How Can I Give More?
We have worked with several non-profits over the years to help them assist their donors in giving more. These charities often state that their donors want to give more, but they don’t want to put their own lifestyle at risk or disinherit their children. And, ultimately, they simply don’t think they can give more.
The reality is that too often this isn’t the reality. These donors can give more and can do it without any risk to their lifestyle or heirs. They simply just don’t know what they don’t know.
A simple way to think about how the causes you hold dear to your heart fit in your financial plan, is to begin with the end in mind—that is, let’s think about your finances at your death.
You can choose from three different types of beneficiaries for your estate.
People - children, other family, friends
Non-Profit Organizations - charities, churches or otherwise
Uncle Sam - the IRS, government
Did you know that you get to choose, for the most part, which of these three are in your estate plan?
For example, let’s assume you have a substantial retirement account like an IRA.
Under the new laws, this account would need to be fully distributed in 5 or 10 years after you die depending on how you left this to your children. Remember, these distributions are, in most cases, fully taxable as ordinary income. So, what would the tax bill look like on liquidating a seven-figure account over 5 or 10 years on top of other income your children may already have? How would you like it if over 30 or 40% of your account ultimately went to Uncle Sam?
My guess is that you wouldn’t. So, what if I told you that you could structure this so that your family could receive more, Uncle Sam could receive less, and you could even add a beneficiary—the cause(s) you hold dear to your heart?
Let’ talk estate tax itself for a minute…If your success is big enough, Uncle Sam will want a piece of it when you die. There are a multitude of ways you could help mitigate this, but often people may still have something that will be subject to this tax when they die. Well, you might be able to give this last, little something to charity rather than Uncle Sam.
Ok…let’s bring things back to the present. You are here and breathing. You are not dead. If you are successful, there is a good chance you fight every year to lower your taxes. What can you be doing to accomplish this goal, give your favorite cause(s) a little more, and perhaps even keep a little more in your own pocket?
The answer is a good one! There are so many avenues to look at that we can’t explore them all here today.
Charitable planning is on purpose and by design. It isn’t for everyone, but it is something you should ask about if you want to replace Uncle Sam in your financial plan. If you have questions, please feel free to reach out. We’re here to help.