Trusts can be an integral part of your financial planning process. When you place your assets in a trust, you can protect your assets and distribute them to who and what you want, when you want. In addition, you can appoint a trustee of your choosing to hold and distribute money in your trust for a predetermined purpose in the event that you suddenly pass away or become incapacitated. 

There are many types of trusts that you can leverage to make a difference while still gaining tax benefits. For example, charitable giving trusts give your assets to charities of your choice. Giving assets instead of cash can give you unique tax benefits. For example, you can avoid capital gains taxes by giving stock directly to a charity. Charities are tax exempt, so they will receive 100% of your donation. 

Depending on your financial situation and financial goals and depending on their tax advantages, you may want to give your donations in some ways over others. You can speak to a CERTIFIED FINANCIAL PLANNER™ professional who can help guide you in your charitable giving plan.

3 steps to building a tax-advantaged charitable giving plan

While the main goal of giving philanthropically is to benefit communities and causes you are passionate about, you can also give strategically benefit your own finances as well. The following tips can help you create a sustainable and beneficial charitable giving plan:  

  • Establish your philanthropic goals.
    Before you begin organizing your assets and money for charitable giving, you need to establish some important details. First, you need to pinpoint the amount of money you wish to donate over time, as well as the organizations you’d like to support. What causes are you passionate about? You can use this information to establish your giving priorities and help you determine a long-term, tax-advantaged charitable giving plan.
  • Determine from where you want to distribute your charitable giving funds.
    Your financial advisor may recommend that you give donations from your charitable giving trust. However, they may also recommend that you establish and use a donor-advised fund, which also allows you to give to IRS-qualified charities without being taxed on your donation. When you give to a donor-advised fund, you receive a tax benefit in the year in which your contribution to the fund was made. Contributions to a donor-advised fund can be invested and potentially grow tax-free.
  • Incorporate your charitable giving plan into your budget.
    After you plan to give a certain amount of money to charities throughout the year, you may want to think about when to distribute your donations so that they do not compromise your spending habits, retirement plans or lifestyle. You should adjust your budget to reflect your charitable giving and include the tax advantages you may receive as a result of your charitable giving. You may also want to pre-schedule your donations throughout the year so that your giving is predictable and sticks to your budget. 

Talk to a ProVise CFP® professional about how to build a charitable giving plan

Do you need expert advice as to how to establish a tax-advantaged charitable giving plan? At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about your charitable giving plan? Contact ProVise today to schedule a complimentary consultation.