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Charitable giving is a powerful strategy that can reduce tax liability while supporting causes that are close to our hearts. 1900 Wealth advisors can help you choose the right philanthropic giving solutions designed to both ease the tax burden and give to charities.

“A thoughtful financial planner can help a philanthropic client achieve several goals through charitable giving, including minimizing their tax liability, increasing their income, and maximizing the value of assets passed on to family members,” said Dan Slattery, Senior Advisor at 1900 Wealth, CPA. and personal finance specialist.

A charitable giving strategy may not be right for all clients, but it’s one that Slattery often recommends to clients who want to help others and give back to their community. His first task when working with a philanthropic client is to have a candid conversation about his personal interests and goals and to suggest a tax-efficient plan to achieve those goals.

One option is the charitable rollover. Often referred to as a qualified charitable distribution, it allows a person age 70.5 or older to transfer up to $100,000 of their required minimum distribution from an IRA directly to charity without reporting that amount as taxable income.

Another vehicle is the Donor Advised Fund (DAF). This is basically an account dedicated solely to supporting a customer’s favorite charities. When a client deposits cash, securities or other property in a DAF, the tax deduction can be applied immediately, while the payout is made to the charity in a later year. By carefully timing charitable contributions, a donor may be able to maximize tax deductions.

The donor can contribute frequently to the DAF and can recommend grants from the fund. The charity can invest the funds for tax-free growth in the meantime. The gift cannot be revoked or returned to the donor or any other person, and it cannot be used for any purpose other than making grants to charities.

Those who could benefit from a DAF include:

  • A person who wants to create a long-term charitable giving plan but is looking for an alternative to the hassle of setting up a private foundation;
  • An individual who does not obtain the best tax benefit from the amount of the annual gift;
  • A private foundation that is having difficulty meeting its 5% annual distribution requirement; and
  • A person who wishes to pass on appreciated property to a public charity, but has not yet identified the public charity to which the proceeds will be transferred.

A donor-advised fund offers great flexibility and is a useful alternative to setting up a private foundation, which involves legal and accounting fees and is subject to a 1.39% annual excise tax on income. net of investment.

A DAF is a separate entity from the donor. Although the donor can advise the fund on the destination of its distributions, the assets of the DAF no longer belong to the donor.

1900 Wealth advisors can offer other philanthropic giving solutions designed to ease a client’s tax burden and become a charity champion.

Based in San Antonio and serving Central and South Texas, 1900 Wealth offers financial services in areas including investment management, advisory services, family education and governance, charitable giving and iDirect.

1900 Wealth Investment Advisors take a holistic approach to building each client’s portfolio, tailoring an investment plan to that individual’s personal preferences and unique circumstances. Advisors consider the client’s time horizon, ability and willingness to accept risk, liquidity needs, strength of current and future income, tax situation, return and other assets on its balance sheet. This holistic planning creates investment plans for clients that cover the additional parts of their financial life while ensuring they all work together. It is essentially an investment strategy that views the whole as greater than the sum of its parts.

1900 Wealth Management LLC is a wholly owned subsidiary of Jefferson Bank and a registered investment adviser with its principal place of business in Texas. Investments offered by 1900 Wealth are not FDIC insured, are not depositary or guaranteed by the bank or any of its affiliates and are subject to investment risks, including possible loss of principal invested. The information contained herein does not constitute a solicitation and is not intended to be used as tax or legal advice. Individuals should consult their tax advisor or lawyer regarding their particular circumstances.

Deposit products offered by Jefferson Bank, Member FDIC.

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