THE BREW – CHARITABLE GIVING STRATEGIES FOR 2024

TOMORROW: INVESTMENT ROUNDTABLE

DATE November 21, 2024

TIME 1:00pm – 2:00pm PST

We invite you to join our upcoming quarterly Investment Roundtable webinar featuring distinguished speakers: John Emerson, Vice Chair of Capital Group International, Inc., Sam Miller, Vice President of Investment Strategy at SEIA, and Phillip Argue, Director of Investment Strategy at SEIA. This session will provide insights on key developments from Washington, D.C., and address today’s most pressing investor questions.

Topics on the agenda include:

• Insights on the recent election and upcoming policy implications
• Strategic approaches for investors navigating today’s economic landscape
• Expectations for the remainder of 2024 and beyond

REGISTER HERE

CHARITABLE GIVING STRATEGIES FOR 2024: MAXIMIZING IMPACT AND TAX BENEFITS

As we start year-end planning, charitable giving remains one way to support causes close to your heart while taking advantage of tax-efficient strategies. With anticipated tax law changes on the horizon and a continued focus on maximizing giving power, it may be beneficial to explore some options available to those that are charitably inclined.  

This article highlights the key benefits of three charitable giving strategies: Donor-Advised Funds (DAFs), Qualified Charitable Distributions (QCDs), and Charitable Remainder Trusts (CRTs). If you'd like to read the full article click here!

1. Donor-Advised Funds (DAFs) 

• Immediate Tax Deduction: When a person contributes to a DAF, they receive an income tax deduction in the year the donation is made. The tax deduction allowed is up to 60% of Adjusted Gross Income (AGI) for cash donations and up to 30% of AGI for securities and other appreciated assets (such as closely held stock). Any excess contribution may be carried forward and deducted up to the applicable limit in the 5-year period after the year of contribution. 
• Flexibility: Once donors contribute to their DAF, the funds are irrevocably dedicated to charitable giving. However, the funds are “donor-advised,” meaning that while donors have no direct control over the fund, they can recommend how their funds are invested and which charities will be granted disbursements over time. The ability to recommend grants over time allows donors to structure their giving to meet their potentially evolving charitable wishes. 
• Growth Potential: Contributions to a DAF can be invested, allowing the fund to grow tax-free over time. This can allow an increase in the charitable impact of the original gift.  

DAFs may be ideal for donors who want to make irrevocable charitable contributions now, and receive an immediate tax deduction, but disburse funds to charities over time.  

2. Qualified Charitable Distributions (QCDs) 

• Satisfy Required Minimum Distributions (RMDs): QCDs can satisfy part or all of an individual’s RMD for the year, helping to avoid additional taxable income. 
• Income Tax-Free Distribution: Unlike traditional IRA withdrawals, which are taxed as ordinary income, QCDs are not included in taxable income. This can be particularly advantageous for high-net-worth individuals looking to minimize their income tax burden while supporting charities. 
• Low-Impact Giving: By using pre-tax dollars to make charitable contributions, QCDs can be a tax-efficient way for retirees to give directly to charities.  

QCDs may be suitable for retirees who are required to take RMDs but prefer to avoid the taxable income associated with those withdrawals. They may also be effective for individuals with significant assets in tax-deferred retirement accounts who do not need all of the assets to live on. 

3. Charitable Remainder Trusts (CRTs) 

• Income Stream: With a CRT, donors can receive an income stream for a set number of years or for life, depending on the terms of the trust. This can provide financial security while still making a charitable impact. 
• Tax Deduction: Donors receive an income tax deduction based on the present value of the remainder interest that will eventually pass to charity. If the CRT is funded with cash, the donor can deduct up to 60% of AGI; if appreciated assets are used to fund the CRT, up to 30% of their AGI may be deducted in the current tax year.  Any excess contribution may be carried forward and deducted up to the applicable limit in the 5-year period after the year of contribution. 
• Capital Gains Tax Deferral: When highly appreciated assets (such as stocks or real estate) are contributed to a CRT, the donor avoids immediate capital gains taxes. The trust can sell the assets after they are donated to the CRT, reinvest the proceeds, and distribute income to the donor without triggering capital gains taxes. 
• Estate Tax Reduction: Assets transferred to a CRT are removed from the donor’s taxable estate, which can be a significant benefit for individuals with large estates who are looking to minimize estate tax exposure. 

CRTs offer a unique combination of philanthropy and income generation. They may be a good fit for donors who want to secure an income stream while ultimately supporting their favorite charities and reducing estate tax liabilities. 

NEXT STEPS 

Whether you aim to maximize the tax benefits of your generosity or simply help ensure your resources are used in the most impactful way, incorporating these charitable strategies into your year-end planning may be one way to give back while helping to secure your financial future. 

Selecting the right charitable giving strategy depends on several factors, including your financial goals, the assets you wish to donate, and the tax implications. It is important to schedule a time to talk with your advisor to determine which strategies may maximize the charitable impact and tax benefits for your personal situation.

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