Wealth from Wisdom

How to Make Charitable Giving Part of Your Financial Plan

November 30, 2019
Wealth from Wisdom
How to Make Charitable Giving Part of Your Financial Plan
Chapters
Wealth from Wisdom
How to Make Charitable Giving Part of Your Financial Plan
Nov 30, 2019
Carson Wealth

The holidays are well on their way. People will be lining up to see Santa, the stores are selling out of turkey, and the economy is preparing for a well-needed injection of capital. 

We’re in the fourth quarter, which is the giving quarter usually. Nearly one-third of all charitable giving happens in December alone. Around 12 percent of all giving happens in the last three days of the year. So not only are Walmart and Amazon gearing up for this season, but nonprofits and religious organizations are, as well. 

On this episode of Wealth From Wisdom, we’re going to discuss how to give effectively. It seems simple on the surface, but it’s more complex than you think. Are you giving with a tax-aware, savings-aware strategy? Are you giving to the same causes you always have or do you need to re-think some of your approach? 



Show Notes Transcript

The holidays are well on their way. People will be lining up to see Santa, the stores are selling out of turkey, and the economy is preparing for a well-needed injection of capital. 

We’re in the fourth quarter, which is the giving quarter usually. Nearly one-third of all charitable giving happens in December alone. Around 12 percent of all giving happens in the last three days of the year. So not only are Walmart and Amazon gearing up for this season, but nonprofits and religious organizations are, as well. 

On this episode of Wealth From Wisdom, we’re going to discuss how to give effectively. It seems simple on the surface, but it’s more complex than you think. Are you giving with a tax-aware, savings-aware strategy? Are you giving to the same causes you always have or do you need to re-think some of your approach? 



Speaker 1:
0:00
Okay, and here's the legal mumbo jumbo. The opinions voiced in wealth from wisdom with Ron Carson and for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged and may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW, an LLC, an sec registered investment advisor.
Speaker 2:
0:30
The stock market hit another all time records $10 billion in social security benefits go unclaimed every single year. The federal reserve announced that they will raise interest rates by 250,000 rocketing cost of healthcare and retirement could now run 350,000 you've worked hard and saved for retirement. That's great, but it's what you do with that money that really matters. Welcome to wealth from wisdom with Carson wealth. Carson wealth is a Barron's hall of fame advisor at recognized by Forbes magazine as one of America's top wealth advisors and they're right here in Omaha. This is where you can count on straightforward and objective advice that can help you make the most out of every dollar you've saved for retirement. Welcome to wealth from wisdom with Carson wealth. Holiday holidays
Speaker 3:
1:14
are well on their way. People are going to be lining up to see Santa's stores are now sold out of Turkey and the economy is preparing for well a well-needed injection of capital or in the fourth quarter, which is the given quarter, usually nearly one third of all, charitable giving happens in December alone in around 12% of all giving happens in the last three days of the year. So not only are Walmart Amazon gearing up for this season, but nonprofits and religious organizations are as well. It's a super important time for them. Hey, I'm Paul West and today I'm a wealth of wisdom. We're going to talk about how you give effectively. So my cohost today is our head of planning. How appropriate, right Aaron would, Hey, it's a good day for me to be here. Yeah, glad to have you back on the show. So we're gonna talk about giving strategies and it seems so simple on the surface, but the reality is it's not a, and most people think about giving as things that you want to be tax conscientious of.
Speaker 3:
2:19
Right? I mean, end of the day a lot of people give because of taxes a lot of people give because it's in their heart and it's the right thing to do. And are you really making decisions? Are you giving to the same causes you always have or should you be rethinking about your approach? And Erin is that time. I mean I just think about a yes, I still get us postal mail. Right. Will you do of course, as it is looking at the total number of emails and such, we get, uh, the, the amount of holiday fund and gift fund mailers I've received just over the last week is over a dozen. Well, and it started to become that trend, right? Where was coming in an email for awhile and now they found so much stuff comes in an email and nobody sees it. And so people have been going back to mail.
Speaker 3:
3:07
And now the mail I get tends to be, you know, our Hy-Vee grocery store ad maybe a few pieces of junk mail and a lot of these charitable requests. Yeah, we're getting a bunch of them. And I think what we have to look at is, Hey, we all wish we could help everyone, right? But the reality is is you have to be smart about it. And on today's show we're going to talk to you about the core things that are going to help you with a given strategy. I want you to think about your philanthropy or your giving as a strategy. You actually just like a financial plan because here's what happens is a lot of people, you have some form of affinity because of your Alma mater or your church. So of course those seem like natural approaches. But then what happens? Somebody approaches you a friend, can you help out with this charity?
Speaker 3:
3:55
Or can you help out with that? Well, and I actually think there's one really big one that we all forget. You're at the grocery store checkout and it's, will you roll this up to go to XYZ organization? And so, Oh, give a dollar or just roll up to the next even dollar a that is a, an unintentional giving that you weren't planning on, but that takes away from the other areas where you did plan together. And we don't always think about it in that instant. No we don't. Uh, and I will say, I, I, I'm a winning story for them. I'm a client for them because I always say yes cause my, my relation is if the gallon of milk would have been two 50 or $3, I would have bought it anyway. So if I'm just going to roll it up to the next dollar, then I'm great with it.
