CLIENT SCENARIOS

 

Giving opportunities often coincide with major business or financial decisions. Recognizing –and seizing – those opportunities can save your clients money.

Here are a few common scenarios:


YEAR-END TAX PLANNING

Scenario
A charitable Minneapolis executive has earned a large year-end cash bonus, thus significantly increasing her taxable income. She would like to maximize her charitable contribution but also spread her nonprofit support over several years.

Solution
Establish a Donor Advised Fund, and receive an immediate tax deduction this year. The following year, the donor recommends grants to nonprofits of her choosing. She continues to contribute year-end bonuses to the fund, making grants when it is convenient and where they will have the greatest impact.

A COMFORTABLE RETIREMENT

Scenario
A St. Paul retiree wants to continue to give to the community in the areas of arts and education, without running out of money during her lifetime.

Solution
Establish a Charitable Remainder Trust. It provides an income stream during the beneficiary’s lifetime, and a Designated Fund can be named as the trust's remainder beneficiary. The trust will provide a steady income stream to the donor with the security of knowing that professional investment advisors manage the trust funds. The fund will achieve the client’s charitable objectives far into the future.


APPRECIATED STOCK AND REAL ESTATE

Scenario
An affluent family in Minneapolis has appreciated stock. It constitutes substantial wealth but also contributes to significant capital gains tax liability if sold. They also want to establish a charitable vehicle to involve their adult children in family giving.

Solution
Create a Signature Fund or Donor Advised Fund at the Foundation. The family contributes their appreciated stock and real estate for the maximum allowable charitable tax deduction and avoids capital gains taxes. When the Foundation sells the assets, the entire gift is put to work. The Foundation's staff will work closely with the family to achieve their philanthropic goals.

PRIVATE FOUNDATION

Scenario
A Bloomington family would like to broaden its philanthropic impact through a private foundation, but the family wants greater tax benefits and fewer bureaucratic hurdles.

Solution
Open a Donor Advised Fund, which can make grants throughout the country. Family members meet regularly to make grant decisions, the family's privacy is maintained, and worries about tax returns, minimum payouts and excise tax are eliminated.