Michael E. Smith, CFP®, MSFS
Private Wealth Advisor
Michael Smith & Associates
Ameriprise Financial Services, Inc.
Stevens Point, Wisconsin
Q: I enjoy giving in support of causes that are important to me. How can I make sure I am maximizing my gifts, while also maintaining the assets I need for my future and to provide for my family as well?
A: Many donors want to maximize their charitable gifts but are unaware of the numerous gifting strategies available. By working with your financial, tax and legal advisors, you may be able to increase your gift while reducing your taxes and providing for your family's needs.
Most people know that a charitable gift can be tax deductible, but few know that certain gifts have the double tax benefit of avoiding capital gains tax and being income tax deductible. Some investors find themselves locked in with large gains in investments that produce little or no income. There are gifting strategies that could allow their sale without current capital gains tax, provide a current-year income tax deduction and increase the investor's annual income now or in the future.
Other charitable-minded people have significant IRA or retirement plan balances which they are unlikely to deplete during their lifetime. A possible strategy could be to leave non-income tax-deferred assets (such as real estate or stocks) to heirs, while leaving tax-deferred assets (such as retirement plan assets) to charities tax-free at death. However, many other strategies exist and should be discussed with your advisors.
Consider the following process: Begin with your financial advisor and share your charitable and family goals with him or her. Ask your advisor to prepare detailed Net Worth (including cost basis) and Income and Expense Statements. From these, several "what if" projections of future net worth, income and expenses should be made. For example, what if you and your spouse remain healthy and both live beyond normal life expectancy? What if one spouse needs long-term care while the other remains healthy at home? What if one dies early and the other late?
With these statements and projections, you and your financial advisor are prepared to meet with your tax and legal advisors. Knowing your charitable and family goals and having a full understanding of your financial circumstances, they may very quickly determine the most effective and appropriate gifting strategy for you and your family.
You will be able to make your gifting decision, confident that you are taking care of your loved ones and maximizing the benefits of your generous gift.
If you are over 70 ½, own a traditional IRA and don't need your RMD for annual living expenses, have heirs and loved ones who are well provided for and have estate plans that include donations to one or more charities you want to help, discuss the possible tax benefits of a Qualified Charitable Distribution with your advisers or visit
Legacy Planning for more information.
For additional information on making a planned gift to Marshfield Clinic, please contact:
Karen Piel, J.D., C.P.A., CFRE
Gift Planning Officer