Tax-Efficient Planning & Charitable Giving Go Hand in Hand
Vann Doubleday uses the ‘yes, and’ approach with clients. Yes, he can help with their financial planning and with their charitable wishes as well. Yes, clients can complete a Roth IRA conversion, and offset the taxes while making gifts to causes they care about.
A financial associate for six years, Vann was drawn to Thrivent Financial because of the emphasis on living generously. “Then I learned that InFaith Community Foundation is here to help us carry that out,” he says.
He recently helped both a young client and a retired couple with Roth IRA conversions in 2017. “The gift planners at InFaith are really good with ‘yes, and’ situations,” he says.
Appreciated Securities in Donor Advised Fund
Vann estimates that 85% of his clients are 35 to 50 years old. “I don’t think generosity has any age limit,” he says.
A 42-year-old client with no spouse or children owned highly appreciated stocks and bonds she inherited as a child. She also had significant IRA investments.
During a tax-efficiency conversation, Vann talked about the best ways to reduce her future tax bill and act on her generous nature. She began a five-year process of converting her traditional IRA to a Roth IRA. To offset the tax consequences, she used appreciated securities to open an InFaith donor advised fund to make grants to several charities she had previously been supporting. Setting up a donor advised fund allowed her the flexibility to increase her giving, reduce her tax liability and move nearly $80,000 from her IRA to her Roth in 2017.
Using Rental Property for Charitable Remainder Trust
A retired couple approached Vann about solutions for their fast-approaching required minimum distributions (RMDs) from their traditional IRAs. They didn’t need the money for living expenses and didn’t want the tax consequences.
An InFaith gift planner suggested they offset potential taxes on a Roth IRA conversion by giving rental property to InFaith for a charitable remainder trust which created a large tax deduction for the clients. The plan will systematically reduce or eliminate those RMDs over the next 10+ years.
“In both cases, they were giving $12,000 to $25,000 a year already,” Vann says. “By doing this planning, they are able to double or triple their gifts.”
Vann quotes Thrivent when he says “money is a tool, not an objective” for clients who are already making regular donations to charities. “It’s not where it’s coming from, but what it’s doing,” he adds.
When exploring possibilities with clients, Vann frequently uses the “What-If Calculator” as an introduction to Ways to Give at InFaith. He says, “The more I work with InFaith, the better I get at seeing charitable opportunities. Ultimately, the member is taken care of, and I am kept up to speed.”
To learn more about InFaith or consult about specific clients, call our gift planners at 800-365-4172.