Charitable giving not only resonates with many clients’ personal values but can also offer meaningful tax benefits. As advisors seek to provide value to their clientele, here are innovative tax-efficient strategies to consider:
1. Impact Investing: Investments made into companies, organizations, or funds with the intention to generate both social and environmental impact alongside a financial return. Impact investing aligns a client’s portfolio with their values, while potentially offering tax incentives.
2. Charitable Lead Trusts (CLTs): A trust that provides a fixed annual amount to a charity for a set term. At the end of the term, the remaining assets go back to the donor or their beneficiaries. CLTs provide immediate tax deductions and potential reduction in estate or gift taxes.
3. Bunching Charitable Deductions: Instead of making regular annual donations, clients can “bunch” multiple years of donations into one, especially beneficial with the increased standard deduction. Maximizing itemized deductions in one tax year can optimize tax savings.
4. Gifting Real Estate: Donating appreciated real estate, like a home, commercial property, or vacant land provides a charitable deduction based on the property’s fair market value, plus avoiding capital gains tax.
5. Setting Up a Private Foundation: Establishing a private charitable foundation allows clients to manage charitable donations, involve family members, and leave a legacy.
By embracing these advanced strategies, advisors can enhance their clients’ charitable impact, simultaneously fostering financial and philanthropic goals. Always collaborate with tax professionals to ensure maximum benefits.
Advisory Services offered through Nepsis, Inc.; An SEC Registered Investment Advisor.