Beyond the Basics: Creative Charitable Strategies to Maximize Client Impact

As financial advisors, you’re always looking for ways to help your clients achieve their financial goals. But when it comes to year-end tax planning, the key to maximizing benefits often lies in thinking outside the box. Charitable planning is a powerful, often underutilized tool that can help clients remove underperforming or worrisome assets in a tax-advantaged way—while also accomplishing their financial and philanthropic goals.

Beyond Cash: Uncover Hidden Opportunities in Charitable Giving

When clients think about charitable giving, cash donations typically come to mind. However, there are far more opportunities to leverage non-cash assets for greater financial efficiency and tax benefits:

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Encouraging clients to think beyond cash gifts can open up tax savings and allow them to make a larger impact. By donating appreciated assets, clients can avoid capital gains taxes and still achieve their charitable goals. This not only benefits the charity but can also relieve clients of assets that may no longer serve their long-term needs.

The Simplicity of Direct Gifts

A straightforward way for clients to give is through direct gifts of assets. When they transfer property—such as stocks, real estate, or even cash—the charity receives the donation, and the client gets a tax deduction based on the asset’s fair market value. It’s simple and effective: the charity benefits immediately, and the client enjoys a tax reduction in the current year.

This is a great way to start the conversation with clients who may want to give but aren’t aware of the flexibility or tax advantages beyond writing a check.

Qualified Charitable Distributions: A Smart Way to Reduce Taxable Income

For clients aged 70? or older, Qualified Charitable Distributions (QCDs) offer a unique solution, especially if they don’t need their full IRA distributions for living expenses. With a QCD, clients can transfer up to $105,000 per year directly from their IRA to charity—completely excluding the amount from their taxable income.

QCDs are a great way for clients to meet their Required Minimum Distribution (RMD) obligations while also supporting a cause they care about. This strategy reduces the taxable income clients would otherwise report, offering them a tax-efficient way to give. For clients with 401(k) accounts, rolling them into an IRA first can unlock this powerful opportunity.

Repositioning Assets: Life Insurance as a Charitable Tool

Clients often have underperforming assets such as CDs or excess cash in savings. Repositioning these assets into a life insurance policy is a creative way to achieve several goals at once. A life insurance policy can provide:

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For example, if a client uses $500,000 in underperforming assets to fund a life insurance policy that provides a $1 million death benefit, they could split the payout—leaving $500,000 to their family and $500,000 to charity. This approach allows clients to leverage their assets for greater impact.

Advanced Tools: Charitable Remainder Trust (CRT) and Charitable Lead Trust (CLT)

For clients with appreciated assets like real estate or large investment portfolios, Charitable Remainder Trusts (CRTs) can be a highly tax-efficient way to support both their financial and charitable goals. Here’s how it works:

1. The client transfers appreciated assets, such as a rental property, into the CRT.
2. The CRT sells the asset without triggering capital gains taxes, allowing the full proceeds to be reinvested.
3. The client receives a lifetime income stream or payments over a set period.
4. Upon the client’s passing, the remaining assets go to charity.

This strategy eliminates immediate capital gains taxes, provides an ongoing income stream, and offers a charitable deduction spread over six tax years.

Alternatively, a Charitable Lead Trust (CLT) allows clients to transfer assets to a trust that pays income to charity for a set number of years. After the trust term ends, the remaining assets return to the client or their heirs. This approach allows clients to support charity now while preserving assets for their family’s future. Think of it as a "charitable retirement plan"—clients can create a lasting legacy while enjoying significant tax benefits.

Charitable Planning: Achieving Client Goals with Creative Solutions

Charitable planning allows you to help clients meet multiple goals at once—removing unwanted assets, reducing tax burdens, securing family legacies, and supporting meaningful causes. The beauty of charitable giving strategies is that they don’t have to be all or nothing. It’s not a choice between family or charity. With the right planning, it’s possible to achieve both.

Advisors who think outside the box and explore creative charitable solutions can add significant value for their clients. Whether it’s through direct gifts, QCDs, life insurance, CRTs, or CLTs, charitable planning can be a win-win for clients, their families, and the causes they care about.

At Camas Advice, we specialize in helping advisors like you design tailored charitable giving strategies that align with your clients’ goals. If you’re ready to explore how these tools can benefit your clients or want to discuss specific cases, don’t hesitate to reach out. We’re here to assist with custom case design and provide solutions that maximize tax advantages while supporting your clients’ charitable objectives.

?Let’s work together to create meaningful, tax-efficient strategies that make a lasting impact for your clients and their families. Reach out today, and let’s explore the possibilities! .

?Take advantage of our no-cost resources: Visit the Legacy Planning Academy, as well as our complimentary weekly one-hour coaching sessions every Wednesday at 9 AM Pacific Time. ?Sign up using this link Coaching? Coaching Registrations

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