Taxes and Philanthropy Video from Savant Wealth Management

[Music] Download our complimentary guidebooks, checklists, and other useful financial resources at savantwealth.com/guides. Welcome everyone.  Thanks for joining today’s Savant live webinar. We’re excited to discuss our subject today, Taxes and Philanthropy: How to Give Strategically. My name is Rob Myers, a financial adviser. I work out of our Cedar Rapids and Iowa City office. I am joined today by Mike Mesch who is our director of tax and consulting with Savant.  I’ve been doing this for 18 years now. All with Mike, a few office doors down. So, it’s been a great synergy. Mike, why don’t you introduce yourself if that’s okay? Thanks, Rob. My name is Mike Mesch. I’m just going into my 26th tax season, historically work with businesses and individuals. Really tax efficient planning is our strong point. Today we’re just really excited to talk about how to donate and really fund your charities in a tax efficient manner. So, thanks Rob, you know before this presentation I looked up what is a philanthropist? What is the definition right? And it comes from the Greek word Felos Phos which means loving and Anthropos which means human. Right? So, it literally means love of humanity which is awesome. And if we can you know help forward that just a little bit with what we do that’s a really cool way to give back for us. So, we’re excited to share. So, our agenda today, right, if you’re going to think about giving, we have to assess your financial resources, your priorities.  I think why a lot of people are here today is to discuss the giving vehicles, right? And how those can work with your estate plan, how giving philanthropy can really work with an estate plan. And then at the end, how to personalize what your plan might be. You know, examining your goals, how it fits in with your retirement plan, and then if we have time, we’ll jump into some Q&A, and we look forward to answering any questions. If you do have a question, please put those in the Q&A box. Okay? And I will add that this recording will be available. If you miss something, if we fly by a topic too quickly, we’ll be able to get the recording to you.

