Tis the Season for Charitable Giving

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Tis the Season for Charitable Giving
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Tis the Season for Charitable Giving

The giving season is upon us, and at Janiczek we are blessed to work with and guide a number of charitably minded clients whose life long mission is to give back to their favorite charities and causes on a regular basis.  While their generosity and intentions really don’t revolve around the tax advantages (it is more about the philanthropies they support), to give wisely is a great way to benefit both the recipient and the donor.

Janiczek donations

So what are the main reasons for making a charitable gift?  That answer may be very different from one person to the next, but I would suggest some of the more common motivations would include the following:

  • Compassion for those in need
  • Religious and spiritual commitments
  • Perpetuation of one’s beliefs, values and ideals
  • Support for the arts, sciences and education
  • The desire to share one’s good fortune with others

Whatever the reason might be, the U.S. tax system is definitely designed to encourage gifting!  There are a plethora of charitable strategies to incorporate that range from an outright gift directly to a charity today, to those who make a gift now through an established charitable trust where the donor receives income for his/her lifetime before passing along the remaining assets in the trust to a given charity, to those who simply wait until they die before transferring any assets to their favorite charities.

Beyond the satisfaction of giving, a few of the financial benefits of gifting may also include:

  • Income taxes:  May provide an income tax deduction, and in many cases can avoid or delay payment of capital gains tax.
  • Cash flow:  May increase personal after-tax cash flow.
  • Estate planning: May reduce the size of one’s estate and increase the amount passing to one’s heirs.

The Federal law does limit the amount that is deductible for the year in which a gift is made, based upon adjusted gross income (AGI).  Should one’s generosity exceed the 20% of AGI limit for a given year, any excess deduction can generally be carried forward for up to 5 years.  Depending on the type of asset given and the type of charitable organization receiving the gift, one’s deduction may be limited to 50%, 30%, or 20% of AGI.

As rewarding as philanthropy can be on its own, a well thought out and tax efficient plan may result in even greater support to your favorite charities.  With all the options to choose from and the tax ramifications to consider, it is always best to seek the professional guidance of qualified professionals.  Embrace the season!

R. Brady Siegrist, CFP®

Brady Siegrist, CFP® is Managing Director of Wealth Management of Janiczek® Wealth Management, which exclusively serves high net worth investors (individuals with $2 to $20 million portfolios) and ultra-high net worth investors (individuals with $20 million+ portfolios) across the country.

With his Bachelor’s degree in Finance from the University of Colorado, his CERTIFIED FINANCIAL PLANNER™ professional designation and 15+ years experience in the financial services and wealth management industries, Brady brings superb technical expertise and experience to Janiczek®’s disciplined Evidence-Based Investing (EBI) and Strength-Based Wealth Management™ (SBWM) platform. Mr. Siegrist is a Partner of the firm and a member of its executive Leadership Team.

bsiegrist@janiczek.com
(303) 339-4484

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