018 // The Power of Strategic Giving to Individuals - Part 2

This is the time of year when we think about giving and generosity. This episode is the second in a three-part series on the topic. Sam and David Kern, president of Wealthquest, discuss strategic giving to individuals in this episode. They will then explore ways to give offering tax benefits in the third part of the series, airing next week. We discuss the emotional and psychological benefits of being generous and the two key ingredients of generosity: action and attitude. We also talk about identifying 'circuit breakers' that prevent us from being generous.

Additionally, we explore how creating an 'abundance fund' can foster a generous mindset. David encapsulates this idea by saying he's never seen an unhappy generous person, underscoring the importance of giving. Next week, we’ll focus more technically on the quantitative side of generosity. We're going to discuss strategies and tools that you can use to be more generous, increase efficiency, and achieve better tax benefits.

Episode Highlights: 

[05:59] Giving and generosity towards individuals is usually non-tax deductible. Generosity for entities that we do get tax benefits from.

[06:58] The lifetime gift and estate tax exemption is 13 million dollars. The yearly threshold is $17,000. This is the annual gift tax exclusion.

[08:28] A form 709 or gift tax return is required for any amount over that $17,000. The numbers change every year, so they need to be double-checked.

[10:27] Cash gifts with those strings attached or wonderful. Even if the money is used in frivolous ways people are learning.

[10:42] You can open a Roth IRA for a child or grandchild if they have income and gift a contribution on their behalf. This can jump start their retirement and get them investing.

[11:43] 529 or educational savings accounts are also very popular. All of the growth of these accounts can be used tax-free as long as it goes towards educational expenses.

[12:53] You can also pay medical or tuition expenses on behalf of someone else. When you pay directly to the institution it doesn't count towards the lifetime gift exemption.

[13:35] You can also give appreciated shares of stock. You're transferring shares and transferring the tax burden.

[15:24] Paying directly to an institution for medical or tuition is not tax deductible.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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