So, assessing your financial resources and priorities, right? Super important. We have to ensure that this fits into your financial plan, right? My job as a financial planner is to really assess is your giving plan, is your idea of giving, how you want to give viable, right, with your investments, with your retirement plan. So, before we can really design that giving plan, we have to make sure you’re in a good spot. How things are going to you know look for you long-term, short term. Do you have a high-income year where we need really be aggressive in giving? All topics we’re going to dive into in a little bit more detail here, but like what is your plan. Is it to children? Do you have specific charities already identified organizations? Do you have a passion? Is it children? Is it animals? Is it, you know, all the various opportunities out there for your giving? So, all big picture questions to think about, but priority one is making sure you’re in a good spot to give, right? And that’s how working with your adviser, your tax adviser, your wealth advisor, super important in that in that first piece of the puzzle. Yeah, I might add that tax management plan, you know, the second piece of this slide is just as important. You know, you want to give to charity, but how can we maximize tax efficient giving? There’s plenty of times where I know you know, in my younger years where I’ve given to charity and doing come time to do my taxes at the end of the year and I realize there’s no tax benefit received. So how can we think strategically to give to charity and realize a tax benefit at the same time? Yeah, it’s right. So like the investment part of this, it’s not just, you know, your allocation, your assets, it’s the vehicles, it’s do you have taxable accounts, your trust, right? Your joint account and giving from those vehicles is going to be a lot different than giving from your IRA, which you can do and we’ll get into, right? So, the investment plan, you know, being diversified across investments, but also like utilizing all the investment vehicles available to you, right? And again, this is a broken record, but assuring working with your professional that this fits into your plan and really how can we make your plan better potentially with this sort of giving, right? And ultimately it flows into estate planning, right, Mike? That’s right, you know, if you have large charitable giving as part of your overall plan, then we’re going to want to look at your estate plan and how can we maybe maximize gifts in your final estate. Reduce the overall estate tax if you’re subject to estate tax as well as, planning to get assets out of your estate while you’re still living might be an appropriate approach. We’ll talk about some of the ways to do that. Yeah. Excellent. It’s like the priorities when giving like what is your goal? Is it the tax deduction which is fine? Is it you know just seeing your passion – your charity advancing?  prior priorities when establishing a plan do you have the sufficient capital to live on for the rest of your life? Right?  we can’t jeopardize 20 years down the road for giving today, right? So, we need to work to incorporate this into your plan. Really map out cash flow today and cash flow years down the road, right? Will your spouse be taken care of? We have to assure that your loved ones, you know, have means – have the capital available to meet their needs. If for some reason something happened to you, right? So, there’s strategies to take to assure your family is taken care of while still giving, right? Maybe testamentary gifts. Importantly, are you examining the tax efficient portfolio strategies, right? There are ways to improve your portfolio by giving, right? We’re going to get into that. Giving appreciated assets, right? Donor advised funds, things like that. really are you protected from unexpected occurrences later in life, illness, premature death, right? Life insurance are your heirs, your generations protected to the point you want them to be, you know, and if there’s extra left over, there’s ways to give you know, give that away as well. So, all important priorities to examine to think like big picture items as you’re formulating your giving plan if you haven’t already like questions to think about. So, income sources, pensions, right? Real estate income, business distributions, things like that. Like are your income sources secure to the point where you’re not relying on just your investment assets and you might have the means, the tools to give a lot away today. Or alternatively, if your income sources are, you know, somewhat tight today, well, then we look at strategies to give later on, you know, when assets have accumulated. Are your withdrawal rates safe? Right? 4% 5%. We don’t want to  you know jeopardize again future cash flows your future security by taking steps today removing assets from your estate giving assets away  that that impact you later in life and can you it’s a difficult one you know can you anticipate care expenses later down the road is your family history one of longevity right or one of a particular, you know, ailment generation to generation that that you need to plan for, right? Or do you have unneeded assets? Are there assets just, you know, accumulating that that you have had no need to touch, right? They’re working well for you. How can we use those to incorporate into your giving plan? So, general rules of thumb as we’re doing the broad assessment, making sure giving is something that makes sense and assuming it does make sense, like how to best do it, like we’ll look at your cash flow analysis. We’re going to look at the probability of success, right? We want to make sure that your plan is sturdy, has the means to jump into the to the philanthropy that you wish to do, right? Portfolio diversification. I mentioned it earlier, right? Is there ways to improve diversification through giving of assets?  Is there ways to, you know, not just investment diversification but like asset vehicles, IRA, taxable accounts, Roth IAS is are you diversified that way as well? And how can we, you know, give strategically from those specific vehicles? So, it’s a long-term focus and again, use your professional. Lean on us. We have experience with this, man, we again, we’ve been working on this, Mike, 20 plus years. I’ve been doing it for 18 years. Your adviser all across Savant, you know, has a team of resources to help you make the best decisions here. Yeah. And here’s some helpful questions to ask yourself. So, we want you to go into giving being thoughtful, you know, growing up, what did your parents do? What did it look like in your family giving? Did it mean, you know, donating at the at the local food station or joining a board of directors? Maybe you’re doing something now as part of, you know, your career. I know several people who serve on local nonprofit boards of directors and get a lot of benefit and personal equity by doing that.  What sort of impact do you want to have in the world?  how would you describe that? These are things to just kind of narrow the focus of what how we could utilize your resources to give and it’s important for your adviser to know these things and really get to know you.

Yeah, thanks Mike. Another way to look at it is like gifting now versus gifting later. Big part of this conversation, right? Great benefit of doing it today. Not just, you know, current year’s tax deductions, but you get to see how your giving helps your organization of choice, right? You can see how they implement it. You can maybe have a say in how they implement it, right?  but there’s gratification in that. That’s a powerful feeling.  So, is the powerful feeling of saving on taxes, right? If you can save thousands of dollars in a potentially high tax year, right, there’s merit to that.  You know, you can think about what might be left over for your heirs, right? Some to be completely honest, some people don’t necessarily want to give their whole estate, all their assets to their children, right? Others do, but they want to give during their lifetime, right? So, the timing questions, right? Certainly, a personal choice, but questions, right? Conversations to be had to determine like when is most advantageous and not just financially, but like personally, what’s going to give you, you know, the most gratitude and the most internal intrinsic benefit of your giving.

So why do we give? You know, to this point, we’re spending a lot of time talking about the reasons to give. You know, educating yourself about, you know, ways to give and why and how. You know, one of the things personally, I’m on the board of directors and have been for maybe 10 years now, a nonprofit locally, cancer related. And I do so because I’ve had several people in my immediate family be affected by cancer or pass away as a result of cancer. And it gives me you know a lot of benefit to just seeing my time and dollars go to help others who are going through similar circumstances. So that’s why I give. You know you have to find your own reason. And once we know that reason of what why you want to give, how you want to give, then your advisor can help you understand maybe the ways to do it that are going to benefit you. And Rob, if you’d advance to the next slide, please.

