HOUSTON, Nov. 28, 2017 (GLOBE NEWSWIRE) -- As the end of the year quickly approaches, Gil Baumgarten, financial advisor and president of Houston-based Segment Wealth Management, recommends looking at two tax-related factors.
“With the holiday season upon us and following an extremely difficult fall due to Hurricane Harvey, I would imagine many Texans have not thought too much about their taxes,” says Baumgarten. “However, tax neutrality on gains and losses and charitable giving are areas that should not be overlooked as the year wraps up.”
Baumgarten, who has been constructing client portfolios using tax-efficient Exchange Traded Funds (ETFs) as a key investment strategy for more than 14 years, says a strong stock market year like 2017 increases the likelihood of people being taxed on the sale of their generated gain. “Tax neutrality – the offsetting of these realized gains with realized losses in that same year – becomes an important move, especially for those in the top tax bracket,” he adds.
Other considerations are charitable deductions, says Baumgarten. “Many people make year-end deductible contributions to churches and other charities, but remember, they are only deductible if the deductions are itemized. Keep in mind also that your advisor or broker may not have time to complete the gifts at year end if instructions come after December 15,” warns Baumgarten.
As a fan of gifting appreciated securities instead of cash, Baumgarten believes, when done correctly, the value of giving is increased for the receiving charity and makes for more powerful giving at less cost to the donor as well.
He is also an advocate of using a donor-advised fund (DAF) for charitable giving. A DAF is a staging area for future giving and makes digging up receipts a thing of the past. Its sole purpose is to hold and invest your gift until you designate where you want the next check sent, says Baumgarten.
“Simply donate securities or cash in larger lumps and spread your giving out over years if you wish,” says Baumgarten. “The contribution to the DAF is deductible in the year it occurs and the gifts can be distributed over time.” The DAF is also a 501(c)(3) tax-exempt organization, making the gift permanent and deductible.
Lastly, individual retirement accounts (IRAs) can also be used to gift up to $100,000 annually to charities. “This is particularly appealing to older individuals who may be staring at required minimum distributions (RMDs) based on age and may not need the cash or want the taxable income,” says Baumgarten.
“Giving from an IRA gets around the deductibility issue because the money is already pretax,” says Baumgarten. “There are many ways this tool could be more powerful than giving cash or securities but you should check with your tax advisor on strategies specific to your situation.”
Segment Wealth Management is Houston’s seventh largest wealth manager with more than $1 million investment minimum according to the February 2017 Houston Business Journal. Gil has been named by Barron’s magazine as one of the 50 best advisors in Texas and most recently as one of America’s top 1200 Financial Advisors, while the Financial Times has named him one of the 300 best advisors in America. Segment is located at 3040 Post Oak Blvd., Ste. 1725. For more information, please call 713.800.7150.
CONTACT FURTHER INFORMATION:
Jana Stafford
713-800-7158