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Maximizing Philanthropic Efforts

If you have experienced financial success in life, you possess a unique opportunity to make a profound difference in the world through strategic and tax-efficient charitable giving. From lifetime donations to incorporating charitable strategies into your estate plan, you can align your philanthropic goals with your financial objectives. Here are a few things to consider:

Charitable donations during life: charitable donations made during your lifetime provide an opportunity to witness the impact of your generosity and engage directly with the organizations you support.

  • Cash donations: the simplest and most straightforward method, cash donations offer an immediate tax deduction. However, for larger gifts it's essential to consider the percentage limitations on deductions.

  • Donor advised funds (DAFs): DAFs are charitable accounts for the sole purpose of supporting organizations you care about. By contributing cash, securities, or other assets to a DAF, you receive an immediate tax deduction, and the funds can be distributed to qualified charitable organizations over time. This allows for strategic and intentional giving, with the added benefit of potential investment growth within the fund.

  • Charitable Remainder Trusts (CRTs): A CRT enables you to donate assets, such as stocks or real estate, while retaining an income stream for a specified period or for life. Upon termination, the remaining assets are distributed to your chosen charitable organizations. CRTs offer tax benefits, including an upfront charitable deduction and the potential to avoid capital gains tax on appreciated assets.

  • Qualified Charitable Contributions (QCDs): If you are age 70 1/2 or older, you can direct transfers of up to $100,000 annually from your traditional IRA to qualified charitable organizations. These QCDs count towards your required minimum distribution but are not included in your taxable income. This strategy can be particularly advantageous for individuals who don't need the full amount of their RMD for living expenses.

  • Private Foundations: Establishing a private foundation allows you to create a lasting philanthropic legacy. However private foundations entail additional administrative responsibilities and stricter regulations. They offer control over the grant making process and allow family involvement in charitable activities.

Charitable Giving Through Estate Planning: Planning for charitable giving as part of your estate plan allows you to extend your philanthropic impact even after you are no longer present.

  • Charitable Bequests: By including charitable bequests in your will or trust, you can leave a specific dollar amount, a percentage of your estate, or even the residual to one or more charitable organizations. Charitable bequests are generally deductible from the taxable estate, potentially reducing estate taxes. An example is leaving a Traditional IRA to a charity, therefore avoiding income taxes on that asset.

  • Charitable Reminder Trusts (CRTs): Like the lifetime strategy, CRTs can be established through your estate plan. By transferring assets into a CRT upon death, your heirs or chosen beneficiaries can receive income for a specific period or life. Afterwards the remaining assets pass to your selected charitable organizations, providing a tax deduction for the estate.

  • Charitable Lead Trusts (CLTs): CLTs allow you to support charities for a defined period, after which the remaining assets are passed to your designated beneficiaries, often married family members. CLTs can help reduce estate taxes, providing an income tax deduction for the value of the charitable payments.

  • Donor advised funds (DAFs): As part of your estate plan, you can name a DAF as a beneficiary, ensuring continued involvement of your family in the charitable giving process. DAFs can provide flexibility for future generations to make grant recommendations based on their passions and values.

You do not need to navigate these strategies alone. If you would like guidance from an experienced financial advisor who will collaborate with your estate attorney and CPA to tailor a comprehensive plan that maximizes your impact while minimizing your tax liability, then please reach out to me today! Together we will create a legacy of generosity and influence social change that resonates for generations to come.

Integrated Financial Partners does not provide legal/tax advice or services. Please consult your legal/tax advisor regarding your specific situation



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