So, these are the things you know that are why you know your passions. Is it transactional? Is it transformational? As far as you know, the amount we’re talking about generational beliefs. What we want to do today and starting right now is talk about how can we incorporate the last two investment strategies and tax benefits into your giving.  because we might as well get a tax benefit if we’re going to be spending the time and it helps really it helps you be able to give more by doing so in a tax efficient manner. Yeah, that’s a really good point, Mike. The giving more and I think the next example highlights that.  Well, first let’s look at the vehicles, right? There’s various vehicles to do this. There’s charitable trusts, charitable annuities, donor advised funds, qualified charitable distributions, using your IRA to give, right?  donating long-term appreciated securities. So, this is going back to my previous statement here a way to potentially actually get more right than if you sell an asset that has a large, embedded gain. So, let’s look at this scenario again. This is specific to taxable accounts, right? IRA is not included in this.  So, your joint accounts, your trusts, your individual accounts, vehicles where when you buy something you establish a cost basis and over time those assets you hope those investments grow, right? So, you can donate these highly appreciated assets rather than cash, right? rather than cutting a check for $50,000, $10,000, whatever it might be, like looking at your portfolio, finding an investment that has grown over the years and using that can give you more bang for your buck. So, in this assumption, we’re going to assume stock ABC is worth $50,000 today. You bought that for $5,000. Okay? So, your cost basis $5,000. There’s an embedded gain of $45,000. If you sell that, you’re going to pay the federal long-term capital gains rate of 15%. You’re in the 24% tax bracket, right? So, you’ve got again this appreciated stock selling it. You’ve kind of pushed it away because, well, I don’t want to recognize that gain or it’s just it’s just something that like paying the tax on it is too burdensome. Well, here’s a solution. rather than selling, let’s look at option one. We’ll start there, right? You sell it. You’re thinking, I’m going to cut a check to my charity of choice. And to do that, well, I need some liquidity. We’re going to look at ABC stock and sell it. Okay. So, you sell it for $50,000. We know there’s that gain you’ve incurred of $45,000. That’s going to be taxable at 15%. So that tax cost to you is $6,750.

Right? In essence, you’re now left with $43,250. You have that amount of liquidity, assuming you’re holding that 6750 back for taxes, left to cut your check. Okay? Still a great amount to give. Now, at your 24% tax rate, in your 24% tax bracket, that savings, that deduction you’ll get is $10,380.

