What strategies can I use for protecting and diversifying highly concentrated equity holdings? If you have spent your professional career with a publicly traded company, much of your net worth may be in your employer’s company stock, leaving you with highly valuable, but highly concentrated equity holdings. Below are a few possible options which you can consider for protecting and diversifying highly concentrated equity holdings. Exchange Funds An exchange fund can be a viable vehicle for diversification without having to sell shares outright. With an exchange fund, you contribute shares of your concentrated stock into a broadly diversified fund and receive a pro rata share of ownership in the fund. A major benefit of exchange funds, in addition to increased diversification, is that contributions are not treated as a sale, and you do not incur capital gains taxes. However, you still face the risk of loss should the other stocks in the pool decline in value, so be aware that diversification does not ensure a profit or protect against a loss. Also note that exchange funds are offered as private placements and are not registered under the Investment Company Act of 1940. Therefore, they have strict net-worth requirements that must be met. Charitable Remainder Trusts A charitable remainder trust (“CRT”) allows for the donation of an asset – in this case, a portion of your concentrated stock position – to a donor-controlled trust. The trustee can then sell the stock and reinvest the proceeds in a diversified portfolio, and you will continue to receive a stream of income for the duration of your lifetime or a set number of years. When this period expires, the remaining assets in the trust become the property of the selected charity. Because this charitable trust is itself a tax-exempt entity, donating shares to a CRT enables you to avoid capital gains taxes on the sale of the shares you gift. Plus, the transaction may result in a charitable income and estate tax deduction. Charitable Gift Annuities These programs provide the benefits of establishing a CRT without the upfront cost, ongoing management responsibilities or owner control. You deposit the stock into a charitable fund, receive an income tax deduction and receive a fixed or variable stream of income over your lifetime. The principal is left to the qualifying charity of your choice. We are here to help you and your family. If you have any questions, please reach out to our team. sharonolson@olsonwealthgroup.com 952-835-1797 #ConcentratedStock #RiskDiversification #ExchangeFunds #CharitableRemainderTrusts #CharitableGiftAnnuities #WealthManagement #FinancialPlanning #EstatePlanning #OlsonWealthGroup #InspiredLifeFamilyOffice #InspiredLife
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IRA funds can be used for more than just retirement. By utilizing one of these split-interest entities, you may be able to make a difference to the charities that are important to you. . . . . . #CentennialStateWealthAdvisors #FinancialAdivsor #WealthManagement #Investing #SmartInvesting #ReturnOnLife #FinancialServices #CharitableContributions
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How investors can make the most of their charitable giving "For advisers, FPI Charitable offers several planning opportunities: • Cash can be contributed to offset the tax effect of an unexpected windfall or bonus. • Appreciated stocks can be contributed to avoid capital gains tax on their sale after they are contributed in kind to the account. • You don’t have to be able to use all of the deduction in the year the account is funded. Contributions carry forward for five years. • In 2023, contributions of cash or liquid securities have an adjusted gross income (AGI) limitation of 60%. That’s twice the level of contributions to a foundation. (Illiquid securities are limited to 30% of AGI 50% higher than the 20% foundation limitation.)" https://lnkd.in/gKEWFFGV Flexible Plan Investments, Ltd.
