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Advisors’ 2022 Year End Giving Strategies

2 weeks ago By Jake Tometich

The end of 2022 is drawing near, and that means that year-end planning conversations with clients are on the rise. Year end presents you with a unique opportunity to build relationships and trust with your clients—and their families—by showing them how they can increase their generosity through year-end giving. Set yourself apart and provide insight into unique ways your client can expand their end of year charitable giving, potentially increasing their tax deductions. Below is a checklist of key year-end giving strategies to share with your clients. 1. Year End Giving Strategy #1: IRA Qualified Charitable Distribution IRA accounts with owners 70 ½ or older can satisfy the required minimum distribution (RMD) up to $100,000 with a qualified charitable distribution (QCD) directly to a charity or designated fund. Since a QCD is a gift of pre-tax dollars, the income is never taxed. Read more on IRA giving here. Please note that QCDs must be clearly marked. A donor advised fund (DAF) is not an eligible recipient of a QCD. The Signatry offers other fund types that may receive a QCD, including designated funds. Grants from a designated fund can only be sent to a single charity. Learn more here. 2. Year End Giving Strategy #2: Stock Giving Selling publicly traded stock and giving the proceeds to charity has been a common year-end giving strategy for many investors. A better approach is to give publicly traded stock (which has been held for at least one year) directly to the charity before it’s sold. This method can increase the level of support to the charity because it will not incur capital gains tax on the donated stock once it is sold. However, charities are often not equipped to handle these types of noncash gifts. A donor advised fund (DAF) can help bridge the gap. DAFs at The Signatry are equipped to accept publicly traded stock gifts, which are generally liquidated quickly without incurring capital gains tax. The funds can then be granted out to a public charity your client recommends. It is a simple solution that helps minimize tax burden. By encouraging your client to set up a DAF, you can simplify the giving process and further the impact of generosity while eliminating a lot of extra work for the clients’ favorite charities. 3. Year End Giving Strategy #3: Charitable Bunching Bunching deductions is, in short, contributing more than one year’s worth of normal charitable contributions in a single tax year to achieve a deductible amount higher than the standard deduction. This is also known as charitable bunching, and it can help minimize your clients’ tax burdens in the long run and maximize what they can give to charity. Example: A donor contributes 3 years’ worth of donations into a DAF. Because the donation is so large, the donor itemizes in that year and receives a tax deduction for the entire amount of their contribution. In later years, the donor recommends grants to charities from the DAF. This creates no additional tax deduction for the donor, but in those years the donor takes the standard deduction instead of itemizing. – As year-end and year end giving conversations approach, remember that you have an incredible opportunity to come together for God’s Kingdom and support the ministries serving those in need by providing year end giving insights and options for your clients. 1 Corinthians 12:14 says “For the body is not one member, but many.” To learn more about how your gifts can make a lasting impact at The Signatry, contact me at [email protected] to get started. Disclaimer: The Signatry does not provide legal, tax, financial or other professional advice. You should consult professional advisors concerning the legal, tax, or financial consequences of your charitable activities.

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Exploring Noncash Charitable Contributions with Clients

3 months ago By Jake Tometich

Since most American citizens’ wealth is held in non-cash assets, many of your clients may be interested in gifting these types of assets to their church or other nonprofit organization. Some nonprofits might not be equipped to facilitate such gifts, but this should not be an impediment to your client’s generosity goals. Navigating noncash charitable contributions is a specialty of The Signatry. Gifting complex assets provides your client the opportunity to use more of their resources to deepen their Kingdom impact. But with added complexity, gifting these assets requires extra planning and care. Our team can bridge the knowledge and experience gap. We can work with you and the donor to review issues such as timing, taxes, and potential risks and benefits to help determine if a complex, noncash charitable contribution is the right choice. When might a noncash charitable contribution make sense? Complex asset gifts are a natural by-product of major liquidity events you may be discussing with your clients and investors—especially C-suite executives, business owners, and entrepreneurs. The key is to complete the donation before your client sells the asset. Complex assets often have a low-cost basis, which can generate large capital gains and capital gains taxes. Gifting these assets can significantly lower (or eliminate entirely) capital gains taxes while providing income tax deductions on the fair market value of the asset. What steps are involved in preparing a noncash gift? To determine the fair market value of a complex asset, you and your client must arrange a qualified appraisal of the asset. There are restrictions on the timing of the appraisal relative to the potential gift, and the obligation to obtain the appraisal falls to the donor. The donor is also responsible for submitting an IRS Form 8283 with his or her tax return, which states the gift’s fair market value. The form must be signed by the appraiser, the organization receiving the gift, and the taxpayer. Every noncash charitable contribution looks different Because complex assets vary so much (from closely held business interests to real estate and more), the process for each asset gift differs. This is where our team can help. Please let us know if you would like to discuss any upcoming liquidity events or complex asset gift scenarios. You can also visit the Generosity Calculator on The Signatry’s website to explore the variables between traditionally selling a complex asset or gifting the non-cash asset to charity.

