Nola Kulig
Kulig Financial Advisors
Longmeadow, MA, 01116 USA
413-565-2839
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Garrett Planning Network Named to Kiplinger’s Best of Everything 2013

December 13th, 2013

I am proud to participate as a fee-only financial planner in the Garrett Planning Network, which was just honored in Kiplinger’s Best of Everything 2013 for Best a la Carte Financial Planning. I concur with their recommendation after being part of the network these last two years. It is a great group of folks working to do the right things for clients.

For the announcement, and to check out Kiplinger’s recommendations on all sorts of things financial which may benefit you, please see http://www.kiplinger.com/article/spending/T050-C000-S002-the-best-of-everything-2013.html?page=4&si=1

Seven Savvy Charitable Giving Strategies

December 4th, 2013

As we approach the end of the year, our thoughts turn not only to thankfulness for the blessings in our lives, but also to giving back. One of the great pleasures of achieving your financial goals may include charitable giving, and this post discusses several financially smart ways to give.

The following are only general descriptions of techniques. Please consult a tax advisor and/or an estate planning attorney for advice on your specific situation.

Cash Gifts

Most of us are familiar with this one. Contributions by check or cash are one of the most common ways we give. If you can itemize deductions, it may be possible to shelter up to 50% of income from cash gifts. Of course, you need to obtain and keep receipts for your records.

Gifts of Assets

Gifts of appreciated assets might include stocks, bonds or other property. Donating appreciated assets is much more favorable from a tax perspective than selling the asset and then making a donation. By donating the appreciated asset itself, you may avoid paying capital gains taxes, and obtain an income tax deduction for the full value of the asset, not just its original cost.

Of course, if you have a loss, the opposite strategy applies. Then you would want to sell the asset, take the tax loss, and then make your charitable donation. The loss you take may be used toward offsetting capital gains.

Retirement Plan Gifts

You may be aware that funds in an Individual Retirement Account (IRA) may be subject to estate taxes at your death. But you may not also be aware that your heirs may also have to pay income taxes on retirement assets they inherit.

If you are over age 70 1/2, one way to deal with this issue is to use special provisions which expire at the end of 2013. For now, it is still possible to make tax-free gifts directly from your traditional or Roth IRA. While you may not take a deduction for such contributions, you do not have to report the withdrawal on your tax return as income. You may do this for amounts up to $100,000.

This approach can be particularly advantageous if withdrawals from your IRA cause your Social Security income to be taxed at higher rates, or if you have reached the limit for how much you can deduct.

Giving Through Life Insurance

If you no longer need life insurance for spousal support or other loved one, you may want to redirect the proceeds toward charitable gifts.

Gifts by Will or Living Trust

If you wish to make gifts out of your estate, this can easily be accomplished by revising your estate planning documents accordingly.

Gifts That Provide Income

It may also be possible to use special giving techniques that allow you to retain income for life or some other period.  Many charitable organizations have programs that facilitate such gifts, which may have significant tax savings.

Donor Advised Funds

Donor advised funds can be an excellent way to not only further your charitable giving, but also to offset higher than normal income that may bump you into a higher tax bracket. For example, you may want to offset the additional income caused by a conversion of a traditional IRA to a Roth, or an unusually large bonus. Of course, the 50% income limit mentioned in the section on cash gifts applies.

This is an especially good solution if you are not sure in advance to which organizations you want to contribute, a potentially thorny issue if it is a larger than usual gift. Organizations like Fidelity and Vanguard both have these programs with reasonable minimum contribution levels and moderate management fees.  Once you make your contribution to these funds, the gift is irrevocable; but in the future, you may nominate an organization for a grant in the denomination you want (subject to a fund company minimum; please see each vendor for details). You may also choose to make the investment selections for your contribution.

Link to the IRS for Details

For detail on IRS requirements, please see http://www.irs.gov/uac/Newsroom/IRS-Offers-Tips-for-Year-End-Giving-2012. Since some of these tips are for 2012, please check for updated specific dollar limits, etc., as an update of the giving tips is not yet out for 2013.

In addition, if you are considering donations in response to a natural disaster, you may want to scroll to the relevant section of this link: http://www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013. While this was written last tax season, the section on charitable giving scams may be worth your perusal, especially if you have been approached by an organization in connection with say, the typhoon in the Philippines.

Dear readers, I hope that this has been a prosperous year that enables you to give. If this has been a tougher year financially for you, or if you are saving to meet those financial goals, then consider a gift of your time. Gifts of time and effort are often priceless in this time-stretched society we live in.

Happy Holidays!

Investment advisor representative of an investment advisory services offered through Garrett Investment Advisors, LLC, a fee-only SEC registered investment advisor. Tel: (910) FEE-ONLY. Kulig Financial Advisors may offer investment advisory services in the state of Massachusetts and other jurisdictions where exempted.