Speaker 3:
4:38
If that every penny or 99 cents can add up and help someone else. Now that's my personal opinion. I'm not saying that's everyone else's. I actually look at it exactly the opposite. So every time someone asks Greenwich, I, I'm not a script, but the values that I have instilled with how we give money, uh, we spend a lot of time thinking about how did that relate to our children? How did we want our children to be involved? Uh, how much do we want to give per year? What types of organizations? And so we do that as a family activity and we include our children. And part of that is making sure that they are helping make the decisions of where we give money. And so if I'm making those decisions every time I'm at the grocery store, it's taking away from my ability to do that with my kids and teach them how to be charitable.
Speaker 3:
5:24
Yeah. And I think this is a good point. I'm glad we're on opposite sides of this, Aaron, because there's no perfect way to figure out how you give a philanthropy in. What I think we're trying to say here is figuring out what's best for you. Emotion often wins a lot of times. Uh, by the way, also, if you don't think charities aren't smart either, why do they host big dinners and fundraisers? What are they doing with you? First cocktail hours putting alcohol in you. Yes, let's have fun. Let's have a good time. You're always willing to do more when you're happy or you have a buzz or what are your options? Are you tied when they bring the person out on the stage? Has the heartbreaking story. Yeah. Well, and they're smart too is they realize you're humanized process information more so the, now almost all of them have moved to videos.
Speaker 3:
6:07
So let's talk about the why. Why do you give, and this is again, it's a personalized decision. Are there family traditions that are important to you, whether it's you participate in JDRF or whatever that may be important to you. Are there religious traditions that are important to you? You may do your monthly giving, but you and your family because Easter, Thanksgiving, or Christmas or Hanukkah or whatever your religious affiliation is, what's most important to you. And you may give more of that time. And that's just because, guess what? That's what mom and dad did. That's what grandma, grandpa did. That's what happens. There's also people who have the why, which is taxes. And that's a big one for some people. They make a decision on that. And another is what we like to call social activism is they're very involved. And so they do that.
Speaker 3:
6:52
And I think what you have to sit down and think about and back to your approach, Aaron, so let's talk about that for a moment. You're very calculated. You're saying, Hey here, here's where conscientious on our giving strategy. But how do you sit down, I mean, what are you doing to think through how much we're giving the per year and where is the giving going? Yeah, so this is something that I have to met. We, we were much more on your side of the fence when our oldest was young and we would, we would just go places and we'd give money and Christmas would come and I would go take so many names off the angel tree and I would go buy gifts. And we did all that. And then as he got older, we realized we were not including him in these conversations. In the end, that was where it really changed for us is when we started looking at what was our family value.
Speaker 3:
7:38
It was how do we teach our children to think about others and how to help them realize how good of a life they really have. Uh, but where do we spend our time and our effort? And so, uh, my husband and I sat down and every year we decide how much, what is the dollar amount we're going to do in total. And then we come up with ideas and then we include the kids. And so when we moved, that changed a little bit too. Uh, we wanted to make sure we are having impact in the community that we lived in. And so not only do we have some national organizations that are important to us, but a lot of what we do is very local. We wanted them to be able to see how the money was being spent and the impact it was having on other children's lives and in the food and things that maybe that they have that others don't and how to make sure they're including others.
Speaker 3:
8:28
Yeah. I'm to phrase, I'm going to use here Aaron and, and a lot of us fall into this and it's hard. I mean, uh, I want to give a little bit to help a lot of people, but also what we find is we call that peanut butter philanthropy, right? We, we just spread it all over the place and just, we want to feel good about the spreading. But also what I like about what you've done there, and I would coach people who that's important to them, is figure out what's most important to you. And it's better often to go in, in with less and donate more of your time, energy or money with less because you're going to get a deeper impact with them. And not just in terms of dollars and cents, but in terms of return on your capital and return on your psyche and return on your behavior because you're going to feel better about knowing, Hey, that's great.
Speaker 3:
9:20
I gave $100 to someone, but if I gave $1,000 and I knew it went a little bit further and I, you're, you're then going to pay more attention to the gift. Right? Correct. And I also think you start to pay more attention to, uh, the organizations you're giving to when you're paying close attention to those dollar amounts and how closely they're aligning. Uh, there is an organization out there that I've used a lot to research. It doesn't work so well when you're looking at really small organizations, but those national ones that you're like, okay, where's my money really going? Is it going to, you know, the CEO or, or their staff or is it really going to the organization? And so the charity navigator, dat.org is one I've used a lot. You can research on there. Uh, you can also, if you're not sure where to give a, it gives you the ability to say, I want to give to kids education.