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Building the Bridge for Generations

2 years ago By Alan Pratt

Where do I begin legacy conversations with clients? What are the attributes of families who are good candidates for discussing a life-long legacy? These questions are so important for embarking on a powerful relationship with clients and building the bridge for their future generations to continue to work with you on their family wealth. Opening the Relationship Early on, I realized it was not about closing the sale or deal, it was about opening the relationship. When you open a relationship, ask yourself what level of a relationship is needed so that when it is the appropriate time for a transaction to occur, it is very natural. There are action steps for both clients and advisors to find success in relational advising, and in bridging wealth over to future generations in the family. Understanding your own values. Do you have a way of reaffirming what you stand for? What are the non-negotiable items in the way you live your life? You can spend some time yourself to uncover these if you need to, but then how do you make them known to others? If one of my clients left the room, they would be able to explain a lot about what drives me and describe my character pretty closely. Why? Because I have spent time with them. You will accomplish more by opening a relationship before you start the transactions. Everything in life starts with a conversation. I have learned years ago that I should go into a first-time meeting with one thing. A blank sheet of paper. The people that are legacy focused are not product focused, and the same principle applies with advisors toward their clients. Products are a byproduct of the clients’ desire to really engage in a trusted conversation. Develop a process. Develop material with short essay questions that take them on a journey of discovering their family legacy. Uncover what they care about, and how that will eventually play into their goals. Ask them about the five areas of wealth: Good relationships Health Spiritual Development Intellectual Growth Financial Resources In financial services we tend to focus on financial resources the most. Quite frankly, in legacy planning, that is not what they care about. Where their minds are stuck is the first one— their relationships. Start there. The balance sheet with all of the assets under financial resources is just a tool to bring value to the other four areas of wealth. It exists to enrich their relationships, their learning, and their physical well-being. Uncover their multi-generational values. Have you developed a values exercise where you can facilitate a values conversation with two generations of one family? When you get into proactive action steps in legacy planning, it is a family affair. Are they planning with their family or are they planning at their family? Conventional estate planning 30 years ago was planning at your kids, and unfortunately it is still practiced today. Incorporate charitable giving conversations. As a part of your values conversation, ask about what causes are close to everyone’s heart. Talking through generosity plans strengthens your relationship with clients. To reinforce the importance of understanding and sharing your own values, talk about your own generosity to spark the conversation. Less than half of advisors discuss their own charitable giving with their clients. Among all individuals who discuss philanthropy with an advisor, 53% say that they would place greater value on the philanthropic advice if the client was aware of the advisor’s own philanthropic engagement.[1] Talking about charitable giving as a group leads to understanding their passions and goals and leads to inter-generational understanding of how to carry on those goals. Encouraging planning with the family and seeing multi-generational discussion and value-based conversations will always yield a higher degree of long-term success. Be curious not for the size of their balance sheet but be curious to know the size of their heart. If you lead with this in mind and use the building blocks above for opening a relationship with your clients, you will build the bridge for their future generations to know you, trust you, and you receive the gift of becoming a part of their success in transferring not only their family wealth, but their family legacy. [1] 2018 U.S. Trust Advisor Study

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Advisor

Having the Conversation on Asset Giving

4 years ago By Evan Lange

Many advisors find that being involved with their client’s giving is one of the most meaningful aspects of their work. Philanthropy is an easy way to build deeper relationships with clients. It not only paves the way for a lasting relationship but offers inroads into the next generation of clients and future givers. When your client is ready for the conversation on giving, discussing their assets will play a vital role in the discussion. The following three points offer an outline that will aid in the conversation. Identify which assets to contribute Whether your client is motivated by philanthropic or tax advantage goals, determining what types of assets they can gift is a crucial first step. The common types of assets that are generally gifted are cash, securities, real estate, or closely held business interest. All of these can be given through a donor advised fund. Timing of gift A recent article in Forbes states, “donating property that has appreciated in value, like stock, can result in a double benefit…not only can you deduct the fair market value of the property (so long as you’ve owned it for at least one year), you will avoid paying capital gains tax” Gift valuation guidelines are established in the current tax regulations. In general, the value of the gift is based on the type of asset and the date of contribution, which is typically the date the asset is delivered to the receiving organization. Gifting a complex asset can be a lengthy process. It is important to evaluate the timing of the gift to ensure it will benefit your client within the current tax year. Selecting a charity Deciding what organizations to support, is usually the most exciting part of the process for your client. For many donors, the organizations they choose often have personal meaning and speak to their experiences. By giving complex assets through The Signatry, donors can make grants to smaller nonprofits that would otherwise be unable to accept complex gifts. https://www.forbes.com/sites/kellyphillipserb/2018/12/11/14-tips-for-making-your-charitable-gift-tax-deductible-in-2018/#65eb5fb5f80c

