The Perfect Holiday Gift: Charitable Giving Strategies

In Estate Planning by Amanda Thomas, MS, CFP®, CDFA™ Client Advisor

 
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By Amanda Thomas, MS, CFP
Client Advisor

 
With the strong stock market returns, many clients have appreciated securities in their investment accounts and may incur capital gains tax should they sell these holdings. One avenue that many use to address this issue is a “Donor Advised Fund.”
 
Donor Advised Funds are offered through investment companies like Fidelity and Charles Schwab, as well as local foundations such as the Santa Barbara Foundation. The Fidelity Charitable Fund allows one to contribute appreciated stock, and that gift becomes their charitable donation. Once in their designated charitable fund, the stocks are sold with no capital gains tax, and 100% of the cash proceeds can then be used to grant to any 501c3 qualified nonprofit.
 
As we approach the holiday season, I am talking to clients about year end donations to their charitable funds, but also about how they want to inspire charitable giving in their children, friends and other family members. How can one do that? Fidelity Charitable offers a "Gift4Giving" feature that lets your friends and family support a charity or charities of their choice using your own Fidelity Charitable account. It's easy – choose any amount between $50 and $5,000 (up to the balance in your own charitable account) and send a Gift4Giving email to the recipient. Once the recipient receives their Gift4Giving email they follow the directions to redeem it. They can then recommend that the full amount goes to just one charity, or they can divide your support among multiple charities.
 
Here are other charitable gifting strategies you may find helpful:

  1. Accelerate charitable giving. The upcoming tax reform possibilities, high long term capital gains from a record market year and an increased need due to recent natural disasters make 2017 an optimal year to gift.
  2. Donate appreciated securities. This strategy can allow donors to potentially give more as they receive a greater tax benefit which in turn actually costs them less.
  3. Maximize carry forward. Charitable donations have a 5-year carryforward if the donor is unable to use all of it in a single year due to AGI limitations. This can be a strategy used to offset the potential loss of state and local tax deductions in upcoming years.
  4. Use IRA charitable rollovers. Donors can gift up to $100,000 of their RMD directly to a qualified charity. This is a strategy to use if the client does not need the cash flow and/or they have a high AGI, as it reduces taxable income.

READ MORE: Charities and IRAs: Your Questions Answered

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MS, CFP®, CDFA™

Client Advisor


About the Author
Amanda has over 30 years of financial experience. Prior to joining Mission Wealth in 2006, Amanda spent 11 years as a Vice President in Private Banking at Northern Trust Bank in Santa Barbara, working with high net worth clients and their banking, investment, and trust needs.

MS, CFP®, CDFA™

Client Advisor


Amanda has over 30 years of financial experience. Prior to joining Mission Wealth in 2006, Amanda spent 11 years as a Vice President in Private Banking at Northern Trust Bank in Santa Barbara, working with high net worth clients and their banking, investment, and trust needs.