Tax laws are written in such a way as to encourage charitable giving. However, the vast majority of people do not take advantage of the opportunities existing to maximize their tax benefits. In addition, there are several strategies which not only give to charity, but also enhance the givers financial position. Charitable Tax Planning is the process of determining which charitable strategies will create the greatest financial benefit to the donor as well as accomplish his or her philanthropic objectives.
Charitable Tax Planning may enable one to:
• Sell a business or real estate tax free
• Pass the family farm on to the next generation tax efficiently
• Build a tax-free family wealth fund
• Do a tax-free conversion of an IRA to a tax-free Roth IRA.
The possibilities are limited only by imagination (and tax law!). Charitable Tax Planning has the potential to address and solve multiple problems and opportunities simultaneously:
• Reduce or eliminate capital gains tax
• Reduce ordinary income tax
• Avoid estate tax
• Increase retirement Income
• Transfer business interests tax free
• Make a significant charitable gift
• Pass values as well as valuables to next generation
• Create a meaningful legacy
Some strategies and solutions are well known and have been around for decades, but others are relatively unknown and have only been developed in recent years. Most solutions will not work for most people. However, certain solutions work for certain circumstances VERY well. It is knowing what to do and how to do it.
Here is our approach:
The Charitable LLC is one of the most powerful and flexible tax-free wealth building tools today. For example, a 45 year old with $1,000,000 of taxable assets earning 6% before taxes can take out $100,000 per year at age 65 and still have $1,400,000 in their estate at age 85. The Charitable LLC would allow them to take that same $1,000,000, get a tax deduction worth $300,000 in tax savings, realize the same $100,000 per year income, gift over $700,000 to charity during life, $2,000,000 to charity at death and leave over $4,000,000 that their heirs can control and repeat a similar scenario for themselves.
“An extraordinary investment opportunity in a business came my way that had the potential for making a lot of money in less than a year, so I invested $150,000. Sure enough, a few months later, a purchase offer came which turned my investment into almost $1,500,000! While that is fantastic no matter how you view it, I was also looking at a short-term capital gain with taxes over $500,000. I was amazed to learn that I could avoid all of the taxes by creating a Charitable LLC and still maintain control over the funds. This strategy will allow me to build substantial wealth tax-free while at the same time doing a lot of good.” -a Kansas Entrepreneur.