Why Should I Rethink The Ways I Give?

Why Should I Rethink The Ways I Give?

In September, SSG Executive Advisory Group had the privilege of hosting the 4th Annual Patriot Invitational. The goal of the event is to raise money that can be donated to vetted charities that support our military Veterans and their families and we are proud to have raised over $400k in gross revenue towards this cause this year. With this event in mind, this brings up the many ways to give as we head into the holiday season.

Many successful individuals and families are asked to give to any number of great causes. While it is relatively easy and almost second-nature to simply write a check, there are other creative ways to give which may not only enhance the net benefit to the beneficiary but also provide benefits to the donor!

As opposed to simply writing a check, consider the following:

Gifting Appreciated Stock

Many successful investors have appreciated stock in their portfolio with potentially meaningful appreciation. This appreciation becomes a (capital gain) taxable event when sold, but if directly gifted to a qualified 501(C)3 organization such as the Patriot Fund, this tax is avoided by both the donor and the beneficiary.

• Donor – has the benefit of taking a tax deduction equivalent to the full market value of the stock gifted and the donor completely avoids the capital gain tax.
• Beneficiary – receives the stock and sells it at full market value. A qualified 501(C)3 organization is exempt from capital gain taxation.

Donor-Advised Fund

Many successful and potentially philanthropic investors find an immediate need for a tax deduction to offset potential capital gains and income tax exposure. Contributing appreciated stock to a Donor-Advised Fund allows donors to benefit from a current tax deduction while spreading the beneficiary gifts over time.

• Donor – has the benefit of realizing a greater current income tax deduction while not committing the entire value immediately. Gifts can be “advised” to the custodian over time.
• Custodian – there are many qualified donor-advised funds available at several Trust Companies. The Trust company receives the granted stock, sells it without capital gain tax exposure, and on the advice of the donor, will make the distribution to qualified charitable organizations.
• Beneficiary – as with any gift, the beneficiary 501(C)3 organization is free from taxation and in this case, several beneficiaries may be funded over time.

Individual Retirement Account Distributions

Financially successful individuals may have a meaningful amount of capital accumulated in Individual Retirement Accounts (IRA’s) which they feel is available for potential charitable giving

• For those over 59 ½ years of age, a withdrawal can be made payable to a qualified charity (Qualified Charitable Distribution – QCD), the amount of which is excluded from taxable income to the donor.
• For those over 70 ½ years of age, Qualified Charitable Distributions up to $100,000 can be counted toward satisfying your required minimum distribution (RMD).

Family Foundation

For some families of greater charitable desire, considering a Family Foundation may provide opportunities similar to the Donor Advised Fund but with greater flexibility, control and management. Such Foundations are used to not only fulfill family philanthropic planning desires but also to foster a legacy of such thought and strategy.

Here at the SSG Executive Advisory Group of Raymond James, we consider each client’s individual situation and can help develop the best course of action for your family’s unique needs.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact us.