Well, we know there’s also that tax cost of $6750, right? So, it’s a haircut. Your benefit is just $3,630 in this scenario. Still good. still better than nothing at all. But option two, work with your advisor. Let’s transfer those appreciated shares in kind over to your charitable organization’s account. They sell the stock, right? They can sell it under their tax efficient 501c3 umbrella and not recognize the gain, right? So now you are pushing the $50,000 of appreciated stock out of your portfolio. You get the full tax deduction on $50,000. $12,000, right? Well, that’s a lot better than the 3,630 bucks, right? You’re coming out ahead. You get additional savings of $8,370 in this scenario. Powerful, right? So, not only did you get more of a tax deduction, right? I think I think there’s, again, this is coming from the wealth advisor perspective here. There’s really good reason to do it. You’ve had this appreciated stock that’s kind of been sitting in your portfolio potentially, you know, an overweight asset that that can mess with your allocation. This is a great way to not only get a tax benefit, but to improve your asset allocation, right? A double win, for lack of a better way to put it. So, if you examine your taxable accounts, again, your trusts, your joint accounts, your individual accounts, if you have securities that you bought a long time ago or that you bought recently that has just done extremely well and you’re hesitant to sell because you don’t want to recognize the gain, think about donating that appreciated security to the charity of your choice. Great way to approach this So, I’m gonna pass this off to Mike. It’s kind of a similar, you know, idea using appreciated securities, but this takes it a little bit further. Mike, thank you., yeah, so this is a way to really take it another step further and utilize something that you can work directly with your advisor to set up. I was going to piggyback off of what you said, Rob, and I’ve known some folks who have utilized their own small business stock and donating that to charity if they have an upcoming sale of their business. So, if you’re thinking about selling a small business and have a charitable inclination, you know, we could look at ways to maybe take a donation for part of your business stock before the sale happens. There’s a little more red tape to go through, but I’ve seen it done and it’s an interesting way of donating in that year of stock sale as well of your business. You’re likely going to have higher income than you might have in other years. So, it might be a good year to examine that option. Using donor advice funds. So, really piggybacking again off what Rob said, you know, if you want to donate appreciated stock, that you own within a taxable portfolio, you can set up what’s called a donor advised fund, with your advisor prior to the end of the year and simply move your appreciated stock into this donor advised fund. becomes a fund that you still control the assets within that fund, you avoid paying the capital gains tax as in Rob’s example. So, still the same benefit, but now instead of giving the money directly to charity, maybe you want to give a larger amount because you do have a large income year, right? either sale of a business or, you know, a big bonus at work. So, you’ve got some extra cash and as a result, you may decide, I’m going to donate some of my appreciated stock, but I don’t want to give it all to the church or to my charity of choice, you know, right away. I’d rather continue to dribble out money to them as I do on a monthly basis or an annual basis., you could move some money into what’s called this donor advice fund. , the money could stay invested and continue to grow. And then in an example, you could donate $50,000 worth of stock and then dribble out maybe $5,000 a year for 10 years to the charity of your choice or multiple charities of your choice. It will continue to grow hopefully all while you know spilling money out to your charities.  You get the deduction though for the entire $50,000 in this example. So, it can help in those years where you’ve got large income that we’re trying to offset. It’s just another arrow in your quiver, I guess, to be able to reduce some taxes or give tax efficiently.  I will note that you know, you probably want to do, you know, get your donor advice fund set up, you know, in a relatively quick manner. It’s November 5th today, so if this is something you’re interested in, talk with your adviser within the next, you know, three, four weeks. I would say certainly to get that set up. , on the next slide, we’ll talk a little bit about why it’s important to plan tax efficiently with your giving. Right? So, in this example, we are looking at five years’ worth of giving. And you can see that these different pieces represent the deductions that add up into your itemized deductions.  Since 2017, a lot of folks have not had to provide as much information to their tax preparer because they simply did not have enough deductions to get over what’s called the standard deduction.  the standard deduction for 2025 is $31,500. So, you need to have mortgage interest, property taxes, and state taxes, which have been historically capped at $10,000. Charity or medical expenses, all of those things have certain limits apply to them as well, but once you get through that entire calculation, all of them had have to add up to more than 31,500 to really see any advantage of those expenses. So, folks will oftentimes give to charity, and we don’t do so for a tax deduction, right? But you may notice on your tax return that you gave $5,000 to a charity and you still didn’t itemize. And so there really was not a tax benefit. So, we want to talk about ways that maybe we can get that benefit. One of them being the donor advised fund or gifting appreciated stock.  Rob, if you could show the next slide. Another way might be how do we supersize our charitable contributions? So that might be utilizing that donor advice fund or what we call bunching contributions.  we could work with our favorite charity and say okay this year has been a good year for me. I want to gift you 50,000 just to stay with the example, however, I’m used to giving you $10,000 a year. Instead of that, I’m going to give you 50,000 now and for the next, you know, five years. I’m not going to or I’m just going to give, you know, minor amounts, and work with your charity to help them understand, you know, if they’re relying on your annual contribution, help them understand what you’re doing, why you’re doing it. In this example, in year one, we’re getting a large contribution and a reduction in your taxes, and in the following years, we continue to use the standard deduction.