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Advisor

Ministry and The Marketplace

3 months ago By The Signatry

Ministry and The Marketplace  I have been inspired and challenged by the positive role models I’ve studied in the Bible and the work they did. Jesus is clearly our most inspiring and challenging exemplar, but many others also stand before us. I’ll nominate the Apostle Paul for inclusion in this group. He was a giant among the early church leaders, a brilliant theologian, church-planter and… tentmaker. He voluntarily chose to stay in the marketplace to support himself so he would not be a financial burden to the young church: “We were not idle when we were with you, nor did we eat anyone’s food without paying for it. On the contrary, we worked night and day, laboring and toiling so that we would not be a burden to any of you.” (2 Thessalonians 3:7b-8 NIV) Paul chose both ministry in the church and ministry in the marketplace to be an example for both groups.  God has designed the church leadership structure to flow through two primary channels: 1) those called to full-time ministry and 2) those that comprise a large support team of volunteer leaders that tend to work in the marketplace. Just as a bird needs two wings to fly, the church needs both groups in order to flourish and grow. Many of the volunteers coming from the marketplace need wisdom to bridge the gaps between the two cultures. Both sides need to learn how to respect the differences, resist the urge to jump to conclusions, actively listen, and act as interpreters (because at times it can feel like we’re speaking two different languages between ministry and the marketplace.)  I’ve heard the statistic that church staffing equates to approximately one full-time minister for every 100 church members. Even if we stretch that to say two per 100 members it means that 98% of the church will never be in full-time church ministry. I have a sense that Paul maintained both ministry in the marketplace and ministry in the church roles so he could serve as an example and “interpreter” to both the “2’s” and the “98’s”.  An example can be found when Paul was in Ephesus (Acts 19). For two years he split his time between making tents in the morning and preaching during the lunch hour at the “lecture hall of Tyrannus” (Acts 19:9-10). His tent-making craft required him to wear a work-apron that had pockets for his different tools. He would also tie a handkerchief around his forehead to keep the perspiration from getting in his eyes (visualize today’s bandana).  The next verse says, “God did extraordinary miracles through Paul, so that even handkerchiefs and aprons that had touched him were taken to the sick, and their illnesses were cured and the evil spirits left them.”  (Acts 19:11)  It appears that Paul would take his lunch break and show up in his work clothes at the Lecture Hall to preach after making tents in the morning. Some of the believers would borrow his work apron and bandana so they could take them and place them on people who were too sick to get to the meeting in person. His work clothes carried enough power to heal illnesses and break the grip of evil spirits. The author of Acts, Luke, called this an “extraordinary” miracle!  I think we’d agree that all miracles are extraordinary, but this one stretches our faith in a new direction when we consider how God used Paul’s work clothes as a tool to heal and deliver people. It should speak volumes to us about the value God places on our careers. It shows that God can use people in “secular jobs” like tent-making to do very effective ministry in the marketplace. Let’s pray for a greater convergence of the ministry in the church and the ministry in the marketplace so the sum total of our combined efforts will far surpass what each group could do on their own for eternal impact.  —  “Peter Roselle is the NYC Director for Archetype Wealth Partners, a leading Wealth Advisory firm specializing in family legacy planning and advanced charitable giving strategies. Peter is a published author on the topic of Sustainable Investing and a thought-leader in the growing field of portfolio values-alignment.  Visit Archetype’s website at https://archetypewealth.com/story/.”  Disclaimer: Our intent in providing this material is purely for informational purposes, as of the date hereof, and may be subject to change without notice. This article does not intend to constitute accounting, legal, tax, or other professional advice. Visitors and readers should not act upon the content or information found here without first seeking appropriate advice from a trusted accountant, financial planner, lawyer or other professional.  This article was originally published on September 14, 2018. 

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