Now that jimrac has given an example, I understand the point he is trying to make. However, there's a couple of things he doesn't consider. IF you took an inheritance as cash, and IF you kept it as cash, then yes, you could spend it down without incurring income tax. However, if you take that money and invest it, you will pay taxes upon your gains. But you do get that Âstep up basis jimrac is depending upon. But of course, if you allow the account to compound over time without spending principal, you run the risk of incurring estate taxes for your own heirs. You could also buy an annuity, which has some limited tax advantages. Conversely, inheriting an IRA is different. You do not have to cash out an inherited IRA, in fact you should always roll it over into an FBO account in your and the deceasedÂs names. IF the owner was taking distributions, heirs also have to take distributions  but they can take the minimum distribution (Required Minimum Distribution, or RMD) which at young ages is a very modest amount indeed. If the owner was not taking distributions, the IRA can be left intact until age 70-1/2 for the heir. And in the case of an inherited Roth IRA, there is NEVER any income tax, for owner or heirs. Because the gains in the Roth compound tax-free, they win hands-down over any taxable account. The biggest issue is the salary restrictions (higher wage earners are barred from contributing to a Roth, although in 2010 only they can convert any amount they wish to pay income taxes on now) and the low annual contribution amount (although I expect Congress will probably increase those at some point). As my ex-boss, a respected CFP, used to say, "Don't let the tax tail wag the dog!" Tax planning should be looked at in a holistic fashion. Somebody's going to pay taxes, it just depends on who that is, and how much. Frankly, if you had a $1M mutual fund account - and I know quite a few people who do - if you were that concerned about your heirs paying income taxes, you'd set up an ILIT (Irrevocable Life Insurance Trust) for your immediate heirs, and a Bypass or QTIP trust for the future generation heirs.

Working as a tax preparer I'm surprised by the difference (and often indifference) in giving. Here is some idea of the various levels of giving that I see and some traits that are pretty common within that level of giving. I have a number of clients that earn a middle-income and give $3000 or more each year to charity. From my experience those that give the most generously are active church participants though their donations are not limited to church nor is the majority of the donations to a church. Most of their donations are for a minimum of $100 to each individual charity and often to the same charities each year. The next group of donators is executives earning a higher income. Most often their donations are payroll deductions to United Way and vary from $520 to $1040 per year. As you might guess they work for companies that host United Way employee fundraising meeting. Quite often this is the only donation they make. The next group of donators is your average earner. They often have a weekly payroll deduction ($52-$104/year) to the United Way. Often include church donations of around $500 per year. Notable this group of donators while providing smaller dollar donations of $5-$50 is the biggest supporter of the local police, fire company, kids charities, and veterans charities. They may give to different charities each year. Overall their donations usually fall between $200-$700 per year. But the surprise to me is how many people do not give any charitable donations especially those with higher incomes ($100,000+). I was also surprised by how very few clients made donations in support of Katrina. I've noticed while preparing returns this year the amount of charitable donations was less than last year. The higher cost this past year for gas, increased property taxes, and medical expenses was often mentioned. I expect that next year with the requirement that donations require a receipt (or cancelled check for donations of less than $250) will further decrease the amount of donations that are claimed. On a personal note I will say that this year I too have less charitable deductions on my tax return than in previous years. Some of this is because my income was much lower this year. And some of it is because instead of donating to a charity we chose instead to help some friends and family in need. We gave some money to a friend who's husband was injured and could not work for 3 months. It was not alot of money but very appreciated. And last year a client of mine was very ill and out of work. I sent a note and a check to them as I knew they were facing financial problems with the loss of income and medical expenses. We also have a family member facing a serious medical problem and we helped them out. So our tax-deductible donations have been less but our hearts are in the right place.

I've had three already in the past 6 weeks and I've done very well. I'm a plantlady (interiors, businesses, residences etc) and with this economy we have lost a few accounts and some plants were coming back to the office from the leases (most accounts own their plants)and we don't have any room for them there. My boss asked me if I wanted them as he was going to throw them out. I jumped at it and took them home. I had already been giving plants to all of my neighbors and freecycle as I get them all the time when we replace plants but here I had a few dozen 5-8 foot plants so I had my roommate make up a sandwich board type sign with signs and arrows on both sides so peeps could see it coming or going down our main street which is just a few houses down the block. WOW! We had people coming by all day and I sold almost every plant. My roomate was amazed at the traffic. I told him to look for tools he didn't want (he had tons of stuff as he's a special effects guy in the studios) and we'd add another sign to our "plants for sale" sign on the sandwich board and see what happens. Guys like tools and Holy Camoly! We were sooooo busy. I had more plants to sell and we did really well that weekend. The third time it was a mix of stuff, plants and tools. I made close to $1000.00 and Bill made in the area of $2500.00. Not too bad for three days work and we got rid of a lot of stuff just sitting in the garage too. The second time we had the sale I had a big pot of chicken and rice soup on the stove and quite a few peeps were shopping while holding a hot mug of soup :-) It was chilly and damp that day. We had some fun, met some neighbors and city council members and made a few bucks. Patti2

Local shelter for abused women ... for which building program my daughter helped raise money several years ago. Several agencies which help the disadvantaged, homeless. etc., locally, including Food Bank and Salvation Army, which provides services in distant places in Canada and internationally, as well. Agencies which work for national and international relief, medical, justice and various human rights issues, including Amnesty, Doctors Without Borders, CUSO (Canadian University Service Overseas), which began as an agency supporting univ. under/grads. doing educational, relief and justice issues abroad, mainly Africa, and which recently gets other, mainly gov't., support to multiply my contribution by about nine, as is true of Farm Radio International, working almost entirely in Africa. Mainly the gov't. support multiplies my one buck contribution to the Canadian Food Grins (keyboard error: that's "Grains") Bank to four, to further their service providing food aid in many countries. Some, mainly rural, congregations provide the production from one or a few acres of land to them each year: the local church which my grandfather attended prior to moving away in 1910 is one, which has a sign beside a local road indicating that service. The seminary and university from which I graduated, and some local libraries. For the non-church ones, I used to write a cheque to them individually, but in recent years have transferred some stocks which have appreciated in value to the local United Way, which transmits funds as I designate (for a modest fee: $12.00 each, in addition to the contribution to them) which allows me to avoid paying income tax on the capital gain. When one makes substantial levels of contribution, that tax saving can be substantial, making major reductions in income tax liability. Churches with current or earlier connection, and our national church's relief, development, justice, human rights and other services. These have been made, thus far, with tax-deductible contributions, but not part of the avoidance of capital gain tax regimen. It was experience and training gained there that had a great deal to do with the spirit behind supporting the other justice and humanitarian systems. ole joyfuelled