There is more to good financial planning than simply providing for you and your loved ones. An attentive financial advisor will not only protect your assets, but also help you establish a legacy of giving. Incorporating strategic charitable giving into your financial plan can positively impact your community while efficiently managing your estate.
But before you open your checkbook, ask your financial advisor about how the following considerations can help you make the most out of your gift.
One of the most efficient ways you can give to a non-profit organization is with an appreciated asset. A stock that has increased in value often makes a better gift than cash. Depending on the level of appreciation, a relatively small investment made years ago could have a large impact on a charitable organization today, while significantly reducing your tax liability.
A donor-advised fund is a great opportunity to target tax efficiency into the year that is most beneficial to the tax payer. Whether you’re selling a business or receiving a large bonus, this type of fund maximizes your giving while minimizing your tax burden. Establishing a donor-advised fund allows you to make one large gift that can be distributed to a variety of organizations, or to a single organization over a longer period of time. When properly managed, it is literally a gift that keeps on giving.
Legacy and Estate Planning
Sometimes “leaving everything to the kids” can leave the kids with less than you’d expect. Estate and income taxes can greatly reduce the value of your assets, leaving your beneficiaries with a heavy tax burden and a fraction of your estate’s worth.
Setting aside a portion of your estate for the purpose of charitable giving greatly increases its value to the recipient organization and reduces the impact of estate taxes on your beneficiaries. With the right planning, you can leave a legacy of generous community support while providing for your loved ones long after you’re gone.
Where to Give
Part of the beauty of charitable giving is the opportunity it provides us to reflect on what we value most. Take some time to think about the issues, programs, and services that mean the most to you and your community. Then talk to your financial advisor about how you can help. Regardless of what organizations you support—from religious and human services to education and the arts—there is no end to the good you can do with a well-considered charitable gift.
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Nathan Quello is a CERTIFIED FINANCIAL PLANNER™ with Loft Advisors in Sioux Falls.
First Dakota National Bank and Loft Advisors are independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC, an independent broker/dealer, and are not insured by bank
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