May 18, 2017
May 18, 2017
There are tremendous breaks and incentives written into the tax code for charitable giving, and you don't have to be wealthy to take advantage of them. But they're most successful for people who truly have a charitable bent -- those who sincerely want to see some of their money go to the charity or charities they care about.
That's because most charitable-giving strategies require a fair amount of planning, paperwork, and set-up and maintenance costs. The tax benefits being what they are, though, it's worth the effort.
The biggest disadvantage to some of the more common forms of charitable giving is that you are, in a way, disinheriting your children. Basically, the charity gets their inheritance. But fear not: There are strategies for "re-inheriting" them -- including using the income stream you've created within a trust to pay for life insurance premiums. So you can give to your favorite charity and still provide for your heirs -- a win-win.
There are many kinds of charitable-giving vehicles: donor-advised funds, pooled-income funds, charitable trusts, life-estate agreements, private foundations and more. When making your choice, you'll want to consider both the tax implications and how much flexibility you'll have as a donor -- especially if you're the type of person who likes to have a say in how your money is spent.
It's important to use a qualified financial professional who can help you plan out your finances, assets, allocations, legacy plans and charitable giving. Planning your finances the right way is vital and is not a do-it-yourself project. With much of your future riding on your income, relying on a professional with adequate experience is a must.
It's also a good idea to communicate your wishes to your children or any other family members who might be affected by your plans. A conversation now could avoid turmoil down the road, especially if they are expecting to inherit specific assets.
For some families, philanthropy is a way of life, passed down from one generation to the next. But if it's new to your family, you'll want to be clear about what you're doing and why.
Obviously, this is a complicated matter. If you're considering making charitable giving part of your wealth plan, consult with a specialist -- better yet, a team of specialists, including a financial professional, a tax attorney and an estate-planning attorney with experience in charitable contributions.
They can walk you through any complex legal matters, and around any obstacles that could get in the way of your success.
Kim Franke-Folstad contributed to this article.
Investment advisory services offered through Global Financial Private Capital, an SEC-Registered Investment Adviser. SEC registration does not imply a certain level of skill or training. Regent Wealth Management and GFPC are not affiliated entities. One or more individuals at Regent Wealth Management are investment adviser representatives of GFPC and [may] receive[s] [JA1] compensation in exchange for soliciting investment advisory services provided by GFPC on behalf of Regent Wealth Management clients.
Copyright 2017 The Kiplinger Washington Editors
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