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Estate Plans, Life Insurance, and Donor Advised Funds

3 weeks ago By The Signatry

As you think through estate planning, here are some ways that you can continue your legacy of generosity through your life insurance and charitable beneficiaries. Donor advised funds are tools not only for today’s generosity but also for a legacy that endures even after your passing. Donors can maximize the power of their donor advised fund by naming their fund as the beneficiary of life insurance, retirement accounts, and other similar assets. Learn more about how to integrate lasting generosity through your estate planning by using these creative donor advised fund options. Life Insurance There are a couple of different estate planning strategies that can expand your generosity by including a donor advised fund as a life insurance beneficiary: Name your donor advised fund at The Signatry as the beneficiary of the life insurance policy. By doing this, the proceeds of the policy will be placed in your donor advised fund and can be granted to charities you have recommended. While there is no income tax deduction in this strategy, this option still allows for incredible generosity to flow from the proceeds of the life insurance policy when the policy owner passes away. Gift your current policy. By donating a life insurance policy, The Signatry becomes the owner of the policy, which would include responsibility for paying any unpaid premiums. The donor may receive a charitable income tax deduction, and when the donor eventually passes away, the proceeds from the policy will go to his/her donor advised fund and can be granted to recommended charities. We encourage you to connect with our team to learn more about how your scenario matches a specific estate planning strategy. Charitable Beneficiaries We typically think of naming children as beneficiaries within estate plans. What about including charities? Naming a charitable beneficiary is one great way to prioritize generosity in your estate plan. Here are just a couple ways a donor advised fund could serve as that charitable beneficiary: Name your donor advised fund as a beneficiary in your will. There are multiple types of bequests that you could use to designate how your estate will be distributed. You could specify set dollar amounts to be contributed to a donor advised fund when the estate is distributed. Alternatively, you could allocate a portion of the estate to be contributed to the fund. We encourage you to discuss options with your professional advisor and see how a donor advised fund works best for the generosity you wish to see carried on after your passing. Name your donor advised fund as a beneficiary of your charitable remainder trust. Charitable remainder trusts (CRTs) are often used in estate planning, but they present a challenge: beneficiaries must be named when the trust is first established. If your wishes change later, it can be expensive to modify the CRT. One way to add more flexibility is to name your donor advised fund as the charitable beneficiary of the trust. In this scenario, the CRT must be distributed to one or more charitable organizations, but which charities will be supported can change even after the trust is established. Within the donor advised fund, the donor and his or her family can modify the recommended beneficiaries. An added benefit is that, if the donor wishes, his or her financial advisor can manage the assets in the donor advised fund. — These ideas are just a handful of the myriad of ways you can include generosity in your estate plans. We encourage you to discuss these and other options with your professional advisor. Through life insurance policies, charitable beneficiaries, and more, you can create a unique path that supports your estate planning goals, both financially and spiritually, all through your donor advised fund. This ultimately is the heart of The Signatry—we want to both inspire and to facilitate incredible generosity.

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Use a Donor Advised Fund to Engage Your Family at Year-End

4 weeks ago By The Signatry

As the end of the year approaches, consider this question in your year-end conversations: how can I engage my family in building a strategy for year-end charitable contributions? Nearly a third of annual giving occurs in December, with 12% happening in the last three days of the year. While it is important to support nonprofits year-round, chances are you will make some charitable contributions sometime during the final two months of this year—what better time to engage the entire family and practice generosity together?  A donor advised fund (DAF) at The Signatry is an excellent tool that can serve as a home base for your family’s generosity while also minimizing your tax burden. Here are just a few of the reasons to include your whole family in a year-end conversation through a DAF at The Signatry this year.  A DAF allows everyone to contribute. By having your whole family on a donor advised fund, you can encourage all family members to make their own charitable contributions and see them show up within the platform. Whether $5 or $5,000, make every family member’s act of generosity play a part in one final, year-end grant recommendation to impact a favorite charity you chose together.  A DAF sets up your family for generations. Come together as a family to write a fund name and mission statement, then add it to your online DAF profile. This unique option in The Signatry’s platform exists to help you communicate to your family the intent behind the grants you recommend to ministries around the globe.  While you are writing a mission statement together, you can recommend your future generations as successors to the DAF. This creates a space to explain the importance of inheriting the fund and its mission and the value of carrying out these acts of generosity for years to come.  A DAF allows you to teach creative generosity. You can get creative with a DAF through both contributions and grant recommendations. If you have the ability, show your family members how to contribute gifts of stock or business interest. When it is time to recommend grants, The Signatry’s platform has a charity search tool that allows you to compare charities in similar fields and see the work they are doing. If your family decides to support multiple charities, it is easy to submit new recommendations in one place rather than giving on multiple different websites.  A DAF provides a track record. With your grant history recorded in one place, you can refine your family’s giving decisions based on how you have given in the past. It can be difficult to remember how much you gave last year and to where. With a DAF, you can look to see if you want to invest in the same ministries as last year, with the same amount, or spread out your acts of generosity.  A DAF invites everyone to participate.  Your family DAF does not have to hold a lot in order to teach family generosity. A DAF with The Signatry has no minimum balance requirement and no monthly minimum charges. The minimum amount for a one-time grant out to a nonprofit is $100. Supporting nonprofits with even this amount is a great opportunity to build the habits of generosity with younger family members. God is honored when we choose to trust Him, and these acts of generosity draw our families closer together around His love.  As you engage your family in year-end conversations and discuss using a donor advised fund to grow your generosity, visit our Start a Fund page to start your generosity journey today. 