Speaker 3:
10:08
I want to give to literacy, I want to give to animal organizations, whatever it might be. You can do searches, which is really cool for all of us who are like, you know, I want to make an impact. I don't know how it's a good place to start in research and we're going to help a lot of you because one of the big reasons people make a donation is for the tax benefit. Uh, and so we're gonna talk shortly about donor advised funds, how they work and your ability to actually get a tax benefit but not have to make an immediate decision on where your money goes. Think about that. You get the benefit. People don't often make the big donation because they're not sure where they want it to go. They haven't had that spiritual moment or that emotional tie into a specific or a couple of different charities.
Speaker 3:
10:52
So what I think helps you is think about your values and what's important to you. And there's, there's no right or wrong answer here, Aaron. This is the beauty about this. So if you're passionate about education and you want to help education, that's great. You might be passionate about helping the homeless. You might be passionate about helping entrepreneurial ism. I mean, whatever those thing, is that a word by the way? I don't think so. She'll tell me she'll look it up. So, but I think what happens is, is when you figure out what's important to you, then you're going to be much more willing to give. Again, it doesn't have to be money all the time. It can be time, it can be volunteering, all of those things. So here, here's the interesting, so, uh, I wanna share this stat with you. So two thirds of people do know organism, excuse me, no research on the organizations they actually give to.
Speaker 3:
11:43
They simply give to those that they always have or those that were recommended by other people. Be crazy. Right? And I, I would believe that because so much of the giving is you're just walking in the grocery store and yep, I'll round up. Or you're at an event and someone asked and um, so much of the giving is about someone asking versus as putting that proactive thought into it. Yeah. So you brought up charity navigator, they actually have another great stat. So you think all this money, it's public news about how much money big foundations give all the time. Right? But did you know the money from individuals is actually 70% it's only 30% comes from foundations. 70% comes from individuals like you would be here and across the country. That's amazing. Yeah. Or you think about all that wealth, and we're going to talk about the giving pledge here in a little bit, but one of the things I want to share with everyone is, is they think about giving, they think about tax and the charitable deduction is one of those tax loopholes people miss out on every single year. If you want guidance on that, just text us. 33, four, four, four use the keyword loopholes and we'll help you out. 33, four, four, four with the word loopholes. You're listening to wealth from wisdom.
Speaker 2:
12:49
Do you own an annuity? Inflated fees and commissions could be costing you an arm and a leg. Get straightforward and objective advice from Carson wealth by calling (888) 419-8513. Are you caring for an aging parent? Are you concerned about the sky rocketed, cost of healthcare and longterm care? Or do you have questions about how to best manage an inheritance? We can help call Carson wealth today at (888) 419-8513 and now back to wealth from wisdom with Carson wealth. Hey, welcome back to wealth and wisdom.
Speaker 3:
13:20
Last, my cohost today is Aaron Wood, our head of planning here at the Carson group. Ah, and it's that time of year, Thanksgiving, the holidays, Christmas, Hanukkah, um, Festivus, whichever holiday you, you celebrate his. Yeah, one of my favorites. So, you know, all these things go on and life just happens and people keep going through the same routine and same exercise. For example, how many of us for Thanksgiving have the exact same meal every single year? Pretty close. I'm going to say 80 90% of it's always the same. Yeah. There might be one little variant or variable that happens. Uh, but what's interesting is here's a stat right now from October of 2019 that actually 20% of people this year that they're going to have a gluten free substitution. Look at how the world's changing and adding that in. So I thought that was interesting. So I'm happy to hear that when people are doing, I mean there's just crazy amount of the average price of a 16 pound Turkey is no idea.
Speaker 3:
14:20
No idea. All right, $21 71 cents we buy a 15 to 20 pound Turkey every year. So right in the middle there. But I have no idea. That's so crazy. Like I go in and think about the price. Do you just know you need it and you're going to spend whatever. So this year was a 19 pound Turkey and I just grabbed it and it was probably $24 something around there. So 64% of all Americans actually have mashed potatoes and there's just a ton of fun stats that go with this. Can we go back to that? Only 64%. What's wrong with these families? Well then I'd be having sweet potatoes or other dishes. We have both. Yeah. There's actually, I saw on the news earlier this week, um, the number one Google searched side dish by state is a really fun chart. Uh, there's one state though that had a side dish.
Speaker 3:
15:08
I wasn't expecting it and it's one of our largest States, which was California. What do you think would their most research side? Dish, brussel sprouts. Brussels sprouts? No, not green bean casserole. Not yams. Not cranberry. Mackin cheese. Whoa. Yeah. Not what I'm expecting there either. That's like the healthy state too. Yeah. So, Hey people I guess are being progressive and looking at that and, and today's show, we're talking about being conscientious about your giving plan a, and there's nothing wrong with tradition. I love tradition and traditions actually instill our values. Right? Think about growing up what your parents and your grandparents taught you. I guarantee you one of the favorite questions you and I talk about all the time is what did your parents teach you about money? Well, it's your first money memory. Absolutely. Also think about what's your first giving memory? Do you remember going down to a food bank or a shelter or wherever that may be?