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President & Financial Advisor at Centennial State Wealth Advisors Branch Manager RJFS
IRA funds can be used for more than just retirement. By utilizing one of these split-interest entities, you may be able to make a difference to the charities that are important to you. . . . . . #CentennialStateWealthAdvisors #FinancialAdivsor #WealthManagement #Investing #SmartInvesting #ReturnOnLife #FinancialServices #CharitableContributions
Turn IRA assets into charitable contributions
raymondjames.com
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Charitable Donation of Marketable Securities I’m a Tax and Estate Consultant for Ullman Wealth Management. The firm and I are both proponents of donating publicly traded marketable securities as a tax effective way to support charities (you can also donate mutual funds, interests in segregated funds and Government of Canada or provincial government bonds). Beginning January 1, 2024, the income tax benefit of donating marketable securities will be affected by the March 28, 2023, Federal Budget (draft legislation released on August 4, 2023) proposed changes to the Alternative Minimum Tax (“AMT”). Given the potential impact of AMT, if you are planning to personally donate marketable securities in the next year or so, you may wish to consider making the donation by the end of 2023. To provide some background, when you donate marketable securities to a charity, the taxable portion of the capital gain related to the donated stock is eliminated for tax purposes (saving as high as 27% in personal tax on the capital gain) and you receive a donation credit. The tax savings of the credit are typically around 50% of the fair market value of the donated securities for high-rate taxpayers. Under the proposed changes to the AMT (which only applies to individuals and certain trusts and not corporations), the capital gains inclusion rate on the donation of marketable securities will increase to 30% from 0%. In addition, the AMT rate for Federal purposes will increase from 15% to 20.5%. The good news is that AMT may only apply if your taxable income is more than about $174,000 (up from the prior $40,000 basic exemption). Finally, the donation credit for AMT purposes will drop from 100% currently to 50% on January 1, 2024. All these changes will now need to be considered when making a donation of marketable securities in 2024 and beyond. It is important to understand that AMT can be carried forward for seven years and as such, should be viewed as a pre-payment of tax, to the extent your income will allow the AMT carryover to be applied within the next seven years. That is part of any charitable planning discussion you will have with your accountant. If you have been considering the donation of marketable securities, you may wish to discuss the benefit of doing so with your accountant before the end of 2023.
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Anticipating a substantial capital gain event, such as the sale of a home or a business? Has your CPA recommended a Donor Advised Fund as a way to make charitable contributions that could help mitigate your capital gains tax? Call me to learn more about opening a Donor Advised Fund at Morgan Stanley, which may help you donate to your favorite charitable causes while potentially managing your tax bill.
MS GIFT: Donor Advised Fund
morganstanley.com
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Anticipating a substantial capital gain event, such as the sale of a home or a business? Has your CPA recommended a Donor Advised Fund as a way to make charitable contributions that could help mitigate your capital gains tax? Call me to learn more about opening a Donor Advised Fund at Morgan Stanley, which may help you donate to your favorite charitable causes while potentially managing your tax bill.
MS GIFT: Donor Advised Fund
morganstanley.com
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Anticipating a substantial capital gain event, such as the sale of a home or a business? Has your CPA recommended a Donor Advised Fund as a way to make charitable contributions that could help mitigate your capital gains tax? Call me to learn more about opening a Donor Advised Fund at Morgan Stanley, which may help you donate to your favorite charitable causes while potentially managing your tax bill.
MS GIFT: Donor Advised Fund
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First Vice President, Financial Advisor with The Saddleback Group at Morgan Stanley
Anticipating a substantial capital gain event, such as the sale of a home or a business? Has your CPA recommended a Donor Advised Fund as a way to make charitable contributions that could help mitigate your capital gains tax? Call me to learn more about opening a Donor Advised Fund at Morgan Stanley, which may help you donate to your favorite charitable causes while potentially managing your tax bill.
MS GIFT: Donor Advised Fund
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Anticipating a substantial capital gain event, such as the sale of a home or a business? Has your CPA recommended a Donor Advised Fund as a way to make charitable contributions that could help mitigate your capital gains tax? Call me to learn more about opening a Donor Advised Fund at Morgan Stanley, which may help you donate to your favorite charitable causes while potentially managing your tax bill.
MS GIFT: Donor Advised Fund
morganstanley.com
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Anticipating a substantial capital gain event, such as the sale of a home or a business? Has your CPA recommended a Donor Advised Fund as a way to make charitable contributions that could help mitigate your capital gains tax? Call me to learn more about opening a Donor Advised Fund at Morgan Stanley, which may help you donate to your favorite charitable causes while potentially managing your tax bill.
MS GIFT: Donor Advised Fund
morganstanley.com
