Don’t Forget to Think About Your Other Legacy: Charitable Giving

Americans are world leaders in giving, and that generosity has touched countless many around the world. And while the 2017 tax reform bill might make charity seem less strategic for those who typically itemize deductions, we have numerous clients who continue to make it a priority – after all, many people interested in philanthropy aren’t doing it for the tax breaks!

That said, there could be ways to utilize the new tax law changes to your advantage, without sacrificing your commitment to the charities that rely on your contributions.

Namely, you might consider a donor-advised fund.

How code changes can impact your charitable strategy

 In the past, Americans who itemized deductions could see immediate benefits each year from their charitable contributions. Now, with the standard deduction rising to $12,000 for individuals and $24,000 for married couples, the bar is set higher in terms of how “useful” a charitable donation will be from a tax perspective.

Of course, you could simply save up and give larger sums to charity every year or two, or however often they would make it reasonable to itemize.

But this might not work for those who recognize how important ongoing cash flow can be to charities and other causes. After all, that money might really be needed every year.

Enter the donor-advised fund

Once you set up your own donor-advised fund, you could be eligible for a tax deduction when you contribute to the fund (again, this assumes that your contributions will be large enough in the context of your overall finances to make itemized deductions sensible).

Once the money has been contributed, your charitable giving from the fund doesn’t get the deduction. However, you’re able to use that money over time to give to your causes on an ongoing basis – that’s the “donor-advised” part, and it just means that you’re in charge of how your charitable funds are used.


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You can set up regular transfers to your charities, or pick and choose over time. For those concerned about providing ongoing support to a cause, this offers a potential win-win: you take your tax deduction when it makes sense, and your charity of choice gets the benefit of regular donations.

A tax strategy bonus

You can of course donate cash to a donor-advised fund, but you could also contribute appreciated securities like stocks.

This can be a useful tax planning strategy for individuals who might want to realize returns without triggering a large tax payment. Donating those stocks to your donor-advised fund can provide an offsetting deduction on your tax return, and even allow you to contribute more without putting up cash.

In the right situation, it could be a tax planning bonus – just be sure to consult with an advisor about your particular situation first.

What you need to know

There are costs associated with donor-advised funds, namely operational expenses and fees. These will vary according to the provider, and you may also encounter minimum donations.

You’ll also be working on a specific timeline. The deadline to contribute to these funds for a particular tax year is December 31, and you’ll need to give yourself a sufficient on-ramp to set up the account and make any required transfers.

Is it right for me?

Before setting up a donor-advised fund or undertaking any new tax strategy, it’s wise to speak with a qualified advisor or tax accountant.

This is especially the case under the new tax reform rules, some of which may still be subject to interpretation. Your advisor should be able to help you navigate the changes and plan ahead for the future.

Legacy planning doesn’t end with taxes

Don’t leave the future to chance. Download our free guide From the Bucket List to the Bank to learn more about important factors in designing your legacy, including common risks, intra-family financial help, education, and estate planning. With special features for business owners and philanthropists, we’ll help you cover your legacy basics and get started in planning for the very long term.

Take your planning into the future: Download our free guide today!


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We can discuss this topic and more at a complimentary appointment. As a bay area retirement planning coaches, we can give you a review and make suggestions based on your retirement objectives.

Important Disclosures
& Associates Insurance Services or United Planners Financial Services (United Planners). The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.
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Further Reading

Introduction to donor-advised funds under tax reform: