rather than dollar amount. As a contingent beneficiary, the charity will only receive death benefits if all primary beneficiaries die before you do. Naming a contingent beneficiary is sometimes optional rather than required.
Sign and date the beneficiary designation form before returning it to the address the insurance company or retirement plan administrator provides. Keep a copy of the completed and signed form for your estate planning record. Designating a charity as your beneficiary will not be effective until the insurance company receives your signed form.
Items you will need
- Beneficiary designation form
- John Hancock: Protect Your Assets by Naming Beneficiaries
- OK.gov: Instructions for Completing the Beneficiary Designation Form
- Counselor’s Corner: Charity Begins at Home
- Human Resources University of Notre Dame: Beneficiary Designation
- Mika Meyers Beckett and Jones: Beneficiary Designations for Retirement Plans
- Hemera Technologies/AbleStock.com/Getty Images