How To "Super-Charge" your Charitable Giving.

Do you have funds set aside for not only 2016 charitable giving, but for multiple years?  You can actually use those assets to help offset your income for 2016.  This can be particularly helpful if you have a large amount of pent of capital gains in your investments or have had an extremely high income year.

The tool I'm referring to is called a Donor Advised Fund, which allows you to receive deductions for assets transferred to the account, without actually having to gift directly for the calendar year.  You receive deductions in the year you fund the account and have discretion over when gifts to charities are divvied out.  Since you received the deduction the year you transfer assets into the account, you are no longer the owner of the assets and can not pull the assets back. 

Here are the mechanics of how it works?

1. Create a new account with your preferred custodian who offers this type of account.  Popular do-it-yourself companies include Fidelity and Vanguard, which have low account minimums.  You can also work with your trusted advisor if managing investments is not your passion(it's not for everyone).
2. Prior to funding the account, I recommend you consult a tax professional as the IRS has a unique set of rules regarding deduction limits.  Although you can always fund the account with cash, you typically would obtain more bang for your buck by donating appreciated assets that are held outside of a retirement account.
3. Begin to fund the account.  Be aware of any potential deadlines as you approach the end of the year.  Once the assets are added to the account, you no longer own the assets, which is why you're allowed to receive tax benefits immediately upon transfer.
4. Most donor advised funds will liquidate any assets you deposit and may allow you to help choose a new portfolio for tax-free growth potential.
5. When you decide to grant a gift to a charity of your choice, use the companies login portal to direct the dollar amount and target of the gift.
6. You can replenish the account for future tax deductions, but it is not required.

Here are some critical details to keep in mind:

• (Third Time Mentioned) you no longer become the owner of the assets, but can direct future gifts to charities of your choice.
• If you have a specific charity in mind, make sure you confirm that they are eligible to receive gifts from donor advised funds.
• Costs and minimums may vary.
• Investment options may be limited.

In conclusion, donor advised funds don't make sense for everyone, but for those who it does, it allows them to maximize their gifting and minimize their taxes.

As always, I'd love to help you and your family with your financial plan.  Please contact me if you'd ever like to findout more.