4 Ways to Boost Benefits from Holiday Gifts
As clients get into the holiday spirit, too many are not making smart decisions about the gifts they purchase. Many clients see gift-giving as a chore, and as a result, are hasty in making purchases. While this may be natural in a task-oriented society, clients should consider transforming their giving from just stuff – opened today, forgotten tomorrow – to gifts that benefit the recipients and themselves long after the tinsel and bows have been swept away.
Here are 4 ways advisors can help clients boost benefits from holiday gifts.
Source: Eleanor Blayney, consumer advocate, CFP Board
Consider talking to your clients about setting money aside throughout the year for year-end giving. Spending without planning is “a sure-fire way to turn the joy of giving into a new year's hangover.”
Advisors can discuss various “planned giving” strategies with interested clients. Possibilities include making a charitable bequest in a will; naming a charity as a beneficiary of a retirement plan or an insurance policy; and creating a charitable remainder trust (CRT) or a charitable gift annuity (CGA). Many varieties of planned gifts can ensure that a donor's assets are available for lifetime needs while remaining assets will go to charity.
Instead of giving depreciable goods (clothes, games, food, etc.), which may have little ongoing value, advisors should urge their clients to choose holiday presents with long-term benefits. Blayney’s recommended gift list includes contributing to a child's college savings plan, paying for a skills-building workshop, and picking up the fee for an adult child or relative to talk to a CFP professional.
With savvy planning, year-end donations can pay off almost immediately by generating added tax savings. For example, advisors might inform clients of the advantages of contributing appreciated securities to charity rather than just writing a check. As long as the securities were held more than a year, donors will get a tax deduction for the market value of the donated securities. They’ll also avoid the capital gains tax that would have been owed on a sale.