Online Calculator | Give And You Shall Receive- Efficient Year End Charitable Gift Planning

Give And You Shall Receive- Efficient Year End Charitable Gift Planning

The 2010 tax year is quickly coming to a close. It is time to make some decisions about year-end tax planning. However, uncertainty and confusion are the prevalent sentiments of many clients. With myriad tax changes slated to take effect on January 1, 2011, many of our clients are not sure what they should do by December 31 to reduce their tax bill now and in the future. In some cases the often heard planning advice of “Defer Income and Accelerate Deductions” may not apply. Nevertheless, certain tax planning actions can be taken before the end of this year.

One area of deductions that cannot be overlooked is charitable deductions. Make the most of charitable deductions by finishing up your gifting and accelerating next year’s gifts into 2010. There is no limit to itemized deductions in 2010 but starting next year people making more than $100,000 might see limitations to these benefits. Any charitable contributions that you can make before December 31, you probably should. Charitable contributions can be made both personally or through a business. If you are unable to pay with cash you can also make a charitable contribution via credit card as long as the balance is paid it short period of time.

However, there is a right way to give and, let’s say, an inefficient way to give. With an unorganized, impulsive and random charitable giving strategy significant waste slips into your gifting model preventing the organization you were attempting to support from getting what they should. Instead, consider setting up a Donor Advised Fund (“DAF”) to create a single repository for all your charitable giving. The DAF can serve as your charitable bank account. You get the deductions when you make the deposits.  But what is better is that you do not have to pick an ultimate charity or charities until you make a request for the grant to be withdrawn.

Over the five-year period ending in 2009, a Philanthropy Chronicle study found that assets held in DAFs at 64 organizations grew from $13.48 billion to $16.86 billion, adjusted for inflation. During that same five years, the U.S. stock market actually declined. More than 100,000 Americans are now using DAFs as a simpler way to better coordinate their charitable giving.

Look at an example for the Williams family:

 

Click here for our example.

 

A DAF creates a family foundation that is administered by Aegis World Fund, a public operating charity. Individuals, families, and businesses create these accounts for the purpose of managing their charitable donations.  Here are few of the benefits:

  • Inexpensive and easy to create and manage.
  • Donate in 2010 and take advantage of the tax deductions without having to select the charities at this time. Decisions about which charity or charities to support can be made any time in the future.
  • Your DAF can retain funds until you are ready to make a distribution. The ability to hold funds allows the funds to be reinvested, creating a larger stream of gifts later. You or your advisor can recommend the investment strategy for your contributions to your DAF. This minimizes concerns about how charities manage or mismanage investments. The growth of assets held by a DAF are tax free.  This too provides for even larger gifts in the future.
  • Reduced record keeping. A DAF account provides consolidated reporting and record keeping. You only need a tax substantiation letter for your contributions to a DAF, therefore you can easily make donations to multiple charities. You can also review your history of grant making online before making future gifts.
  • With the successor advisor designation you can establish a enduring family legacy allowing for active family member participation.
  • Any of your gifts can remain private.

Whether or not you should choose to accelerate charitable contribution deductions depends on your current and predicted future marginal income tax rates. With the multitude of impending tax changes scheduled to take effect at the start of 2011 it is important to be proactive and speak with your tax advisor. The traditional strategies to defer income and accelerate expenses may not work for you in 2010. You might consider extending accelerated income and expenses into 2010 by setting up your DAF and acceleration your charitable deductions.

Take control of your taxable situation and proactively direct your legacy.Use a DAF to enable the efficiencies in your charitable planning, and let Aegis World Fund help you realize the potential you have to impact the organizations and the causes you care about the most.

_____________________________

More information on Thomas Agresti can be found here:http://aegiscompanies.com

Thomas (T.J.) Agresti, J.D., LL.M

CEO Founder and Chairman of the Board, Aegis Holdings, Denver, Colorado

Thomas Agresti (JD LLM) from Denver, Colorado began a successful career as a tax attorney after finishing an extensive and well-planned education that included the University of Maryland, Seton Hall University School of Law, University of Parma School of Law in Italy, and University of Denver School of Law. He is currently registered with the Bar of Colorado.

In law school he focused on taxation and transactional law. Additionally he went to Italy to learn the intricacies of international law and finance, also with a focus on taxation and transactional law.  After Italy, T.J. took his skills to the ultimate level receiving a Masters in Taxation from the University of Denver School of Law.  Because of his rare professional and education experience, he quickly became a highly sought after attorney. He chose to work with a large multinational public accounting firm allowing him to gain significant tax and transactional law experience in a short time frame.

As a specialist in taxation for a “Big Six international accounting firm, T.J. specialized in domestic and international strategic tax planning.  Simply put, he reduced his clients tax burdens. His responsibilities also included financial and estate planning; income, gift, and estate tax reduction; compliance for individuals, trusts, and estates, partnerships, corporations, and tax-exempt entities. After leaving the “Big Six” accounting firm, he worked for a major law firm before opening his on practice.  He has lived and worked overseas representing a broad range of clients.  He has practical experience planning and implementing multi-national transactions, sophisticated wealth transfer planning, sophisticated life insurance structures, captive insurance, private equity and structured debt instruments.

_____________________________________________

Ted Rusinoff, M.Tax, CFP®

President, Aegis Risk Management Group

Executive Director, Aegis World Fund

Ted has almost twenty years of experience as an advisor helping families and businesses in various financial and tax disciplines to best utilize the tools and strategies at their disposal to accomplish their goals. For the last eight years he has been working with several organizations to develop and implement their Donor Advised Fund platforms, finding new developments to better serve the donors of each organization, and their legacy plans.

Ted earned a Bachelor of Science Degree in Business Administration/Finance as well as a Masters of Taxation from the University of Akron.  He has also earned the designation of Certified Financial PlannerTM

A nationally sought after public speaker, Ted writes frequently on such topics as retirement planning, charitable planning, risk management, tax planning, and business best practices.  Ted lives in Hudson, Ohio with his wife and two daughters.  He enjoys snowboarding, horseback riding, golf, and bicycling.

Filed Under Online Calculator | Leave a Comment

Tagged With , , ,

Comments

Leave a Reply