Speaker 3:
16:04
That often stands out for many children. Uh, I know like for my children, they have to do a certain amount of service hours at the high schools they're at today. Uh, and I love it. You know, first pay, they're teenagers, right? They're going to complain again about doing it, but every time they come back there's a reason why the schools are having to do it. They learn a lot and they feel better. I mean, that idea of experience and understanding the world around you, there is no better way to do that than through donating your time. Yeah. And don't you think they're going to then, because it was a tradition for them earlier in life, they're going to instill the same values upon their children potentially eventually. Absolutely. Yeah. So let's talk through number one reason again, people make donations, whether you like it or not, is because everyone hates paying taxes.
Speaker 3:
16:46
Let's just listen. The whole point of wealth from wisdom is we want to be transparent and direct with everyone is. So let's not hide that. That's why they do it. So what's interesting is is the richest 1% of people are responsible for 99% of the donations. However, every penny counts, every amount counts. And religious groups do receive the majority of charitable contributions, right? About 30% per year. So what does one of the best ways to do that, Aaron, you run planning for our group? Uh, so one of the most, I would say actually under utilized techniques is a concept called a DAF or donor advised fund. DAF. We help explain to our listeners today what that is and how it functions. The donor advised funds are a fantastic tool and one of the things that makes them so unique is that you can put the money in today, take that tax deduction, and then you can let the money sit there and grow.
Speaker 3:
17:40
So you could put it in investments, you could put it in some type of cash account if you're going to use it soon. But you do have flexibility to let that money sit in there and grow tax. And then when the money comes out, as long as it's a five Oh one [inaudible] organization, the donor advice fund will send the money directly to your organization of choice. And then it comes out tax sprain. So you've got to take the tax deduction up front. When you put the money in, you do not take the tax deduction when the money comes out, but it was allowed to grow, get interest, put investments, and then you can pull that money out. When you find the charity that makes the most sense, the tax benefit. Now, today, so 2019, but gifting in 2020 or beyond, is there a finite period of time that I actually have to give them money?
Speaker 3:
18:22
No. So that money will set there. If you pass away, then it goes on to your successor who will run the account. Um, so ultimately you do have the ability to continue passing that on. So if I put $10,000 in right now, in December of 2019, I can do $1,000 a year for the next 10 years if I wanted. Correct. Yeah. So, or I put a million, whatever my number is, it doesn't matter. Nope. The technique is, Hey, it's probably better for those of you. A lot of people are in the bracket. So right now with our new standard deduction, it's tough for a lot of families to actually itemize and to get the full benefit of that. So right. They have to be, we're not, this is not a tax shelter, nor do we want it to be, because that may not excite everyone.
Speaker 3:
19:05
Uh, but what we call bunching in a good way to bunch your charitable distributions is to put it into a donor advised fund. Uh, and by the way, a lot of people that did this when the tax and job acts came out, and in 2017, uh, and so they put a bunch in. In December, we saw a lot of religious organizations see a spike. Uh, I know community foundation saw a big spike at the end of that year. The donor advised way is a way to bunch it but then spread it out so you don't have to pick one specific charity, one specific religious organization at that period of time. Well, and it works really well for the people who don't know, like they, they know they want to give them money. They haven't found that charity yet. And so like you said before, you can put the money in there and let it set and until you do find that charity, but in the meantime you've set up that savings account.
Speaker 3:
19:50
So it's there when you're ready for it. Yeah. And a lot of times what's interesting is, is when you ask people about charity and philanthropy, um, they, they tell you is, Oh, I just do it because I do it and it's the right thing to do. But if you actually challenged them to think about why, and for those of you, I want you to think back about your last check you wrote to charity. [inaudible] did you do it because you want it to, cause you had to, I really mean had to because you felt emotional strain. Like if you didn't do it, you'd be letting a friend down or whoever was asking you or was it actually a planned gift, meaning one that you had thought through and decided an approximate or exact dollar amount. And I will tell you when you do that planned gift and there's no way to measure this errand.
Speaker 3:
20:41
So this is complete subjective, Paul going here, you're going to feel better. Yeah. You're to feel better because you made a more conscientious and direct decision that, you know what, I'm going to give $2,000 20,000 whatever your number is to X and Y organization because I believe in it. My child was affected, my father, my brother, my sister, whoever was, you're just going to feel better about that gift than the a hundred dollar check here and there. Yeah. Well, and we talked about this in the last segment. You know, when I was giving money before, I will say it was very much a sprinkle. Like just like you, I went in, someone asked, I gave money, a kid came by and knocked on the door and here's $20, whatever the case may be. Uh, it wasn't until we really started thinking about it and getting our kids involved that I started to get much more pleasure from the money that we are giving because it's not just the idea of I know where the money's going and I've thought about it.
Speaker 3:
21:37
It's that idea of how I'm instilling values in the next generation and teaching them to grow up and be good humans. And so that to me was when our charitable giving really changed and how we were doing it. Yeah. So here's an example. Uh, I think, you know, my specialty is working with business owners and helping them think through their business, their family, their family business, and the combination of all of the above. But sometimes you as a business owner, make a decision to change your currency from owning the business to selling it. And so one of the techniques that we use, and I'm going to talk today about foundations, cause it's going to get too complex, but they of course have a major tax hit that year. They have a very big tax hit. So if they're philanthropic in nature, and even if they're not, by the way, the donor advised fund is a great way for them to say, Hey, I sold my business.
