Financial Planning with Legacy Financial Partners

This article is from the Novmeber 2023 edition of SDPB Magazine. See past issues HERE.

As a member of SDPB, you know the value of charitable giving. Because of your donations, we can pursue our mission of bringing informational programming and materials to the state. However, we want our members to be cared for first and foremost. Financial advisors can be vital in creating balance in an individual's funds between what they need and what they can comfortably give. Jon Pochop and Tiffany Even are financial advisors for Legacy Financial Partners, a private wealth advisory practice of Ameriprise Financial Services. Jon and Tiffany shared some advice and encouragement for the next steps that may be helpful to those who are planning the future of their funds.

What are some ways that you can give charitably?

Many people have IRA accounts," says Jon, "and can use a QCD (qualified charitable distribution) to donate to charities. When they do that, they give funds directly from their IRA to the charity. Other ways of giving would be with a CRUT - a Charitable Remainder Unitrust. For example, let's say a young couple moves to California in the 80s, stays there for 30 years, and then decides to move. The home they purchased for 200,000 is now worth about 3 million. They can gift that home to a charitable remainder trust, receive a deduction, and then receive an income from that trust the remainder of their life."

Tiffany continues with ways to give charitably. "There are so many wonderful ways, and each way is dependent upon a person's situation. Having a personal financial advisor that can help is a great thing for a person. One way a person can give is simply to withdraw from their checking account. Another thing that they can do is to leave the charity in their will, or they can also put a beneficiary designation on their IRA or non-IRA accounts so that when they pass, it will go to a charity. Some foundations can be set up, or you can contribute to community foundations as well. But again, each way is unique and serves its own purpose. Each person may have a particular reason why they pick one of those over another."

What are some ways you recommend to clients to give to nonprofits from their IRAs and stock accounts?

"An IRA can hold stock," shares Tiffany, "but the thing that's unique about an IRA is that when you put money into an IRA pretax, you have to pay taxes on it when it comes out. The wonderful thing about a charity is once you turn 70.5 years old, you can give directly from your IRA to a charity as long as it's a qualified charity and you don't pay taxes on it. If you are looking at a non-IRA account with highly appreciated stocks, you can gift those stocks. Let's say you have 100 shares of stock with large gains; you can gift those hundred shares directly to the charity so you don't have to sell them and claim the gains as income."

What is the current policy for donors who are 72 or 73 for their RMD?

“RMD (Required Minimum Distribution) is a very large part of our practice," says Jon, "we have many clients over 73 years old. At 73, they're required by the IRS to pull funds from their IRA account. That's a taxable event to them, called the required minimum distribution. The purpose is that the IRS requires those funds to be distributed eventually, either by the individual owner or when their children receive it. They have a certain amount of time that they will need to redeem those funds from that IRA account, which becomes either an inherited IRA or a beneficial IRA."

What is your personal Legacy's philanthropy on giving?

Tiffany starts by stating, "When a person meets with a financial advisor, oftentimes they think that they're only going to be talking to them about what kind of investments to buy, and there's just so much more that a financial advisor can help with. One of those areas, in particular, is financial planning, which helps you to plan for today as well as tomorrow. Frequently, a person wants to give a certain amount, but they don't know if they can and still be able to have enough to provide for themselves. One of the things that a financial advisor can do is to help them put together a financial plan that helps to pinpoint how much is a good amount for them to give and in what way it's best for them to give. Sometimes, even for myself, it's hard to see because we're too emotionally attached to whatever it is. Going to a professional advisor allows people to come at it with a different lens, so to speak, and allows people to donate in ways they didn't realize that they could. At Legacy, we help clients identify their top five values and combine those values with their goals."

"One of our biggest compliments," Jon continues, "is when our clients refer us to individuals like themselves who have not been working with a financial advisor. We're trained to find the avenues of approach that best suit individuals with the funds. If individuals or couples feel that they have the funds, visiting with a financial advisor gives them direction on what makes the most sense. Many people are giving funds to nonprofits, and that's wonderful. But there are so many benefits of working with an advisor to get advice and to give direction that not only helps the nonprofit but benefits themselves based on the IRS rules. If a couple or an individual knows that they have the funds available to give to nonprofits or to charities, we ask that they go visit with their financial advisor or research financial advisors that can help them give to these nonprofits in the most beneficial way, to the nonprofit and to themselves."

^{Readers are encouraged to consult their financial advisor or tax attorney directly.}