Leaving a Legacy to Your Community

Many people feel compelled to give back to their community. After all, what better way is there to leave your legacy than by helping others? A plan of charitable giving is the action behind the words of the Legacy Statement.

There are causes near and dear to each of our hearts that we have a desire to support. Unfortunately, many people don’t know how to set up a charitable plan. Even more unfortunate, many don’t believe they have the resources to contribute to charity.

There are many different ways to set up a charitable program. No matter what the size of your estate, you can create a vehicle that will allow you to give to the cause of your choice, on your terms, for generations to come. Even smaller estates can create a charitable legacy that will positively impact lives. Did you know that you can reduce and eliminate estate taxes through charitable giving? That it's possible to give a large portion of your estate to charity and still have your heirs receive a larger inheritance than if you had not given?

If you have a large estate, you are going to be a philanthropist whether you plan for it or not. If you make no charitable plan of your own, your default charity will be the United States Treasury.

Estate taxes are levied at the federal and state levels and confiscate a significant percentage of all estates that exceed the maximum estate tax credit. Some high net worth individuals have engaged in estate planning to be able to pass the maximum amount allowed by law to their heirs. But in a lot of cases, part of the estate is still subject to estate taxes. For these taxpayers, their legacy is contributing to the programs and operations of the government.

Think about it. Do you believe the government is doing a good job of applying our tax money? Or do you think you can make better decisions on how that money is used?

What a lot of people don’t know is that their charity doesn’t have to be the government. You can control that part of your estate that is earmarked to go to the government in the form of estate taxes. How much of an impact do you think your estate tax contribution will make to society? And what will it support? Will it be a program or cause that you feel strongly about, or will it be used in a way that does not represent your values? Remember, sharing your legacy is about passing on your values.

Fortunately, the government has provided us with certain credits and deductions to apply against our estate tax liability. The most powerful of these is the charitable deduction. Any portion of your estate that you contribute to a qualified charity is not counted as a portion of your estate that is subject to estate taxation. In addition, charitable contributions provide deductions that will reduce your income tax liability. In future posts I will show you how the charitable deduction can be used to actually increase the size of your estate.