Speaker 3:
22:28
I'm going to put 100,000 a sale into a donor advised fund. I don't even know yet what I want to do with it, but I'm going to get the tax benefit, which often is what they're looking for. But it gives time for them and us and our planning team to help really curate what their actual giving strategy is going to be. So they get the benefit of both. They don't have to make a decision today, but they get the tax benefit that they're looking for at that period of time. No different than you're selling a stock. Maybe grandma or grandpa gifted you a Berkshire stock. And we're all hoping, right? You can say ARB. So, okay, think through that. You're gonna have to pay taxes at some point. Everybody hates paying taxes. As soon as somebody says, Hey, I want to sell something, I say, okay, what's the tax I want to pay taxes?
Speaker 3:
23:11
Well, guess what? You're in a taxable account. You gotta pay tax. And most of the donor advice funds really have that ability for you to put lots of options in there. And besides just cash. And we started off saying, you know, Oh, put the cash in, use it as a savings account. But these pieces of business ownership or highly appreciated stocks, a community foundations here in Nebraska can even deal with grains, um, farm type situations. And so there are a lots of things you can put into a donor advice funds and take advantage of that tax. So, you know, they're working on now, Aaron, to talk about being progressive here. So we're nationally based, I mean, we're one of the top 10 ranked registered investment advisory firms in the country. Uh, we're certainly based here in Omaha, but we have offices in California, Indiana, Texas, all across the country.
Speaker 3:
23:55
So of course a trend is what we call digital currencies. So most people know of that as Bitcoin. So you actually, there's foundations now beginning to accept digital currencies, Bitcoin and other type of things. Okay. Now be aware if you are emotionally attached to a stock. So let's say for example, you worked at DuPont your whole life and so you accumulated a lot of DuPont and you want to gift some to a charity because that's one of the smartest things to do is to gift appreciated shares of stock. You have to realize almost every single charity has a trading mandate that as soon as they receive it, guess what they're going to do? They sell it, they sell it. And so you have to be okay with that. Correct. But they sell it and they don't have to take the tax hit on it. And so that is important piece of it.
Speaker 3:
24:38
Yes, they're going to sell it. But where you were going to have to pay those long term capital gains on a very little basis, the charity pays a zero. Yeah. And so I would say, I would say suggest to our families. This is one of the best techniques, but really, I mean when you take your car to a mechanic, you take your teeth to a dentist, right? Why won't you take these types of questions to a financial expert? If you want to talk about it, just text us at 33 four four four with the word appointments and we'll help talk to you. Again, it's complimentary, it's confidential, or if you want, you can email us info@carsonwealth.com and we can help get started today.
Speaker 2:
25:13
You're listening to wealth for wisdom. Any major decision in life is worth getting a second opinion and financial planning is no exception. Let's talk about how you could make your money go further in retirement than you ever thought possible. Call Carson wealth. Just schedule your free initial analysis now at (888) 419-8513 do you have a lot of assets but are short on cash? Learn how you could leverage your assets to free up cash with Carson wealth by calling (888) 419-8513 and now back to wealth from wisdom with Carson wealth. [inaudible]. Welcome back to wealth of wisdom.
Speaker 3:
25:48
All last joined by Aaron Wood. Today we're talking about building your right charitable giving strategy. Sorry, did I say that right? Charitable giving strategy, uh, too much caffeine today, I guess. Erin, it's never happened to you every day. Yeah, it could be. I love coffee, Dunkin Dunkin donuts, coffee, none of that. A sponsor the show, if they want to be, they can call us. We'll be glad to discuss it with them. But when I, when I think about philanthropy, there's, there's a famous, uh, organization, uh, and really gifting the idea, and you've probably heard about this. It's called the giving pledge. So the giving pledge is very famous. This is a commitment by many of the world's wealthiest individuals that have already made the decision that they want to give the majority of their wealth back to causes that need it. So earlier this year, there was over 200 pledgers there in actually 23 countries and ages range from their thirties to their nineties.
Speaker 3:
26:40
And by the way, to a wide array of, and of course there's famous people like Paul Allen from Microsoft. Um, I mean all across the board in terms of Warren buffet. I mean, and we can go on and on and on on who these people are and that's great. And I love them leading by example I think is that the website that lets every single one of them, when you click on their picture, it has the letter of why they've chosen today or this? I believe so. So let's take like Reed Hastings, here's a great example. You know, read from Netflix and so he can walk through, um, his actual letter. Yep. So it's fun to watch that and see that. But the reality is, is not all of us are in that top 1%. Very few of us are in that top percentage. So giving though, as a retired person, Hey, we realize what the average family has when they retire.
