Charitable Giving & Legacy Planning: Maximize Impact, Reduce Taxes

Do you want to leave a lasting impact on your legacy? You may make a significant difference in your community by donating some or all your estate after your passing. Creating a legacy plan with a focus on philanthropy is a wonderful way to assist those in need. We’re here to help you achieve this goal by maximizing the impact of your donation while potentially minimizing the taxes for your beneficiaries. 

Charitable Giving and Legacy Planning:  

A good place to start is to consider whether you are a lifetime giver or a charitable giver so you can plan. Planning is essential when you want to leave a legacy for charity. When creating a legacy plan with giving in mind, it’s important to ensure that it is designed for maximum impact on your chosen charity.  

Legacy planning goes beyond simply donating; it helps you navigate difficult questions, create the necessary legal documents, and clarify where your legacy will go after you pass. This process is designed to help ensure that the organization receives what you intend and that your legacy continues to make a difference. 

Learn More: Charitable Contributions and Tax Benefits  

Reduce Taxes:

Giving to charity is a reflection of your character more than your financial status, but it’s certainly a plus to enjoy financial benefits as well, such as tax savings. By developing a legacy plan now, you may take full advantage of these tax benefits while ensuring that your wishes are honored after your passing. 

When selecting a charity to support, it’s important to verify that it qualifies as a tax-exempt organization. You can do this by checking the IRS’s Internal Revenue Code Section 501(c)(3) list of charitable organizations. 

Additionally, when planning your charitable contributions in your legacy planning, consider the tax-free aspect of a Qualified Charitable Distribution (QCD). Making a significant financial gift allows you to offload assets while ensuring that your favorite charities receive the full benefit of the contribution. 

Some options for giving:  

1. Cash, Securities and Assets: While this approach may be the easiest, it offers no benefits for growth or your legacy plan. Similarly, you cannot give anonymously or designate a successor.  
2. Donor-Advised Funds (DAF): These funds allow you to earn interest and donate non-cash assets without incurring taxes on investment income. 
3. Charitable Trusts: There are two types of charitable trusts to consider. Charitable remainder trusts enable the donor to receive income from the assets, with the remaining amount ultimately going to the charity of their choice. In contrast, charitable lead trusts allow donors to provide immediate support to nonprofits. 

Learn More: Preparing for Taxes in Your Retirement Plan  

Maximize Impact:  

When you donate, it’s important to ensure that your contributions go to the right place and have a significant impact. First and foremost, choose a charity that resonates with you personally. As you develop your legacy plan, take a close look at your various accounts and the different ways you can give. Find a method that aligns with your values and goals. Just like retirement planning, this process isn’t a one-size-fits-all approach. It’s best to discuss your options with a financial advisor who can guide you through the steps and help you make informed decisions without emotional bias. 

Conclusion:  

Giving is a universally wonderful act, and having a financial advisor can help you achieve your charitable goals. Setting clear objectives in your planning can greatly benefit both you and your chosen charity, ensuring that your legacy endures. Collaborating with a financial professional and an attorney on legacy planning may maximize the benefits for you while supporting your organization—whether it focuses on environmental causes, community development, or any area that aligns with your values—so they can continue their important work effectively. 

 

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