Thanks, Rob. Yeah, I think this is a great example though of really maximizing taxes, focusing on a year that income is high, right? How do you mitigate that? Well, you know you lump it together. Now, you could do the same strategy in a donor advised fund.  you lump it the accumulation of the future five years this year, right? And then as Mike said earlier, you can you’re in control of that. You can still give to your charity equally over the next 5 years, but because you put that into your own donor advised fund, you get to recognize a tax deduction this year, your high-income year, fully understanding the next years, you’ll probably just go back down to the standard deduction. And that’s okay because income, you know, for planning is going to be less. A super cool strategy, again, Mike mentioned, we are now in November. There are some time considerations to it. So, if this is something that is, you know, ringing a bell for you, reach outreach out immediately as soon as you can so we can see if it’s feasible yet this year. So, I’ll take the next one and this one’s really cool. this is way to utilize your IRA, right? The previous methods focused on taxable accounts, appreciated securities in those accounts, donor advised funds. This is a way to use your pre-tax savings. All the years you contributed to your 401k, IRA, well, those come out at your taxable income rates, right? And that can be fairly expensive in retirement or, you know, when you do need to tap into those.  we also know that with IAS right there is something called a required minimum distribution. It used to be at age 70 70 and a half that a person had to start drawing against their IRA. The IRS wants their revenue. This is a way to force people to get it out of that tax advantaged account and get their get their revenue pause on it so to speak. All right. Now, the RMDA has moved to 73. I think that’s important to note. That said, this next strategy, you utilize a qualified charitable distribution, you can still start that at age 70 and a half, right? So, you’ve saved well over the years. Your IRA has grown to a point where you might not need it. You might not, you know, want to take all that income. Well, how can you avoid it? You can take some of your RMD and send it directly to a charity, right? By doing so, it avoids income taxation. So, you have an RMD of 100,000, so to speak. Just as example, you can give 50 of that away and take the other 50. You have an RMD of 30,000. Well, then you don’t need that. Your cash flow is solid from other sources, right? You can give all of that away up to $108,000 this year. Your qualified charitable distribution cannot be more than $18,000, but this is a tool that we have seen become more and more popular, you know, over the years. Markets have done well, RMDs have grown, people are, you know, doing great planning with us and, you know, with Mike and his team. Right. And how do we how do we limit the taxation? Let’s send it directly to the charity. How does that work? A lot of times we get instructions on your IRA. You tell us the recipient. We get their address. You know, come November, come June, whatever the time is. You tell us when and how much you want to send over to them. We cut a check. They have it. They cash it, right? It’s out of your IRA. No taxes. There’s a caveat here. You can see down at the bottom of this slide, the IRA custodians do not necessarily identify that a distribution from your IRA was a QCD. Right? So, if you had $100,000 of IRA distributions and you sent 50 of those to your charity of choice, your 1099R is still going to read like a a taxable distribution of $100,000. you need to or I need to working alongside of you and working alongside of Mike, you know, inform your tax preparer that 50 of that was a QCD so they can take appropriate steps to assure you get credit for it and you are not taxed on that full amount. , very similar. I might just add in I appreciate that because unless you tell us or unless we work directly with your adviser as your tax preparer, we’re not going to know that you gave that money away.  if you do it one year, you know, we’re probably going to be asking in the future, you know, because we know that you’ve got a history of that, but  make sure to just  be extra on top of it, letting your taxpayer know, the other thing I just wanted to really point out here is, you know, this is a way of avoiding all the ways that the tax code limits your deductibility of charitable contributions. This RMD distribution directly to charity comes right off the top of your taxable income and you save taxes on 100% of the amount that you that you send to charity. So, it’s a great way to do it, and if you’re coming up on that age where you’re going to have the requirement on distributions, talk to your advisor about it, see if it’s right for you. Thanks, Rob. No, thank you, Mike, and I was going to say this again, we are in November. This does take some time to get set up on your IRA to have it in place. So, there is some time considerations here to think about. So, reach out to your adviser, reach out to Mike, your tax preparer, to your financial advisor, and walk through it with them. See what they say, and if it’s, you know, something that makes a lot of sense, right? If your retirement plan can sustain it, your cash flow is good, a fantastic way, like Mike said, to get a dollar for dollar, reduce your income, dollar for dollar, I should say.

Next vehicle, a very neat one, a charitable lead annuity trust, CLAT for short. Maybe a less common strategy. You perhaps haven’t heard it as much as a donor advise fund, a QCD, or just writing a check, right? But with a with a CLAT, the charity receives payments during your life or the lives of you and your spouse or a specified term of years, typically about 10 to 20 years is what we see, right? This is valuable in the right situation if you have larger principal amounts perhaps that you’re looking to get out of your estate and to get a larger deduction in a given year. This this would be something to explore. So as the term annuity in the CLAT right charitable lead annuity trust suggests there is a fixed payment right you give in this example $500,000 into your CLAT your charitable lead annuity trust $500,000 out as we’re drawing up that document there’s going to be a fixed payment say 5% each year for 10 years for 20 years that goes directly to the charity So, $25,000 in this example each year for that specified term really beneficial for you and the larger deduction you get. But if you think about it from your charitable organization’s end, like they know now know now that they’re getting this specific payment each year. They can budget for that. Very beneficial for them, right? Really cool tool, now the value of the transfer is reduced by the value of the payment stream. So, if you put $500,000 in, there’s going to be a formula that actually calculates the present value of that annuity and that’s what you get deducted. It’s still going to be a healthy amount, and it channels the future appreciation to the trust beneficiary’s estate tax free again. So, estate tax or excuse me, estate planning, you know, large amounts of principal available, high-income year, maybe we consider a CLAT as a way to explore reduce your taxes in that year but really support your charity in a in a meaningful way.