Speaker 3:
27:28
Giving can be, and I would actually say should be part of your retirement income plan, right? I mean there's a big difference there is just because you're retired doesn't mean you should stop giving to your church. You're not getting a paycheck anymore. That doesn't mean you stop giving to the charities that are important to you. So we're going to talk through a couple techniques. So one, we were just getting into a little bit, which is gifting stock and everyone thinks about gifting cash, right? That's easy. I'm going to write a check. I'm going to send an ACH, I'm going to do a Venmo. Whatever you're going to do, but giving stock is one of the best techniques you can possibly do because if that stock's grown and it was worth 10,000 and now it's worth 20,000 very simply you had a $10,000 capital gain. Therefore, depending on what tax bracket you're in, you have to pay tax.
Speaker 3:
28:21
But if you gift that $20,000 worth of stock, what's the benefit they get then for the gift. So then they get to give the the stock itself. So you take the value of the stock and then you are going to be able to not have to pay, like we said before, the longterm capital gains on that. That all gets pushed over the charity, which the charity plays zero. And then as far as the individual, they will be able to look at their AGI to be able to deduct the portion that they can debt deduct. Yeah. So huge benefit is no, no tax will sale, but they get the full value of that current market value on the date of the gift. Therefore making it really efficient for them. And for those of you that have stock options through your work, this is another thing to look at that you can, there's some techniques and tips that we like to walk through that with people.
Speaker 3:
29:10
If you want help on that, just text us 33, four, four, four, uh, with the word appointments and we can help you out with that. So another technique, many people in retirement, and I just said giving can be and I think should be part of your overall retirement income plan. Uh, Aaron, I think I've told you not, I think, I know I've told you. I'm taking a program right now. It's called the chartered advisor in philanthropy program cap program. It's through a com is through the American college, uh, and uh, teaching myself and other professionals how to help people, not just with the X's and O's on giving, but the, I'm going to call it the why. Why are they doing it, why is it important to them and helping people be more conscientious about it. And, and can I add to this? The one thing that we have not talked about yet on the show is even though through money and stock and donations, people choose not only to give, as you said before, their time or their money, but we also make a conscious choice choice of where we spend our money, right?
Speaker 3:
30:11
So you go into the grocery store and there's the ones that say, you buy this product and we're giving to X, Y, Z, philanthropy. The amount of focus that is went into that area has jumped tremendously over the, the last few decades. Uh, 1993, 66% of people said that they would switch brands because of affiliated with charities in 1993. Yep. Now it's up to 89%. Wow. That is a huge difference. So how we spend our money, um, is vastly important. So these types of programs that you're, you're in, um, directly connect to the behavioral, um, focus of all of us, but where we spend our time, where we spend our money, how, how do we donate our time? Yeah. All of consumers are more socially conscious than ever before. Uh, and I would add, I mean, just go look at something we do. So annually, I can't remember if we're on the fourth year, fifth year here at Carson wealth.
Speaker 3:
31:04
Uh, we offer, um, complimentary pies to our clients for Thanksgiving and they get to choose between pecan or is it pecan dependent? Depends on where you're from, right. And pumpkin and they can choose and we added this year the ability for them to donate. So we had quite a few people this year. Take us up on that Aaron. And I think it's super cool and a great job. Do Jill, our event manager for coming up with that and saying, Hey, we want to give you multiple options. If it's not important to you, it could be important to someone else. So they're all going to be donated down to a shelter and given to them. And I just think it's really cool and it's not something I think that would have even been thought of 10 years ago, maybe even five years ago that we have to, I've, I've seen, uh, a thing on Twitter this last week that I love trending.
Speaker 3:
31:53
By the way. I'm on Twitter. I'm at Paul West coach or at Aaron would four Oh two. Right? So it's hard to do. Uh, so I saw the need, I saw people just doing random acts of kindness and I love to see these things and keep sharing them socially is people going into Walmart and paying off people's layaway. So then that way when they came in, they didn't even know. So I just thought it was something amazing that people were doing. Now a note was you got to at least leave 1 cent on the layaway. Oh, I realize you take this stuff. So you be careful of that. But a technique, especially. Now, let's move back into the retirement conversation. Many of our listeners are in retirement. Whether you're listening on, on our show or of course, uh, we're on multiple avenues, uh, in terms of podcasting, RMD.
Speaker 3:
32:41
So we talk, let's go back to taxes. The required minimum distribution you have to take at age 70 and a half is a blessing and a curse, right? I like to call it that hidden tax bomb that's waiting for you. Yep. So right now, many families, if I'm going to write a $10,000 check to my church, what do they do? Are they go into there? They go in their cupboard, grab their checkbook, write a check, give it in an envelope, or just give it when they're at their church. However, how'd that $10,000 actually get in their account? If you're above age 70, you had to take a required minimum distribution. When you took a required minimum distribution, you paid federal and or state tax, correct? Right. So you could be at whatever tax rate you're at. So let's just say for example, well and let's say that that snowballs too.
