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.
- 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.
- 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.
- 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.
- 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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Mission Wealth is a Registered Investment Adviser. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