So I again we’re advisor we see this every day right so I hope our explanations of those vehicles did it justice did you justice if you don’t again questions in the Q&A but let’s review right bunching donations right taking funds this year well looking out maybe five years and instead of doing those spread out over those five years, bunching them this year so you can get that itemized deduction. Powerful tool. Doing that within a donor advised fund. Again, you maintain control of that fund. You still have discretion on when and who gets those funds, but you’ve received that tax benefit in a given year, likely a year, where your income could use some deductions. We talked about qualified charitable distributions, right? Utilizing your IAS. Sometimes the IAS are a forgotten vehicle when it comes to charitable giving. And often, like in some circumstances, they can be the most powerful, right? You can get a lot of income tax, you know, wiped off the slate if you do it the correct way, right? So, work with your advisor, ask us how we can help with that. charitable trusts, right? We just examined the CLAT and how you know giving larger amounts of principle into a trust which then kick off a known quantity each year to your charity of choice, super beneficial to you, super beneficial to your organization of choice. They know how much is coming. They can budget for that really cool tool if that works for you. And really this flows into estate planning, right? These are all ways to, you know, think about how to reduce potential estate tax liability, who your recipients are going to be, you know, beneficiary wise, you know, and leaving it to children. You can also leave it to charities. So, giving does not have to end while you’re living, so to speak, right? There’s a lot that you can do once you’re gone within your estate plan. So, I’ll turn it over to Mike to touch base on the estate side of things in a little bit more detail.

Thanks, Rob. Yeah. So, with estate planning, you just want to make sure your documents are reviewed, you know, every few years to make sure it reflects, you know, your current thinking with regard to how you want your assets to pass as well as current laws. Those always seem to be changing or increasing, exemptions, etc., which we’ll talk about a little bit, in addition to that, you know, you can incorporate charitable giving into your estate plan either relatively easily via simply naming a charity as your u as a beneficiary of your estate, that might be helpful in the event that you got a taxable estate and you want to reduce the amount that’s going to pass to heirs down to the estate tax exemption. You can give the rest away to chair. We should all be so lucky to have that problem, right? But if we don’t, we don’t have a taxable estate, then it’s just a matter of do we want to, you know, bequeath some of our assets we’ve built up over our lifetime to a charity that’s meant something to us during our life. So, you can work with your advisor and your estate attorney to incorporate giving very easily within an estate plan. You could also utilize some of these charitable trusts and things that Rob previously mentioned.  If you wanted to get a little bit more into the weeds on those things, there’s all sorts of options you can utilize.  The next slide, we’re going to talk a little bit about some things that have been up in the air recently, right? So, prior to the passage of the One Big Beautiful Bill on July 4th of this last year, there were all these questions that were coming up because at the end of 2025, the prior tax law was expiring and so many things were going back to 2017 rates.  Meaning some of the brackets were getting smaller at the lower half of the brackets and people were going to end up paying more taxes. The standard deduction was going to be reduced again. There were questions about capital gains rates and what’s going to happen there as well as eliminating cost-based a step upon your passing. So, I’ll touch base briefly on each of these higher rates and cap deductions. So, I mentioned the marginal tax rates and brackets were going to be compressed at the lower level, meaning some folks, you know, 250,000 and less married filing joint. We’re going to have income taxes increase.  The most recent tax bill kept those the same and made them permanent. In addition to that, you may have noticed, or we talked about earlier that a lot of folks don’t itemize anymore. And one of the reasons for that is, if you live in a high income taxed state where you’re paying a high amount of income taxes to that state, , the benefit or excuse me, the deduction on your itemized schedule A was limited to $10,000, so you add up your real estate taxes, your taxes you pay on your vehicles, and then your state taxes, and those might be $20,000 altogether, historically, you used to be able to deduct $20,000 and add that towards your itemized deduction, but that was capped at 10,000. With this most recent bill on July 4th, they’ve increased that cap to 40,000. So now folks who live in a higher income tax state may be itemizing. We’ll have to see how it all plays out this year.  But that’s something that we now have a little more clarity on.  Also, there was all sorts of talk about a decreased estate exemption. The expectation was that the new law; in order to increase revenue for the government, we might be reducing our estate exemption to $7 million per person. So, we’d still have $14 million excluded before you’re taxed on your estate after you pass away. , well, that was  also changed as a result of the One Big Beautiful Bill and instead, in 2020, excuse me, here in 2025, we’re still at 13.99 million each that you get to exclude before you’re taxed. In 2026, it goes to 15 million and then it’s suggested for inflation thereafter. So, unless you got 30 million or more in total assets upon your passing as a married couple once you both pass away, that’s when that potential tax would come into play. If you don’t have more than that, then we don’t have to worry about the estate tax. If you do, or if you’re getting close, or if you’re young and you’ve got a certain dollar amount, we will help you analyze that and decide if there’s some things we should do now to maybe get some assets out of your estate to make sure you’re under the exemption. Hey, Mike. And to add to that point, I think it was set to revert back to about 7 million, right, from 99. So you can see like had it not been extended like all of a sudden a lot more people are impacted by that right so giving you know getting assets out of your estate at that point you know becomes a lot more relevant to people I mean that’s it’s a large sum of money but you know it it’s with years of investing and savings right it’s not that that far away for many That’s right. And we’re in Iowa, which has a large constituency of farmers and a lot of those folks have, you know, generational farms that have increased in value significantly over time. And so, it could have affect could have affected those or a lot more people in that situation. Capital gains rates, there’s always talk about capital gains rates going up, you know, the highest individual income tax bracket is 37%. The highest capital gains bracket with the net investment income tax ends up being 23.8%. So quite a benefit to realizing income via capital gains versus ordinary income. The expectation was that or not necessarily expectation but it’s always a concern that those rates are going to be taxed as ordinary on long-term capital gains as opposed to the benefited smaller bracket amounts.  But 23.8% going forward is what we can expect. And then the other talk was that they were going to eliminate cost basis step up upon your passing. So, if you don’t know what that is when someone passes away, they get to step up their cost basis in that asset. So, you own a share of stock and it’s worth you bought it for $50 and it’s worth $1,000. If you die owning that stock under current law, the cost basis steps up to $1,000 or the value at date of death. And then your heirs could sell that share of stock and realize no taxable income. So, it’s a big benefit to heirs and to estate planning and that also does not change. So, for now, we’re good. Many of the things in this BBB bill state that they’re permanent. We all know that that’s only as permanent as the next administration that comes in, but  these are things that  we can at least rely on for the time being and it’s good to have that with six months left, you know, in the year for planning and things. So, if you have questions on any of that, please put those in the chats and we’ll be happy to talk with you about how that might affect you going forward.

