Financial Consultant David Kratz has been sharing ideas with his clients for 35 years. One concept that many of his clients find especially meaningful is including family in their charitable planning decisions.
That was the intent of David’s clients who recently established a donor-advised fund. They approached David about their 2020 tax bill after receiving a large windfall.
“The money was in their account already, so they couldn’t defer it,” David recalls. “But they could offset the taxes with a charitable gift.”
A feature of donor-advised funds that appealed to this family was the ability to include their young adult sons in their grantmaking decisions. “It’s important to them to pass those values and good habits to their children,” David says. “You learn from your parents, is the bottom line.”
He uses words like “flexible” and “fluid” to describe his favorite charitable solution for clients. Donors may receive a tax deduction when they create a fund and they are able to designate gifts to charities over time.
“Clients like having control,” David says. “They can pivot to other charities as the family becomes more involved.”
Giving when there is no 'next generation'
David also has several clients who do not have children. “There isn’t a next-generation to leave money to,” he says.
David recently helped two unmarried sisters give shape to their generosity with a gift of charitable life insurance. The women have named six charities as eventual beneficiaries. During their lifetime, they will reduce their annual tax bill by paying premiums with qualified charitable distributions (QCDs).
Like many financial professionals, David uses software to project for his clients that their assets could grow and lead to tax consequences. “I suggest they help other people rather than give money to the government, and when they see they have the dollars to do so, they are willing to listen,” he says.
Helpful resources
Since David can’t sit face-to-face with his clients at this time, he selects from a variety of resources that address common client questions.
David also suggests that FPs simply call or email gift planners for ideas and expert implementation. “The gift planners keep you informed on what’s happening with your clients along the way,” he says.