America the charitable

As you have likely observed at some point in your life the tax laws of the United States are, in large part, established to encourage certain actions of taxpayers. One such action the tax code looks upon with great reverence is charitable gifting. Americans give more to charity than any other nation in the world; a point we should take pride in. Many of us are generous, charitable, and compassionate individuals and two recent events brought this to my attention.

First, a friend of a friend experienced substantial water intrusion in his house when a rainstorm caused flash flooding. Because of the proximity of the house to the creek it didn’t qualify for flood insurance. What happens when insurance coverage is lacking or does not exist? Occasionally friends, relatives, neighbors, and strangers volunteer their labor and resources to assist the affected. However, at the end of the day large financial hardship is suffered by the owner of the property or the family of the deceased. Proper planning might not prevent the situation from occurring but it will increase the chances of recovery.

Second, a recent article on the Walton family’s support of the arts in Northwestern Arkansas reinforced the importance of charitable gifting as an element in an effective financial plan. The Waltons, along with many other American families, have used their wealth to create museums, endow charitable foundations, support not-for-profit organizations, and enhance schools and universities. Establishing these charitable trusts supports important causes and removes a portion of your assets from estate taxes. Estate Tax, commonly referred to as the death tax, can significantly reduce the amount of money you pass on to other generations, potentially limiting your legacy.

One of Helen Walton’s favorite phrases was: “It’s not what you gather but what you scatter that tells what kind of life you have lived.” Proper estate planning allows your legacy to continue so that your heirs and your charitable concerns can be supported for generations to come.

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