This week, Angela discusses charitable giving and how individuals can maximize their donations to causes they care about while also benefiting themselves from a tax perspective. She emphasizes the importance of asking questions and seeking holistic financial planning to understand how to give more effectively.
Key Takeaways 💡
- Giving back during the holidays: The holiday season is a time for giving, inspired by the gift of Jesus Christ. Many people want to give more to charitable causes but may not know how. It's important to explore ways to give back and support causes that are meaningful to you during this time of year.
- Charitable gifting and taxes: Many people are unaware of the full potential of charitable gifting from a tax perspective. Instead of simply giving money to the government through taxes, individuals can redirect those funds to nonprofits or charities, potentially increasing their impact and receiving tax benefits.
- Three life buckets: Financial planning involves three buckets: a lifestyle bucket (to ensure financial security), a contingency bucket (for emergencies), and a third bucket for giving to others or supporting causes. Maximizing the dollars in the third bucket allows individuals to support their values and passions.
- Donor-centric gifts: Donor-centric gifts benefit both the donor and the nonprofit organization. These gifts can support the donor's lifestyle while ultimately benefiting their favorite cause after they pass away, instead of going to taxes. It's important to explore these options to maximize the impact of charitable giving.
- Beneficiaries of your estate: When planning your estate, you have three choices for beneficiaries: people (family and friends), nonprofit organizations, and the government (IRS). Understanding how to allocate your assets among these beneficiaries can help you minimize taxes and maximize the impact of your giving.
- Retirement accounts and taxes: The SECURE Act has implications for how retirement accounts are inherited, potentially leading to significant taxes for beneficiaries. Structuring your estate plan strategically can help your family receive more, the government receive less, and allow you to support causes you care about.
- Mitigating estate taxes: If your estate is large enough, it may be subject to estate taxes upon your death. There are ways to mitigate these taxes, and if there's still a remaining amount, consider giving it to a cause you support rather than having it taxed at a high rate.
- Charitable planning: Charitable planning should be intentional and tailored to individual circumstances. It's not a one-size-fits-all approach but rather an intricately woven part of someone's financial plan. By asking questions and seeking guidance, individuals can ensure their dollars go where they want them to go, supporting their values and passions.
