“Life’s persistent and most urgent question is ‘What are you doing for others?’”
- Martin Luther King Jr.
We all want to leave a legacy. When it comes to wealth transfers, you have three choices of beneficiaries: loved ones, the government, and charities. Most of us would prefer our loved ones and the charitable organizations we care about to receive the wealth we’ve worked so hard to build.
Did you know there are some key financial planning strategies that can benefit you, your loved ones, and your favorite charities? With the right financial planning strategies, donating to qualified charities- both during your lifetime and at death through your estate plan - can reduce or eliminate income, capital gains, and estate taxes. This tax savings is an added bonus that allows you to contribute to causes you care about- launching a legacy for generations to come!
According to the Almanac of American Philanthropy, the United States is the leading nation in charitable giving, with the majority of the $390 billion (2016) donated coming from individuals rather than corporations or foundations. Between lifetime donations and bequests through wills and trusts, 2/3 of American households contribute significantly to charities each year. According to these statistics, the likelihood and amount of charitable giving increased respectively with the household income, although the percentage of household income given was relatively consistent among middle and upper income Americans.
In the 18th century, John Wesley, founder of the Methodist church, said:
“Gain all you can. Save all you can. Give all you can.”
Make an Impact Now
If you’re one of the many Americans currently giving to your favorite qualified charities, you likely know the impact your generosity has for the people and causes you support. You’re also likely aware that the tax savings for gifts to qualified charities is an added benefit, and one that can be utilized to effectively reduce tax liability along with a comprehensive financial plan. There are several ways you can make an impact now through donating to charities during your lifetime and receive tax benefits while doing so. Here are some ideas that you can discuss with your Certified Financial Planner at Dosio Wealth Management.
A one time or recurrent tax deductible gift
Gifting all or part of a life insurance policy, annuities, or RMDs
Gifting non-cash assets
Gifting appreciated assets, such as stocks, mutual funds or real estate
When you gift cash or assets to a qualified charity, you may be eligible for an income tax deduction for the fair market value of the asset given. This can be especially useful for appreciating assets. Realizing tax deductions on appreciated assets can help mitigate tax liability and protect an individual’s cash position. Many individuals find this to be a helpful strategy, especially during these uncertain economic times.
At DWM, our wealth management team can help you create a holistic financial plan– one that honors your core values and beliefs.
Launch a Legacy in the Future
We can all contribute to the world around us by making life better for others. Finding the right charitable giving strategy that meets our clients needs and goals is a top priority at DWM. There are many ways to launch a legacy by giving to your beloved charity in the future. Here are some examples:
o estate planning (bequests, revocable living trusts, etc.),
o charitable lead or remainder trusts,
o real estate,
o donor advised funds,
o beneficiary designations on life insurance policies, retirement accounts, etc.
Giving a final donation through your estate plan is a wonderful way to launch your dreams into the future and leave a legacy long after your gone. We believe in the joy and benefits that giving to others provides, and we get so excited to see it in our clients’ lives!
Choosing a Charity
The Almanac for American Philanthropy also found that 39% of all charitable giving was donated to churches and religious organizations, such as those that help the poor, provide medical care, education or disaster relief. Some of our trusted, favorite charitable organizations include: Compassion, Samaritan’s Purse, Deeply Rooted Grounds, and our local church. Whatever charity stirs your heart, DWM can help you develop a comprehensive financial plan so that you can leave a lasting legacy and make an impact in your community and in the world!
Here are some considerations that can be helpful as you consider your charitable giving options.
1. Clarify your goals.
2. Ascertain your available resources.
3. Determine how the plan will operate.
4. Reevaluate the plan periodically
1. Clarify your goals
Consider the following questions and write down your goals as they relate to giving.
What is most important to me?
In what ways do I want to leave a lasting legacy?
How do my particular interests and experiences guide my financial experiences?
What do I want to be remembered for?
Do I want to involve or encourage my children or grandchildren to give to charities?
Is it important to me to ensure continuity in my giving even after I’ve passed away?
Our experienced team at DWM can help you clarify your financial, estate, and charitable planning goals.
2. Ascertain your available assets
Charitable giving is not limited to cash gifts. There are a variety of assets that can be strategically and methodically included in a comprehensive charitable giving plan. Here are some questions to think about when evaluating what resources could be included in your financial plan.
Do I have valuable personal property (boats, cars, collections, jewelry, etc.) that could be gifted, placed in trust or sold to benefit the causes I want to support?
Could life insurance policy beneficiaries be adjusted to also contribute, in whole or in part, to a beloved charity?
Do I have assets in trust that could be transferred to a charity at a time I pre-determine?
Could my 401k, 403b, IRA, or TOD/POD bank account beneficiaries be adjusted to meet my giving goals?
Do I have real estate that I want to donate now or through my estate plan?
3. Determine how the plan will operate
Often, we know we want or should do, but we don’t know where to start or the next steps to take. This is where DWM can help in the greatest capacity. We can help you put together your whole financial picture, organize your financial DNA, develop a plan of action, including establishing and ensuring your legacy of giving, and implement the comprehensive financial plan. This is a big goal and a big achievement, and we find that clients are most satisfied and appreciative to have help in accomplishing the many steps it takes to create, build, and execute their financial plan!
When do I want to give – now, in the future, upon my death, or a combination of these?
Do I want to the plan to operate automatically or would I prefer to be more involved?
Would I benefit from tax savings?
Which of the strategies discussed above would meet my needs and goals?
What steps will be required to create and operate charitable trusts, charitable gift annuities, endowments, gifts of property or appreciated assets?
Would having a Certified Financial Planner help me create, build and execute the plan be beneficial for me?
4. Reevaluate the plan periodically
Often, people begin their financial plan with the best of intentions. They’ve meticulously gathered and organized their paperwork, established their goals, and set the ball in motion to reach their desired financial destination. But then life gets busy. They have careers to build or hobbies to distract them. Medical issues can arise that arise all their time and attention. Loved ones pass away and financial circumstances change. There are so many variables that can lead our attention to other important things. Our clients at DWM can rely on our team to annually review their financial plans and help them make adjustments with circumstances change. When life becomes busy or chaotic, the DWM team can be a source of trusted guidance to help you navigate your financial future. Here are some questions to consider as you contemplate this crucial component of your financial strategy.
Do I have a team, like DWM, in place to monitor and adjust my financial plan as needs arise?
When my circumstances change, do I know the process for making adjustments to my financial, charitable, and estate plans?
Do I have a trusted relationship with a CFP who can help me during busy or uncertain times?
Is my spouse or child able and willing to manage my financial, charitable, and estate plans, should I be unable to do so?
The Benefits of Starting Now
Giving strategically is a process that can be overwhelming. We’re here to help! If you want to make an impact on the world around you and leave a lasting legacy for generations to come, the team at DWM can help you develop a strategic financial plan that incorporates your values and honors your cherished causes. According to the American Psychological Association, procrastination has a negative effect on happiness for 94% of people. Take the first step toward reaching your charitable and financial goals today by scheduling an appointment with the trusted team at DWM.