Thanks, Mike. That was good stuff. Yeah. So, we’ve covered a lot, right? Big picture questions as you’re going into creating your philanthropic plan. We’ve reviewed the vehicles available to you, some of the vehicles available to you, the primary ones that can help, you know, reduce taxes, get you to where you want to be. But like really, how do you formalize it? Right? We’ve done it and it starts with, you know, sitting down with your advisor, reviewing and identifying the assets that, you know, might give you the most benefit, right? Those appreciated securities, those assets in your IRA where we can utilize a QCD to get those out, right? Then we need to talk about the timing. Do you want to see the benefit while you’re living or is this a testamentary gift? Right upon your death, you need to maybe assure that your heirs, your spouse, your significant other is taken care of during your lifetime. And while you want to give well that’s a secondary goal to assuring you know assets are available capital is available for those remaining family members. Well, you can give upon deaths, right? You can do it testamentary, right? Leave assets to charities. And we see that all the time, right? You see it on the news. We see it in our, you know, folks we know, their beneficiaries, their designations. Determine like, do you want your kids involved? Do you want them to understand what might be coming their way? Do you want them involved in potentially a family foundation to where they can direct some of the family’s wealth? Again, like not every parent wants or trusts their child, coming into a lot of money. Maybe it impacts their career path. They want them to stay engaged. Others want their family to receive it all. Right? But engage your family if that’s something that you think would be beneficial. You know, it could be good for the second generations to see how giving work works and you know, the intrinsic benefit of the giving and you determine the dollar amounts, right? We integrate it with the tax side of things, you know, with your tax advisor like Mike, seeing how QCD impacts things versus itemizing deductions using a donor advised fund. You know, we’re going to document it. We’re going to implement it into your overall financial plan, right? And that, you know, maybe that flows into a more detailed estate plan. You take all these big picture questions, look at your specific investments, your accounts, right? The accounts that you have at your disposal, taxable, pre-tax, all of that to really formulate your ideal plan. We’ll see if it works and we’ll help you put it into effect.