Speaker 3:
33:30
So you take that money out and it's all taxable income. And for those in that age group, they're also on social security. They have Medicare premiums, all of that money goes towards what your overall costs for social security taxes are and your Medicare premiums. And so that is, that's a big one. How much you have to take out of those RMDs has big impact in lots of areas. Yeah. So you're right, you just created a tax snowball rolling downhill directly at you and it's going to hurt. So if we can minimize it and eliminate that snowball picking up speed, there's this technique that I'm still surprised how few of people take advantage of this is called a qualified charitable distribution or QCD for short cause I guess we like acronyms and all, all phases of our financial services industry. So that same $10,000 gift, if I had a required minimum distribution, I can instead ask my IRA company, so whoever my custodian is to send that money to a five Oh one C3.
Speaker 3:
34:30
So that means they're a registered charity and can give the gift directly to them and not pay taxes. Absolutely. But also what does it satisfy for them? Takes care of that RMD. Yes. So you get the double, or actually I could probably say triple benefit of you don't pay as much in taxes, which makes people happy. You satisfy your RMD, which doesn't create the additional taxable income and to increase in your tax rate and you get a benefit, the charity that you want to. So, and in most cases, for many of our right retirees, it's money they were giving anyway. So this is a much more efficient way for them to give to the places they were already going to give to anyway. Yeah. So I mean, I think, uh, what I would say to you is, is retirement can be taxing, right? And we know that physically, emotionally, financially, and one of the ways you can minimize your tax burden is through your strategic charitable giving. And we've actually, Aaron here put together this guide. You and your team have helped with this of eight legitimate tax loopholes that you may be missing and this really gives you tips on how to be more tax wise. If you want a copy of this, just text the word loopholes, all one word to 33 four four four that's our free guide. Eight legitimate tax loopholes you may be missing. Just text us at loopholes to 33 four four four you're listening for well, you're, excuse me, you're listening to welfare wisdom
Speaker 2:
35:49
and we'll be back in a moment. Have you ever wondered how do other people get away with paying fewer taxes than everyone else? Learn how you could save thousands of dollars in taxes by calling Carson wealth at (888) 419-8513 social security risk, taxes and healthcare. This is where you can count on straightforward and objective advice on the biggest challenges with investing for retirement. And now back to wealth from wisdom with Carson wealth. Hey, we're back. Well from wisdom
Speaker 3:
36:20
by Carson group. I'm Paul West joined today of course by the one and only Aaron Wood who am the one and only, well there's probably multiple Aaron ones, but you're the only one I know. So you're the one and only here for us. So Aaron, I mean we're talking about charitable giving and helping people out in life. And I think you may be wondering why in the world is a financial services firm talking about this. But the reality is is when you think about the value your financial planner should offer, you're giving impacts your income and impacts your taxes. But more importantly impacts, why do people hire us for financial peace of mind? The peace of mind is making sure every element of their financial life is in place. And many of you have a giving strategy or you don't and you're a sprinkle giver and you sprinkle it all over the place.
Speaker 3:
37:12
So we have to help you think through these things. A few key points. We've talked about donor advised funds and the value they can offer. We've talked about qualified charitable distributions and the value they can offer, but let's not forget about what happens at the end of life. Is it part of your estate plan to help out charities? Many of you, it is a many of you. It's not. But one of the things that I you should think about is when you're preparing your will and trust, have you thought about the gifting you want to do to charities and is it revokable or irrevocable that standpoint. And I think it's one of those things when people set up a will and a trust, they're most concerned about who's watching their children or grandchildren. Less about, Hey, should we actually name that? I want my church to get X amount of dollars.
Speaker 3:
37:59
And I will say, you know, I read a lot of these documents and typically when individuals are putting uh, charities and to their estate plans, most of the time it is where we're thinking through some of those tax situations. If we do this, then we know it's going to lower your taxable estate. And so many of the individuals put those charitable givings in place ahead of time to make sure they're taking advantage of them in their life. And then also said that their children, uh, you know, at the end of life you have three choices of where your money goes. It goes to your beneficiaries, it goes to the government in taxes or it goes to charity. I always tell clients, one of those, I'm always tell clients I'm happy to help them figure out two of the three. Uh, they can choose which two are of the three they want.
Speaker 3:
38:40
But if they don't, uh, put a plan in place, then it automatically will end up being taxes. So in 2018 Americans gave 427.7 1 billion to charity, 427. That's awesome. I love to hear that. That's amazing. But I would tell you most of those are not, I'm going to call them conscious or calculated or planned out gifts. They happen naturally. They happen emotionally. And if more people spent time in their will and trust planning out their gift, they would actually would feel better. And I think one of the things they do, so let's talk about taxes again. I noticed that thorn in so many people's side, again, a technique people miss. Why? I don't want to name it my will or trust. Okay. But you know, you want to give money to whatever it is. JDRF, salvation army, you go down the list. Why not designate a foundation, a nonprofit, a charity, as the beneficiary of your IRA.
