Revocable or not?

Can you identify the differences between a revocable and irrevocable gift? See whether you think the statements below are true or false.

  1. A gift made through your will is an irrevocable gift.
  2. Both revocable and irrevocable gifts qualify for a current income tax deduction.
  3. Naming WELS as a contingent beneficiary in an IRA is a revocable gift.
  4. A gift that can be recalled before it is completed is revocable.
  5. Donors without a lot of assets are wise to make irrevocable gifts first.

Answers

  1. False. Anyone naming a charity as a beneficiary in his or her will can change the amount and even revoke that gift as long as they are alive. Only at death (when the estate is activated) does that gift become irrevocable.
  2. False. To qualify for a tax deduction, every gift must be completed. Any gift that is revocable will not entitle the donor to a deduction until the gift is transferred to a qualified charitable entity.
  3. True. A contingent IRA gift such as “equal shares to A, B, C, and WELS” can be revoked any time during life. In fact, if B does not survive the IRA account owner, upon death A, C, and WELS will be paid their shares by the IRA administrator.
  4. True. When giving shares of stock, for example, the transaction can be reversed if the wrong stock is mistakenly sent out. Only when the shares are correctly sent and accepted by WELS is the gift complete.
  5. False. People of modest means are normally advised to keep what they have in case it is needed at some point in the future. Changes in health, financial circumstances, or income could mean that an asset irrevocably given away previously, even if placed in a trust, could be seen as a mistake.

What This Means to You
Whether you are thinking of making an irrevocable or revocable gift to WELS, an important consideration is to “expect the unexpected.” In other words, it may be better to give in such a way to preserve your future personal freedom and financial security.

This is just one reason we recommend that you talk with your local WELS Christian giving counselor. He knows the various options for supporting WELS gospel ministry through irrevocable and revocable gifts. He can help you think through the purpose for your gift, the best way to fund it while covering your family’s financial needs, and the right timing. He can also encourage you to talk with your attorney or other capable adviser, and provide information that will help you have that conversation.