BY: Michael Romero, JD
VP & Relationship Manager, Heritage Trust | (405) 608-8642
We’ve all been affected by the upheaval of this last year in one way or another. For some individuals, it’s been a time of reflection and reevaluation of our personal priorities. As I’ve interacted with clients over the past 12 months, a common theme of our conversations has been their desire to be more generous with what they have — not just charitable donations of money, but also of time and influence.
It’s been heartening to see so many individuals come to the conclusion, after this tumultuous period, that one way to make things better is to look out for each other a bit more through charitable donations. For us at Argent, wealth management means more than just helping clients protect and grow their money; it also means using some of that abundance with those who are less fortunate.
There are so many worthy causes and organizations out there that it can sometimes be overwhelming to decide where to place one’s charitable donations. We can assist clients who know which causes they most want to support by connecting them with local organizations that are making the greatest impact.
Tax strategies for charitable donations
While the desire to help others is often the primary motivator for these families, there are also a variety of tax advantages for charitable donations that shouldn’t be overlooked. Few would say no to being able to reduce one’s tax bill, or increase the impact of one’s donations, while still having a positive impact on the community.
Investors who are over age 70 ½ and have money saved in traditional IRAs should be utilizing qualified charitable distributions (QCDs) to donate to organizations they support. QCDs allow for up to $100,000 a year to be donated directly from a person’s IRA to a 501(c)(3) charitable organization, counting toward the yearly required minimum distribution. Best of all, the entire amount goes to the charity without taxes having to come out.
Another tax-friendly option for charitable donations is a donor-advised fund (DAF), which can be established through a local community foundation or other sponsoring organization. Although DAFs take a little while to set up, they allow a donor to take a tax write-off immediately on any assets that are placed into the fund. The donor can place cash or other assets into the fund ($5,000 is a typical minimum), then decide when and to whom they should go.
For individuals wanting to contribute to the work of a particular charity in the years to come, another option is to designate that organization as a beneficiary of a retirement account. The tax-exempt status of nonprofit organizations will allow them to withdraw funds from those accounts tax-free after the donor’s death. Charities and philanthropic organizations can also be designated as beneficiaries on life insurance policies, with the policy owner splitting the distribution in whatever percentages they desire.
Supporting your charitable support
However our clients wish to donate — financially or in other ways — we at Argent do everything we can to support them and look for ways to make the process as tax-friendly as possible. During challenging times like these, philanthropy is one of the most important things we can do to support our community and work toward a brighter future.
If you would like additional information about charitable giving, please contact one of our professionals at Argent Philanthropic Services.
