Personal Gift Goal
This card allows you to model a gift from the client to another individual. You can specify who the gift is for (which can be a specific child, grandchild, or other family member entered in the Family Profile), or you can select “Other individual” if you don’t want to enter the specific person’s name. Personal gifts can be entered as a percentage of salary income, or an annual dollar amount.
Any gift to a single individual in excess of the annual gift tax exclusion will reduce the client’s lifetime gift/estate tax exemption amount, which could ultimately result in higher estate taxes reflected in the Estate analysis.
Charitable Giving Goal
These goals allow you to model donating assets to a charity or donor advised fund. Charitable giving can be entered as an annual amount or a percentage of salary income. All asset types can be given to the “Charity” recipient while only cash and appreciated assets can be given to a “Donor Advised Fund”. If charitable giving and other deductions exceed the standard deduction in a given year, RightCapital will automatically itemize deductions when calculating taxes.
The personal and Charitable giving goals will allow for values of up to $100,000,000
When adding a charitable giving goal card, the ‘type’ field allows you to specify the following charitable giving strategies:
- Cash: This charitable giving type can be used to reflect a scenario where clients are donating cash to charity or Donor Advised Fund. When donating cash to a donor advised fund the amount is added to the DAF balance listed in the Profile > Net Worth.
- Appreciated asset to charity: This can be used to reflect scenarios such as someone donating stock or tangible assets to a charity or Donor Advised Fund. When donating appreciated assets to donor advised fund, the assets will be added to the DAF balance listed in the Profile > Net Worth.
When this option is selected, you can enter a ‘cost basis ratio’ which is the percentage of the amount that is basis, as opposed to growth. When a stock or asset is donated to charity, there are no capital gains taxes paid when assets are liquidated.
- For example: if a stock was purchased at $20,000 and is now worth $100,000, the cost basis ratio should be 20%.
- Donor Advised Fund: Distributing from donor advised fund to charity will reduce the balance of the DAF listed in the Profile > Net Worth by the amount specified.
Since funds in a DAF must be used for charitable donations, clients receive a tax deduction for the entire contribution to the DAF in the year it is made, even if the funds are donated to charity in future years.
Investment accounts that are set up as ‘donor advised accounts’ in the Net Worth are not considered part of the client’s invested assets but will still be tracked as part of their net worth.
Donor advised fund balances are tracked in the ‘Other asset’ category on the Net Worth cash flow page.
- IRA (Qualified charitable distribution): This allows individuals over 70.5 to donate funds from an IRA directly to a charity tax-free. QCD's will also count towards their required minimum distribution for that year. When selected, you will see a Planned Distribution in the Retirement > Cash Flows as well as a goal to reflect the contribution to charity.
- Inherited IRA (Qualified charitable distribution): This allows individuals over 70.5 to donate funds from an Inherited IRA directly to a charity tax-free. QCD's will also count towards their required minimum distribution for that year. When selected, you will see a Planned Distribution in the Retirement > Cash Flows as well as a goal to reflect the contribution to charity.
- IRA annuity (Qualified charitable distribution): This allows individuals over 70.5 to donate funds from a qualified annuity to a charity tax-free QCD's will also count towards their required minimum distribution for that year. This is only available if the distribution setting for the annuity is ‘Regular withdrawals’. When selected, you will see a Planned Distribution in the Retirement > Cash Flows as well as a goal to reflect the contribution to charity.
