Charitable giving techniques are typically used for those who have accumulated wealth that is subject to estate tax at death. Estate tax rates can be as high as 50%, and those who have worked hard to create and accumulate wealth will opt to utilize these techniques to reduce the incurred tax burden. This creates a lasting legacy without necessarily depriving your family from benefiting from your hard work. Charitable planning is also utilized with minimize income taxes (which can exceed 40%), and you can retain full control of your assets.
Charitable planning can also be effective when selling your business. When properly utilized, you can avoid paying income taxes on the sale of your business!
Utilizing a plan enables the donor to direct the use of his or her assets that would otherwise go to the IRS. Your assets can pass to your family, charities, or the IRS, but you must choose two out of the three – and if you don’t, the IRS wins by default.