The Giving USA Foundation™ estimated that American charities collected more than $260.28 billion from donors in 2005, an increase of 6.1% from 2004. The organization estimates that personal giving amounted to $199.07 billion in 2005, up 6.4% from 2004.*

Giving can be very rewarding for you and your family. It provides a way for you to share your values with your children, and reminds them of how fortunate they really are to have their health, their home and their basic necessities.

Additionally, donating a portion of your inheritance to a charity provides income tax and estate planning benefits. You can deduct from your taxable income the money you donate to a qualified organization and you can bequest financial assets out of your estate to achieve a variety of financial strategies.

After receiving an inheritance, you may be overwhelmed by the responsibility you face in determining how to allocate that money. Donating a portion of your inheritance may be an option you wish to explore. One way to donate a large sum of money to a charitable organization is to establish a charitable remainder trust.

The trust is funded by your donation and can be structured to provide a designated beneficiary with lifetime income while earmarking the donation and any growth it experiences for the philanthropic organization. You should consult an attorney and a qualified Financial Representative when considering a trust. Their professional advice can help you determine how to structure and fund your trust.

Spend time thinking about your philanthropic goals. What are the causes you feel strongly about? Maybe you have been directly impacted by an illness or received aid from an organization in the past when you really needed it. These types of decisions should not be made without serious thought. You want to feel confident that your resources are being put to good use.

Determine what financial goals you want your giving to accomplish. Do you have specific assets you want to gift out of your estate? Are you looking to lower your taxable income to stay out of a higher income tax bracket? Knowing the answers to these questions will help your Financial Representative work with you to achieve your philanthropic objectives.

Even if you're not thinking about estate planning just yet, there are still great income tax benefits to be realized through charitable giving. The cash and assets you donate to a qualified charity will reduce your taxable income in the year you donate. If your donations are substantial, this can amount to significant tax savings.

In order for you to receive an income tax deduction for your donation, the organization must have received a specific status from the IRS. The principal status used for this purpose is 501(c)(3). Any charitable organizations you contact should provide you with their status information. If they refuse, do not make a donation—the organization may not be legitimate. The Better Business Bureau ( www.bbb.org) evaluates a large number of charitable organizations and keeps records of any issues that consumers have filed.

Make sure to save receipts from every donation you make. You will need documentation to substantiate your donations in the event of an IRS audit. Good record keeping will help you claim the right amount of deductions when you do your taxes.

Another great strategy to lower your income taxes is to donate appreciated assets. Let's say you own stock that has appreciated dramatically. If you were to sell the stock, you would be required to pay the capital gains taxes. What was left could be donated to the charity. However, if you donate the stock to a charity, and the organization is tax exempt it won't be required to pay the capital gains taxes and can give you an income tax deduction for the full sale price of the shares.

Above all, make sure you do some leg work before you start cutting checks and donating assets.

Some great resources are: www.charitynavigator.org, www.guidestar.com, and www.nonprofit.about.com.

Examine the organizations you are considering carefully. What percentage of each dollar donated is really used in charitable activity? How does the organization work to achieve their purpose? How large is the organization and where are they located? Ask questions before you donate! Remember it's your money, and you want to feel confident in how you give it away.

Before you decide how to allocate your inheritance, consult a Northwestern Mutual Financial Network Representative. Charitable giving may be part of your overall plan for your inheritance, and talking with your Representative can help you make decisions you feel confident about.