Feeling Generous? Secure Your Own Financial Well-Being First!

11/20/2024 - By Michael Hall, CFP

Many clients find that they often want to give back after securing their own financial stability. However, without a coordinated giving strategy, they may face unintended consequences, such as missed tax benefits or complications in settling their estate. Creating a formal giving plan is essential; it enables clients to achieve their charitable goals while meeting their financial needs. Just as airline safety instructions advise securing your own oxygen mask first, clients should prioritize their financial stability before focusing on giving. With the right guidance, clients can build a personalized plan that aligns with their life goals—including charitable giving—while reducing tax impacts and ensuring they have enough funds for their lifetime.

Once a financial plan has been completed and the capacity for giving has been determined, the next step is identifying the causes or individuals you wish to support. You may want to give to an individual, a church, a school, or a charity. If multiple causes are meaningful to you, it’s essential to prioritize which ones you wish to support first.

How Should You Give?

After identifying both your capacity to give and the recipients, it’s time to determine the most effective giving strategy. Many options are available, each with distinct advantages. Lifetime gifts, such as Qualified Charitable Distributions (QCDs) from an IRA, gifting highly appreciated stock, or using a Donor-Advised Fund, can be impactful and offer unique tax benefits. If lifetime giving isn’t part of your plan, charitable contributions at your passing can also be integrated into your estate plan. By designating assets to charities in your estate plan, you can maintain control of your assets during your lifetime while providing a benefit to the charity upon your passing. Options for this include various trusts or bequests, which an estate attorney can help you select.

Who Can Help You Navigate This Process?

Creating an effective giving strategy often requires advice from a team of professionals. A core team typically includes an attorney, a financial planner, and an accountant/CPA. While additional specialists may be needed, these professionals can provide the foundational guidance for your charitable plans.

What Does the Charity Need?

Finally, it’s important to speak with the intended recipient of your gift to ensure your intentions can be honored and that the charity’s mission aligns with your giving goals. Large gifts can sometimes be challenging for smaller organizations to manage effectively, while more modest gifts may not always yield the public recognition that some donors seek. Working with the receiving institution to learn about their needs will help to ensure your assets will be used for their intended purpose.

Ultimately, the main reason people give to charity is a desire to make a positive impact on causes or communities they care deeply about. This motivation often stems from empathy, personal values, or a sense of responsibility to help others and improve the world. Many donors are inspired by their life experiences, such as witnessing hardship, being influenced by family or cultural values, or receiving support during difficult times. For some, giving fulfills a spiritual or moral belief, while others are driven by a desire to leave a lasting legacy.

How We Can Help

At Saltmarsh, our goal is to help our clients align their financial plans with their giving aspirations, ensuring their own needs are fully met throughout their lives. If you’re interested in creating financial security for yourself while making a positive impact on the causes and people most important to you, contact the Saltmarsh Financial Advisors.

About the Author | Michael Hall, CFP®
Michael is a director for Saltmarsh Financial Advisors, LLC, an affiliate of Saltmarsh, Cleaveland & Gund. With over 22 years of expertise in asset management and financial planning, he specializes in delivering comprehensive wealth management solutions that integrate asset management with tax planning and risk management. Michael’s extensive experience in portfolio management focuses on risk management and diversification, helping clients achieve their goals without exposing them to unnecessary risk. With a keen interest in the complex nature of investment markets, Michael thrives on the challenges that come with helping clients navigate financial landscapes, making him a trusted partner for those seeking strategic financial growth.