“Creating a strong financial legacy involves more than saving money and writing a will” — Paul Ebeling
Charitable giving: People are giving more to charities than ever before. In Y 2020, individual charitable giving totaled $324.1-B, the highest dollar amount to date, even after adjustments for inflation.
Modeling your philanthropic values for your family can help you chart a legacy that extends beyond your own family.
Whether you decide to start your own charitable foundation or contribute to the work of others, allocating some of your money to support charity work can help establish a lasting legacy that upholds whatever values are dear to you.
To bring your family into the process, consider these strategies:
- Decide as a family how funds will be donated each year based on your collective values.
- Let your children know about the organizations you financially support and why these matter to you.
- Designate some funds to be given to charity in your will.
Including a charitable giving component in your financial plan can help your children understand and uphold the causes that matter to you, long after you have passed.
Your financial legacy will be the values and opportunities you pass on to your children through the decisions you model.
“According to industry experts, one should be aware that there are limitations on deductions. For example, the IRS allows the taxpayers to claim up to a certain amount of deduction and according to their regulation, your deduction cannot surpass 50% of your Adjusted Gross Income (AGI). In each case, the deduction limit will vary depending on the type of organization you are contributing.
- Donations to nonprofits like churchyards or veterans organizations are limited to just 30% of your AGI.
- If you donate appreciated property to charities that are subjected to 50% tax-exempt your donated assets will only receive 30% deductions of your AGI
- If you donate appreciated property to organizations that are subjected to 30% limitation you will only receive 20% deductions of your AGI.
For example, The value of your donated assets will be estimated based on the current market value of what you have donated. For example, if you donate a land you will be able to do that.
“But, if you donate a car, then certain conditions will apply. If your donated car is used by the charity then you will be able to deduct the value of your asset based on the fair market value. If the charity sells the car you will only get the deduction for the selling price instead of the original,” notes LTN US tax expert Bruce WD Barren who further states that one should always consult with the appropriate tax law expert when giving to charity.
No matter how much money you have saved you can build your financial legacy and help your heirs feel confident about their finances.
Have a prosperous week, Keep the Faith!