How to Help Clients Navigate the SECURE Act’s Impact on Charitable Giving: The 5-Step Framework

Introduction to the Framework

Since the SECURE Act took effect in 2020, the classic “stretch IRA” strategy—where non-spouse beneficiaries could stretch required minimum distributions (RMDs) over their life expectancy—is gone. Now most non-spouse beneficiaries must withdraw the entire inherited IRA within ten years. This change has major implications for charitable giving, both for clients leaving IRAs to charity and for those inheriting IRAs they may want to donate. Yet many advisors lack a clear, repeatable process for helping clients adapt.

The SECURE Charitable Solutions Framework gives you a step-by-step method to evaluate each client’s situation, optimize beneficiary designations, and maximize tax efficiency while deepening philanthropic impact. It works for clients who want to give during life, at death, or both.

By the end of this article, you’ll have a practical, actionable framework you can apply immediately with your clients. Let’s dive in.

Why This Framework Works

Post-SECURE, the rules are more complex. A simple “name your favorite charity as beneficiary” could still be right, but for many clients—especially those with large IRAs, multiple beneficiaries, or a desire to maintain some family inheritance—the optimal path requires coordination.

This framework works because it’s built on three core principles:

• Tax Efficiency First: It prioritizes strategies that minimize income taxes for both the estate and beneficiaries.
• Charitable Intent Respect: It honors the client’s desire to give, without forcing a one-size-fits-all solution.
• Adaptability: The framework works for clients of any net worth and adjusts as laws evolve.

We’ve broken it into five steps that fit naturally into a client conversation, with clear decision points and templates to capture the plan.

The Framework Steps

Step 1: Assess the Client’s IRA Landscape

Begin by gathering key data about the client’s retirement accounts and their charitable goals. Use this checklist:

• Total IRA value (traditional, Roth, SEP, SIMPLE)
• Number and age of beneficiaries (especially non-spouse)
• Current beneficiary designations (primary and contingent)
• **Whether client intends to give during life, at death, or both
• Charitable giving vehicles client already uses (DAF, trust, direct gifts)
• Client’s marginal income tax bracket
• Net worth outside IRAs (to gauge if IRA is needed for heirs)

Document the answers in the Client IRA Profile Worksheet we provide later. This step ensures you don’t miss details that could change the recommendation.

Step 2: Identify the Optimal Charitable Vehicle

With the data in hand, match the client’s situation to the right giving vehicle. The table below summarizes the main options post-SECURE:

Decision flow: If client wants all IRA to go to charity, name charity as primary. If client wants a mix of income for heirs and charitable remainder, a CRT is often ideal. If client is charitably inclined during life, a DAF plus QCD strategy may be best.

Step 3: Optimize Beneficiary Designations

Now design the beneficiary structure. Critical considerations:

• Spouse: If spouse is primary beneficiary, they can roll IRA into their own IRA and defer RMDs. This is usually optimal for married clients.
• Non-spouse individuals: Under the 10-year rule, beneficiaries must withdraw full balance by end of year 10 after owner’s death. No annual RMDs are required (though if original owner died after RMD age, beneficiary may be subject to annual RMDs in years 1-9 if IRS final regs apply).
• Charities: Tax-exempt, so they can receive IRA proceeds tax-free and outside the 10-year rule.
• Trusts: Qualified trusts can be named beneficiary; look-through provisions may apply. Typically, charitable trusts (CRT, CLT) are more straightforward than non-charitable trusts that try to stretch distributions.

Best practices:

• Separate IRAs for each beneficiary to avoid commingling complexity.
• For clients leaving IRAs to both charity and individuals, consider splitting the IRA into separate accounts so each beneficiary receives their share directly.
• If using a DAF, check if the DAF can be named as beneficiary (most can).

Step 4: Implement with Coordination

Once the plan is set, implement alongside the client’s estate planning documents. Key steps:

1. Update IRA beneficiary forms (not just the will). These forms supersede the will.
   2. Consider a “IRA as to” clause in the will: “I give to my children the IRA proceeds that would otherwise go to charity, and to charity the IRA proceeds that would otherwise go to children.” (This can bypass state law issues.)
   3. If using a CRT, fund it during life or via testamentary trust. For testamentary CRT, the estate receives a charitable deduction; income to heirs is taxed as ordinary income.
   4. For DAFs, ensure the client has named the DAF as beneficiary and that the DAF’s governing documents allow it.
   5. Coordinate with QCDs if client is over 70½: they can give up to $100,000/year directly from IRA to charity, reducing AGI.

Step 5: Monitor and Review Regularly

Estate planning is not static. Review beneficiary designations when:

• Client marries, divorces, has children, or changes charitable interests.
• Tax laws or SECURE Act regulations evolve (e.g., final regulations on 10-year rule and RMDs for beneficiaries).
• Client’s financial situation changes significantly (inheritance, sale of business).

Set a reminder to review every 3-5 years or after major life events.

How to Apply It

You can use this framework in a single 60-minute meeting or across two sessions. Start with Step 1 (assessment) as pre-work or a quick in-meeting questionnaire. Use the template to guide the conversation. Then move through Steps 2-4, summarizing the recommendation in a one-page plan.

