The holidays are a time for joy, celebration, and reflection on what we all should be most grateful for. Then, many of our thoughts often drift to those less fortunate than ourselves and the extraordinary organizations that work tirelessly to help them. We can support these organizations and causes in many ways – churches, universities, hospitals, medical research, and others.
You’ve worked hard to accumulate a significant amount of assets. This holiday season could be an ideal time to create a charitable giving strategy that helps the organizations and causes you wish to support. And the bonus can be a lasting legacy for you and your family.
It’s also time to develop a plan for minimizing your 2023 tax liabilities. The Scott Marsh Financial team has assisted successful individuals and families for more than 30 years with the creation and execution of sophisticated charitable giving and tax planning strategies. Whether you reside in Utah or another state, we specialize in helping families create meaningful legacies.
In this blog post, we dive into how you can create a charitable giving strategy while producing financial benefits for you and your family.
Going Beyond the Checkbook
Charitable giving isn’t just about writing a check to a cause you believe in. At Scott Marsh Financial, we firmly believe that community support should be a cornerstone of our values — and we provide comprehensive gift-giving services that make this possible for our clients.
As your financial caretakers, we are also committed to helping you make smart, informed financial decisions that protect and nurture your wealth to pursue a secure and prosperous future for you and your family.
“We make a living by what we get. We make a life by what we give.”
Winston Churchill
Donor-Advised Funds (DAFs)
Consider a Donor-Advised Fund (DAF) as a specialized charitable savings account. You contribute to the fund, enjoy immediate tax deductions, and then designate the distribution of those funds to qualified charitable organizations.
One compelling benefit of a DAF is the immediate tax relief. Contributions to a DAF are generally tax-deductible in the year you make them, so they can be useful for offsetting high-tax years.
The tax benefits become even more attractive if you contribute appreciated assets, for example, stocks, that would otherwise incur high capital gains taxes if sold outside the DAF.
As fiduciary advisors in Utah, we can provide personalized counsel on whether a DAF aligns with your current financial circumstances and philanthropic objectives.
Download our popular eBook on Donor-Advised Funds.
Charitable Remainder Trusts
At its core, a Charitable Remainder Trust (CRT) involves transferring assets—often highly appreciated—into a trust. This trust sells the assets tax-free and invests the proceeds. You and your designated beneficiaries receive income from the trust for a predetermined period, which could be a surviving spouse’s lifetime. The remaining assets go to the designated charitable organization when the trust terminates.
What’s in it for you? First, the tax advantages: Transferring and selling appreciated assets to a CRT can bypass capital gains taxes and provide charitable deductions in the year the trust was funded. Then, the income generated by the trust can supplement your retirement income, tailor-made to suit your financial needs.
Our team of fiduciary advisors in Utah can guide you through establishing a CRT that serves both you and the nonprofit institution of your choice.
Direct Charitable IRA Distributions
Another charitable giving strategy to consider is a Charitable IRA Distribution. This tactic lets you directly transfer funds from your Individual Retirement Account (IRA) to a qualified charity.
The standout perk here is that the transferred amount is not considered taxable income—enabling you to avoid potential bumps in your tax bracket.
For those 72 or older and subject to Required Minimum Distributions (RMDs) from their IRAs, this charitable alternative can satisfy your RMD obligations without increasing your taxable income.
Concerned About Your Heirs?
You may be worried that charitable giving could reduce your heirs’ inheritance. A straightforward solution is a survivorship insurance policy. The primary purpose of a survivorship insurance policy is to provide financial protection to heirs, such as children or other beneficiaries named in the policy.
A survivorship insurance policy, also known as a second-to-die insurance policy, covers the lives of two insured individuals, typically you and your spouse. This policy only pays a death benefit after both insured individuals have passed away.
These policies can replace the gift amount in your estate and are often funded through the trust’s income or tax savings.
Consider Scott Marsh Financial as Your Financial Partner
Choosing the right Utah financial advisor can be one of the most important decisions for you and your family.
At Scott Marsh Financial, we offer virtual family office services tailored to your comprehensive financial needs. Here are a few expectations you should have when you partner with us:
- We help you plan for prosperity that spans generations
- We develop a sophisticated tax plan so you keep more of your money
- Our team is genuinely invested in your success
- We go beyond one-size-fits-all solutions
- We provide integrated financial solutions tailored to your circumstances
- Our relationship is based on complete transparency
- We are single-minded when it comes to the achievement of your goals
We invite you to connect with us to learn more about our charitable and tax planning services.