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Maximize Impact: 2022 Charitable Contribution Limit

2 months ago By The Signatry

For many families, the last three years have provided a rollercoaster of emotions, finances, schedules, and lifestyle. Throughout the same period, charities encountered new operational challenges and similar hardships. One thing remained strong throughout the first two years of the pandemic: the generosity of God’s people impacting ministries on a global scale. Therefore, how can we continue to maximize our impact through charitable contributions as we near the end of 2022?  Looking Ahead Tax benefits for charitable contributions: Current tax law offers charitable deductions to donors who itemize taxes and contribute cash or appreciated non-cash assets held for more than a year. So, what is the charitable contribution limit in 2022? Donors may claim a tax deduction for non-cash asset gifts to qualified public charities and donor advised funds up to 30% of their adjusted gross income (AGI). For cash gifts, the charitable contribution tax deduction limit rises to 50% to 60% of one’s AGI, depending on other charitable giving. Donation amounts in excess of these limits may be carried over for up to five tax years.  Giving More in 2022 There are a few main strategies to know as a donor seeking to maximize impact through charitable contributions with their current assets in 2022.  Give appreciated non-cash assets instead of cash For those who itemize deductions, giving capital assets such as stock, cryptocurrency, real estate, or business interest to a donor advised fund may maximize your generosity and minimize taxes. Beyond claiming a deduction for the fair market value of an asset, donors can avoid the capital gains tax they would otherwise incur if they sold the asset and then donated the cash proceeds. This can mean even more going to charity and less to taxes, as shown in the example below.  This example is only for illustrative purposes of a publicly traded appreciated stock gift. This scenario assumes a cost basis of $20,000, a fair market value of $50,000, ordinary income tax rate of 37%, and capital gains tax rate of 25%. Leverage deduction rules or a bunching strategy Bunch contributions. You may find that the total of your itemized deductions for 2022 will be slightly below the level of the standard deduction. You might find it beneficial to bunch 2022 and 2023 charitable contributions this year: itemize deductions on 2022 taxes, and take the standard deduction on 2023 taxes. In addition to achieving a large charitable impact now, this strategy could produce a larger deduction in the first year than two separate years of itemized deductions, depending on your contribution amounts and filing status. With a donor advised fund, you can recommend a schedule of gifts to go out across the two years and add any additional amounts from the itemized 2022 return as bonus gifts to charities.  Stocks and Charitable Giving Appreciated stocks donated to a DAF before they are sold do not affect the donor’s capital gains taxes. Donating appreciated stocks before they sell is another strategy to minimize tax burden and maximize generosity. Learn more here  Consider Retirement Assets Make a Qualified Charitable Distribution (QCD) of IRA assets. Individuals age 70½ and older can direct up to $100,000 per year, tax-free, from their Individual Retirement Accounts (IRAs) to operating charities through qualified charitable distributions (QCDs). By reducing your IRA balance, a QCD may also reduce your required minimum distribution (RMD) in future years, lower your taxable estate, and limit your beneficiaries’ tax liability. A donor advised fund is not an eligible recipient of a QCD—a distribution from your IRA to a DAF will not be tax-free. The Signatry offers other giving methods that may receive a QCD, including designated funds. Grants from a designated fund can only be sent to a single charity. Learn more here.  What Can You Do Next to Maximize your Impact? The Signatry has resources and information online to help guide your charitable contributions strategy and generosity journey:   Create a family mission statement Invest in alignment with your goals and passions Bring your advisor into your generosity journey Become a Cause Champion giver For insights specific to the strategies discussed in this article, donors are invited to review these articles:  Donating a complex, non-cash asset Bunching charitable contributions Making Qualified Charitable Distributions (QCDs) If you are contemplating any of the strategies highlighted above, consult with your tax, financial, and legal advisors. Donors and advisors can also call us at 913-310-0279 for more information and to set up a meeting.   

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