Below is a Client IRA Profile Worksheet you can use with clients.

Client IRA Profile Worksheet

Decision Matrix (Sample)

Examples/Case Studies

Case Study: The Philanthropic Widow

Situation: Margaret, 75, widowed, has a $2 million traditional IRA. She wants to leave $500,000 to her two adult children and $1.5 million to her alma mater. She also does QCDs annually. Her children are in high tax brackets.

Framework applied:

1. Assess: IRA $2M, children as primary beneficiaries currently, no charity named. Margaret does $50,000 QCD each year.
2. Identify vehicle: CRT works well: children need some income, ultimately charity gets bulk. Since Margaret wants children to get $500k and charity $1.5M, a CRT could pay income for 10 years (or life of children) with remainder to charity.
3. Optimize: Instead of splitting IRA, she could leave a specific dollar amount to children and the rest to charity. But because children would owe income tax on IRA withdrawals (within 10 years), better approach: Name charity as primary beneficiary of 75% and children as primary of 25%. Then children withdraw their share over 10 years (taxable) and charity takes tax-free. Margaret also continues QCDs.
4. Implement: Update IRA beneficiary form: 25% to children per stirpes, 75% to university. Review will to coordinate.
5. Monitor: Next review in 3 years or if tax law changes.

Result: Children receive about $350,000 after taxes (assuming 32% bracket), university gets full $1.5M. Margaret saves estate tax (if applicable) and reduces RMD burden through QCDs.

Case Study: The Young Couple

Situation: Tom and Lisa, both 45, have $800k in IRAs combined. They want to leave everything to each other first, then to their three children, but also support their local food bank. Their children are minors.

Framework applied:

1. Assess: IRAs $800k, primary each other, contingent children. Marginal bracket 24%. No current charitable giving.
2. Identify vehicle: Simplicity wins. Use a DAF. Name DAF as a percentage beneficiary (e.g., 10%) of IRA after spouse dies. Children get 90%.
3. Optimize: Spouse can roll over IRA upon death, deferring taxes. After second death, children must withdraw within 10 years. By giving 10% to DAF, children avoid income tax on that portion. Plus, DAF can be managed to give over time to food bank.
4. Implement: Set up DAF at a community foundation, name DAF as contingent beneficiary for 10% of IRA. Update will to reflect.
5. Monitor: Review when children are older or if charitable interests change.

Result: Tax-efficient giving; children get 90% of IRA (after tax) and DAF provides ongoing support to food bank.

Common Mistakes to Avoid

1. Naming charity in will but not updating IRA beneficiary form: The IRA beneficiary form controls, so if charity is not named on the form, heirs (or estate) may receive it, triggering tax. Always update the IRA beneficiary form.
2. Failing to consider tax impact on heirs: With the 10-year rule, heirs could be pushed into higher brackets. If the IRA is large, consider CRT or charitable split to reduce their taxable income.
3. Using a non-qualified trust as IRA beneficiary: Many trusts don’t meet look-through requirements, causing the trust to be taxed at the highest rate and distributions to be compressed.
4. Assuming the stretch IRA still exists: It doesn’t for most non-spouse beneficiaries. Don’t plan on life expectancy distributions unless beneficiary is an eligible designated beneficiary (minor child, disabled, etc.).
5. Overlooking QCDs: Clients over 70½ can give up to $100,000/year directly from IRA to charity. This reduces AGI and RMDs. Combine with DAF for even more tax efficiency.
6. Ignoring state tax: Some states conform to federal SECURE rules; others have their own. Check state income tax on retirement distributions for beneficiaries.

Templates/Tools

Client IRA Profile Worksheet (already provided in Step 5, but available as a downloadable template on our site)

Decision Flowchart (simplified)

Start:

• Does client want to give during life? If yes → use QCDs or DAF.
• Does client want to give at death? If yes →
  • All to charity? → Name charity as primary.
  • Mix? →
    • Want income for heirs? → CRT.
    • Want flexibility? → DAF as beneficiary.
    • Other? → charitable bequest via will (but watch tax).

Sample Letter to Advisor for Client

Many clients struggle to talk to their advisors about charitable giving. Here’s a template they can use:

Dear Advisor,

I’m interested in leaving some of my IRA to charity at my death, but I also want to provide for my children. I’ve heard that the SECURE Act changed the rules. Can you help me explore options like naming a charitable remainder trust or a donor-advised fund as a beneficiary? I’d like a tax-efficient plan that balances my charitable goals with my family’s needs.

Best, [Client Name]

Use this to initiate conversations.

Conclusion

The SECURE Act eliminated the stretch IRA, but for charitably inclined clients it also opened doors to more strategic giving. By using the SECURE Charitable Solutions Framework, you can systematically assess each client’s IRA landscape, identify the optimal vehicle, design efficient beneficiary structures, and implement a plan that minimizes taxes and honors their legacy.

Remember, the key is to act now—many clients still have outdated beneficiary forms. Start the conversation today. For more resources, check out our free estate planning tools and nonprofit partnership opportunities.