Thanks, Rob. If you want to review in in greater detail Oh, sorry, Mike. I cut you off. No, that’s okay. I was just going to say the same thing. , you know, we’re going to take some time to answer a few of the questions we see in the chat here and  make sure we’ve covered all the bases here, but we won’t have time to answer everything. , if you look to the  chat, you can see a link in there where you can schedule a free  15 minute phone call with us. We can go over questions you have and set up maybe an in person meeting at some point or Zoom. Be happy to talk to you about anything that we may have covered or anything else that you want to discuss.

Should we get into the questions, Rob? Yeah. So, here’s a disclosure slide that we want to show. But next let’s look at some questions here.  Mike, I did see one with regard to charitable contributions. Did the One Big Beautiful Bill introduce some new rules starting in 2020 starting next year in 2026? Yes, good question. There were a few things that are going to change. So, in 2026, we are going to have a floor on contributions prior to being able to take a deduction for them on your itemized deduction schedule A. Simply said, what that means is, half a percent of your adjusted gross income will be excluded. So, as an example, let’s say you’ve got $200,000 of adjusted gross income. That means your W2, your investment income, social security, whatever that might be that adds up to that line on your tax return. Half a percent of that or $1,000 is excluded before you’re going to get a tax deduction or be able to add that to your schedule A. In addition to that, in 2026, there is an above-the-line deduction for married couples of $2,000 and single filers of $1,000. what an above the line deduction is. It simply means you can give 2,000 to charity and get a tax deduction for it whether you itemize or not. So that’s something that’ll go into effect next year and help out for you know at least a little bit on some of your charitable contributions. Let’s see if there’s one for you, Rob.  Let’s see here.  QCD question.  It’s getting close to the end of the year. If I haven’t taken my QCD, can I still do a charitable donation?  Yeah, my RMD, excuse me. It’s the RMD, right? That’s what it is. Oh, yeah, that makes sense. Yeah. Yeah, you still can. There is still time. I We touched on this a little bit during the during our conversation, right? Anytime we get to November, December, mail starts to slow down. Things do start to get a little compressed as it comes to the deadlines. So, if it is something you want to explore and potentially use, yes, I think you can still get it done at this point in the year, but it would be something to attack and get on your agenda right away, right?  ultimately like if you send a check from your IRA to that charity, we have to assure that that charity cashes the check in 2025 for it to be valid. So time is getting to be the essence. Same with the donor advised fund, right? It does take work to establish the donor advised funds. It’s not as simple as logging on, clicking a few boxes, and having it ready to go, right? There is a process to it, and it can take a couple of weeks at least to get it in place. So, if you do wish to take advantage of some of the vehicles that we discussed, right, that are time-sensitive, we recommend putting that at the top of your list of things to do, reaching out, seeing how we can help. But we welcome that opportunity. Again, that’s what we’re here for. It’s really what we enjoy doing, right? We’re professionals in this business that, you know, have seen a lot helped people get to their retirement goals and that’s certainly fulfilling. But, you know, a lot of times after these, we work closely with the recipient. So, once that donation hits, you know, we get thank yous, too. And it’s really cool, right? Again, we didn’t make the donation, we just help facilitate it. But that’s pretty fulfilling to us as well. So absolutely.  Rob, I was going to show there was another question here. I think we have time for one more.  and I can take it, but are the tax benefits the same when you give to a donor advised fund as when you give to a charity?  yes, that you get the deduction whether you’re giving cash to a donor advised fund or appreciated stock or you give it directly to charity, you get the deduction on your tax return.  You’ll want to work with your tax adviser though, an investment advisor to make sure that it fits into your overall tax, right?  because you know a $2,000 donation to a donor advice fund if its cash may not help you to itemize and it’s not getting any appreciated stock out of your portfolio. So, you really want to make sure you’re doing it in a meaningful and thought-out way in order to ensure that you get a tax deduction.

Exactly, Mike, thank you very much for your expertise today, really appreciate it. I think we’ll wrap it up at this point. Thank you everyone for your questions. If we didn’t get to it and please feel free to reach out. We’ll happily address those, you know, more individually. If you are looking for more information on Savant, you know, we invite you to go to our website, savantwealth.com. But thank you for an hour of your time today. Hopefully, you took something away from it that’s valuable or gave you some ideas. And, you know, we look forward to any opportunity you might give us to help you, you know, get to your philanthropic goals or your retirement goals or your tax planning goals. But, again, thank you so much. Thanks, Rob. Appreciate your time. Thank you, guys.

If you enjoyed this webinar, visit savantwealth.com/guides and download our complimentary guidebooks, checklists, and other useful financial resources.