Speaker 3:
39:40
So a great way to do it there. So Aaron, will you walk through, why is that a good technique for people? So the IRA, when it goes to your beneficiaries, your children, typically they're going to pay normal income tax. And for a lot of individuals, again, their children happen to be in higher income taxes, uh, than what they might be there in their working years most of the time. And so, uh, it's usually they're in their highest income tax brackets that they'll ever be in. So giving an IRA to your child, you have given them the benefit of the money, but you've also given them that benefit that now they have to pull money out of it. And they're paying additional taxes. So it's not the most efficient thing to give your children, uh, you know, giving a Roth, giving, uh, insurance premiums, those types of things are much more tax efficient than an IRA.
Speaker 3:
40:26
But if you give that IRA, again to a charity or a foundation, they're not paying those taxes. So you're able to give the more tax benefit options to your children, give the IRA to the charity or foundation and they then don't have to pay that tax. Yes. So one of the mistakes we see people make, and our job here on welfare wisdom is also point out the mistakes we've seen many families make. And our job is to help, hopefully correct them in time. Is it, let's think about this. You have three children, so as you're building your estate plan, most of you want to split things a third, a third, a third. Um, but then also maybe you're split a third, a third and total dollar mal, but you're not thinking about what's the net after taxes that each one of them is receiving. So maybe one gets the house worth $1 million. One gets an IRA worth $1 million, in one case, a taxable account worth $1 million. Yup. That's not the same. They all get, no, the one who got the IRA got the short end of the stick.
Speaker 3:
41:20
But you know, the other thing we haven't talked about yet is that the proposed changes to the beneficiary RMD rules that are going to be voted on I think first quarter of next year. And so if that's the case, that stretch IRA that we have in case, uh, in place right now where, uh, the beneficiary has the option to take those distributions over a lifetime, that will actually be changed where it all has to be taken out in a very short amount of time. So take that million dollars and cash it all out over a five year time period. That's brutal. Uh, you just took someone into highest possible tax bracket you could have. Yeah. So there's interesting data from the federal reserve and it shows that about 85% of inheritances are smaller than 250,000 and even the majority of those are 50,000 less. And that's because people don't plan and they don't make the right decisions there.
Speaker 3:
42:08
And if you sit through and calculate this information, you know what's gonna happen is your kids are going to be happier because Aaron bumps sitting around the table and we're all talking, Hey mom and dad gave me $1 million and the one with the house feels great. The one with the tax book account feels great and the other is sitting at Thanksgiving table saying, Oh my gosh, all these taxes on paying now, they're terrible, they're crazy. And the other two are sitting there. What are you talking about? Got nothing. The house, unless you sell it, you got nothing. So if I'm the parent and I'm sitting there like all of a sudden if I'm looking down from above, hopefully not from below, I down from above and I'm saying, Oh my gosh, look at what, I just created a bond amongst my three children. I had the chance to avoid that in my lifetime.
Speaker 3:
42:52
If I would have done better planning. And here's what happens, you just kick this down the road. It doesn't become a priority for you because you just, it's not, and then all of a sudden it's too late and you never get to it. Or you're not working with a financial planning professional. Maybe you're just working with a broker who manages your money. Or maybe you're working with an estate planning attorney who just sets up your documents. Somebody has to talk you through. I always call them the quantitative and qualitative parts of your plan. The numbers are one thing, but how it makes you feel. And one of my favorite Maya Angelou quotes, and I say it here frequently, but um, I don't say it on the show that often is, well, my favorite quotes is people don't always remember what you say. People don't always remember what you did.
Speaker 3:
43:36
People will always remember how you make them feel. Yeah. It's so true. I mean, I ask you to visualize yourself many times in life where you were or what happened is, and it's absolutely how you make yourself feel and giving is, it's very much a feel good thing, but a feel good thing with a strategy. Again, I don't know how to put a number on it, but it's like infinite, infinitely better. I dunno if it's two X five X a hundred X, but it just feels good knowing, you know, I planned this $10,000 gift. I feel good about it and let's not forget with the States if you're going to have that money and you're trying to decide where to give to charity, bringing your beneficiaries under that conversation because it makes them feel good tail to help decide where this money is going to go.
Speaker 3:
44:19
It's the same as me teaching my children, uh, as kids teaching your children as adults, it's never too late. Yeah. So a technique, we're not going to it to the details today, but we help a lot of families, um, set up foundations and what we often advise is if they're going to put several hundred thousand or several million into it, that they actually let their children be the decision makers of the foundation because then they have to work together, be again, conscientious about how they're going to make the gifts, where it goes to. It's going to go to what's most important to them versus what support in the families. And it just improves family dynamics in so many ways. So obviously we talked about a lot of things. The financial matters are complex. Even when includes giving. If you want help, I want to talk through it with us. Just text the word appointments to three three four four four or 33 four 44 or you can email us@infoatcarsonwile.com Aaron, thanks a lot. Enjoy talking about philanthropic giving. Hope everybody has a wonderful holiday season and we'll be back again soon. On wealth from wisdom
Speaker 2:
45:20
risk, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of fame advisor Ron Carson.
Speaker 1:
45:33
Okay. And here's the legal mumbo jumbo. The opinions voiced in wealth from wisdom with Ron Carson are for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged and may not be invested into directly investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CWM LLC, an sec registered investment advisor.
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