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Setting up a charitable trust
Old 05-11-2016, 04:33 PM   #1
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Setting up a charitable trust

Since my wife is a pastor and we live in a parsonage, we don't own our home, we have no property taxes or mortgage interest. We don't nearly have enough medical or other expenses to be "miscellaneous" Schedule A deductions. We haven't itemized in 10 years, and in every year, charitable contributions would have been the single largest item on our Schedule A. If we could lump 2-3 years of these together into one year, we could itemize and save on taxes.

But there are years when charitable deductions *almost* get us over the hump. And I was thinking: What if we contributed (say) $25K into one of these every several years, and then put money aside into a designated savings account so a few years later, we can replenish it in amounts that are enough to get a tax break?

Does anyone use a charitable trust like this? I know Schwab has sent me stuff about this since I'm a customer of theirs, and they charge basically the lesser of $100 a year or 0.6%. Any experiences or opinions? It would be nice to get a bit of a break if we can, though it won't really affect how we give.
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Old 05-11-2016, 04:41 PM   #2
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Yes. We use Vanguard Charitable. Currently in 25% tax bracket while working so have been putting as much as we can in there. Then when we retire we will be using this account for all of our giving.
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Old 05-11-2016, 04:49 PM   #3
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Yes, we contribute every other year to our Fidelity Charitable Trust.
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Old 05-11-2016, 04:56 PM   #4
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I use a donor-advised fund for this. Fidelity makes it very easy to set up a Fidelity Charitable Giving Account and since the money is invested, it earns even more between the grants you make from it. Also, if you make donations to it of appreciated stocks/funds, you avoid the capital gains tax on them.
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Old 05-11-2016, 07:08 PM   #5
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The thing I never liked about donor advised funds is that any value appreciation while it is invested in the account does not receive a tax deduction. Why not hold onto to the invested funds yourself until you are ready to donate to a charity to make full use of the tax code and maximize funds available for charitable giving courtesy of the government?
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Old 05-11-2016, 07:32 PM   #6
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I use a Schwab donor advised fund. Very easy to use. Can make grants through the website. Donate appreciated stock so no cap gains to pay.
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Old 05-11-2016, 07:36 PM   #7
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The thing I never liked about donor advised funds is that any value appreciation while it is invested in the account does not receive a tax deduction. Why not hold onto to the invested funds yourself until you are ready to donate to a charity to make full use of the tax code and maximize funds available for charitable giving courtesy of the government?
I had the same thoughts but being able to avoid cap gains on donating appreciated stock made it worth it. I currently pay 20% on any LT cap gains and the fund is invested such that it won't make anywhere that much back before it is all granted. So I get the deduction for the donation and avoid paying cap gains as well.
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Old 05-11-2016, 08:01 PM   #8
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523HRR - Think of it as bringing several years of future donations into the current tax year. Also, donor advised funds can accept stock donations and send cash donations out the other side - some charities can't handle gitfs of stock.

I looked at 4 providers of donor advised funds before settling on Fidelity Charitable. I liked Vanguard's fund choices best, and TIAA-CREF's low overhead cost best. But Fidelity and Schwab's $5,000 minimum was much more convenient. I think the tiebreaker was grant size ($50 minimum) and fund choices between Schwab and Fidelity.

An added benefit of a donor advised fund is anonymity. You can name the fund what you like, preserving "stealth wealth" for those who don't want their name and address attached to their donation.
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Old 05-12-2016, 12:10 AM   #9
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Another very happy Fido charitable fund customer.
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Old 05-12-2016, 05:49 AM   #10
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Originally Posted by 523HRR View Post
The thing I never liked about donor advised funds is that any value appreciation while it is invested in the account does not receive a tax deduction. Why not hold onto to the invested funds yourself until you are ready to donate to a charity to make full use of the tax code and maximize funds available for charitable giving courtesy of the government?
Because I support some charities that need ongoing donations, not just one huge one every several years. And the only way I can get a tax break on it is if somehow, I can lump multiple years' worth of donations into one year, taking the standard deduction in other years.
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Old 05-12-2016, 08:51 AM   #11
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Another happy FIDO CT user. Each year look for most cap gain appreciated MF in brokerage account and move chunk of it to the CT. Actually need to gift some out as it's built up a bit.
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Old 05-12-2016, 09:02 AM   #12
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Mine is with Fidelity. One thing I LOVE is that donations can be made anonymously. You have wide latitude as to whether the check from the account is sent with full details (Jane Smith, 2016 pledge payment) or is accompanied by a letter stating that the donor wishes to remain anonymous. I've had a couple of major charities hound me after a generous donation, looking for more. It must drive them crazy now when they get a check and can't add them to their spam list! You still have a legitimate tax deduction (at the time you deposit the money in the account) without having to tell the charity who you are in order to get a receipt.
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Old 05-13-2016, 01:07 PM   #13
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Originally Posted by RockyMtn View Post
I had the same thoughts but being able to avoid cap gains on donating appreciated stock made it worth it. I currently pay 20% on any LT cap gains and the fund is invested such that it won't make anywhere that much back before it is all granted. So I get the deduction for the donation and avoid paying cap gains as well.
Many charities accept shares of stock. Most of my donations are appreciated stock to avoid capital gains also...I just do it directly to the charity from my brokerage account (with no fee).

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523HRR - Think of it as bringing several years of future donations into the current tax year. An added benefit of a donor advised fund is anonymity. You can name the fund what you like, preserving "stealth wealth" for those who don't want their name and address attached to their donation.
To me, these are the best arguments for a donor-advised fund.
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Old 05-13-2016, 04:15 PM   #14
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Many charities accept shares of stock. Most of my donations are appreciated stock to avoid capital gains also...I just do it directly to the charity from my brokerage account (with no fee)
And many charities do not.
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Old 05-13-2016, 04:21 PM   #15
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Quote:
Originally Posted by 523HRR View Post
The thing I never liked about donor advised funds is that any value appreciation while it is invested in the account does not receive a tax deduction. Why not hold onto to the invested funds yourself until you are ready to donate to a charity to make full use of the tax code and maximize funds available for charitable giving courtesy of the government?
That's why I only donate highly appreciated assets that I intended to sell anyway.
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Old 05-13-2016, 04:23 PM   #16
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523HRR - Think of it as bringing several years of future donations into the current tax year. Also, donor advised funds can accept stock donations and send cash donations out the other side - some charities can't handle gitfs of stock.
Good point. I sometimes think of it that way.

We donate out of it every year, but we donate to it every other year at most.
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