State Laws Target Delays In Charitable IRA Inheritances

According to CNBC, nonprofit leaders and lawyers say charities are increasingly running into delays and extra paperwork when collecting IRA gifts left to them by donors, prompting state-level efforts to force financial firms to transfer inherited assets more quickly. In the past two years, six states have passed bills addressing the issue, and California is set to become the seventh if Gov. Gavin Newsom signs a donor intent bill. The article said some brokerages and banks require nonprofits to open new accounts and provide sensitive personal information before releasing inherited IRA assets, even though lawyers said custodians are generally not required to notify charities that they are beneficiaries or to make them open accounts. Rob Hilbert, president of the Iowa PBS Foundation, said his organization once spent more than five years trying to collect a $6,000 gift, while Jon Kraus of the University of Denver said it took two years to receive an investment account worth $2 million. The piece said Colorado enacted reform in April, with custodians there required to transfer assets within 60 days of receiving an affidavit from a charity. It also said Cerulli Associates estimates $18 trillion will be donated to charities and philanthropic causes by 2048, and that Fidelity reported 20.3 million active IRA accounts as of the end of June.