Charities say IRA gifts by deceased donors get held up

Key Points:

• Donors can leave their IRA accounts to charities to save on taxes and leave a legacy, but nonprofits often face lengthy delays and invasive requirements from financial institutions when trying to collect these gifts.
• Some brokerages demand nonprofits open new accounts and provide sensitive personal information of employees or board members, causing charities to spend significant time and resources to secure funds, sometimes leading them to abandon the gift.
• Six states have passed laws requiring financial firms to release charitable IRA funds promptly and without forcing charities to open new accounts, with more states considering similar reforms amid the growing wealth transfer expected to generate trillions in charitable bequests.
• Financial institutions often cite anti-money laundering and customer identification rules to justify their demands, but experts and regulators state charities are not legally required to comply with all such requests, and some major firms do not impose these hurdles.
• Donors can help ease the process by informing charities of their beneficiary designations and choosing financial firms with smoother policies, while advocates continue pushing for broader state and national reforms to protect charitable gifts.