April 2026
From donating appreciated stock to planning around high-income years, they highlight how thoughtful giving can align with retirement, estate planning, and long-term legacy goals.
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Austin, we're going to have some fun today talking about charitable giving. One of the reasons why I thought you'd be the best person to have on this episode with me is because you're one of the leads of our charitable committee, and I know it's sort of a cause not only giving your time, but your energy and your dollars, you know, towards organizations that are near and dear, not only to us, to our clients, to our community.
So I'm excited to have this conversation with you today.
Thank you. Obviously, it's the conversation we're having a lot these days, especially with taxis and rolling around. It's, you know, top of mind for people.
It is. And our industry loves to have an acronym for everything. So we've got Q CDs, we got Dafs. We've got, you know, carts, we've got all sorts of stuff. Don't worry. We're going to try to use less jargon and more sort of actual words for what these things are. But I was having a conversation with a client recently and we were talking about, you know, them going to church and tithing to their church on a, on a frequent basis.
And like a light bulb went off, and I and it's relatively new client. I said, you know, hey, you mentioned that you'd like to give to your church regularly. I'm just curious, like, what's the amount and how often and are you giving cash? And they said, yeah, you know, when they gave me the specifics and I looked at their account, I said, are you aware of something called a donor advised fund?
They said, no, what is that? I said, well, it's just a charitable account in your name. And it will allow me to take a stock like this that you bought at a very low price. That's worth a lot of money. Now, I can take a portion of this stock and put it into your donor advised fund. You avoid having to pay the capital gains and now you get to donate directly to your to your church on a monthly basis from this account.
And it's going to save you taxes. You can then take the cash that you were originally going to give to your church, and you can make other investment decisions with that. And in this way, everybody wins. You get to continue to donate to your church. You save a little bit money on tax down the road, and you have cash to buy things that at other opportunistic times.
And so it brought up the idea of having this conversation with you on different ways that people can donate to charity.
Yeah, some people are even aware that that option exists. You know, it's kind of just a standard, you know, if I'm going to pull out my checkbook and write a check or I'm going to do something online, obviously it's going to come from my bank, why would I look anywhere else? But I like these options that we have.
You know, we're not going to cover everything, but let's focus in maybe on the donor advised fund and that qualified charitable distribution.
Yeah. So why would somebody I know that I just hit on the donor advised fund? Tell me a little bit about like, what a qualified charitable distribution is, why somebody would use it and some pros and cons, maybe even a client story.
Sure. So the qualified charitable distribution is going to be coming from your individual retirement account. So if you're 70, you're 70.5 years old or older, you can utilize this option. And it is a great way because instead of you having to take the normal distribution, paying income tax on it, and then writing that check to the organization, you can just go directly there.
And that really is the key. It has to go from your individual retirement account to the charity.
It also doesn't increase your income, so it's a good option.
The standard deduction right now is really high. You know if you're married filing jointly it's 32,200. It's hard to itemize above that. Most people are just using that. Well this kind of allows you to build upon that and get an even bigger, discount.
So it's not a deduction. It just doesn't count as income towards your total year.
So if you're charitably inclined and you're over the age of 70.5 and subject to required minimum distributions, a qualified charitable donation is or distribution would be the one path that you can take. And what are some of the you mentioned some of the benefits in terms of not having to realize the income, having the check go directly to the charity.
What are some of the pitfalls or things that should people should be aware of if they're going to sort of deploy this strategy?
I think one of the biggest ones, you have to know where you want the money to go right away. Like I said, it needs to go from that account to the charity. So if you're waiting until the last minute and you're calling us up in late December, that's going to be more challenging, especially if we're trying to reach out to the charity and find out where do they want the money sent.
So if you can do some planning on the front side, it's a good time. January is a great time to start planning, you know, in April when we have taxes do that's also another time just because it's top of mind, right? We're thinking about the tax impact of things. So let's go ahead and make that plan for the rest of the year.
Yeah I've talked with most clients that like to do a Q city or qualified charitable distribution. And around August September it's like, okay, here's the list of organizations and amounts that you gave money to last year. Do you want to do the same thing? Do you want to do something different? Let me know as soon as possible. So that way we can sort of start getting things processed, because the last thing we want to run into is a check gets sent in December and it doesn't get deposited or cached by the charity or UN.
Unfortunately, sometimes they get lost in the mail or lost in their mailroom with all the other mail that the organization is getting during the holidays. And so having a plan for it in advance is important. One of the other things to note if you're doing a qualified charitable distribution, you can't go from your IRA to a donor advised fund.
Currently today, that does not count, as a qualified charitable distribution. So you really have to have a 501 C3, know the institution, know the amount and where to send the money from.
And when you're talking about the list, that's something else that needs to be. We need to be mindful of. We need to track where that is going because the custodian is not going to send it out, you know, a 1099 and saying, hey, you made a a large, qualified charitable distribution. They're just going to say X number of dollars left your account.
It is up for you and your CPA to write down where that money went. And that it does not doesn't need to be counted towards income.
I'm glad that you brought that up, because when you when you're subject to taking required minimum distributions from your IRA, you're going to get a tax form called a 1099 R. And so if my required minimum distribution is I don't know, $40,000, my 1099 R is going to say that I took $40,000 out of my retirement account to satisfy that that need.
If I gave 10,000 of that directly to charities, I'm going to need to let my CPA know. So that way they can reduce the amount that's taxable to me. So that way I'm not paying income tax on it. So one of the downsides with doing the qualified charitable donation QCD. See, even in this industry we get so used to using acronyms.
But one of the downsides of using that strategy is you do have to keep track of the amounts that go out, just like other donations.
Right? And so while this works, if you have an IRA, what are the options if you have money in another account?
I mean, look, if you've got a taxable account or a trust account, there are several different options. One, you can you can give cash that's in your account. Number two, some organizations allow for you to track, transfer stock or mutual funds directly to them. But one of the best ways, especially if you're in a higher income, earning year, is to leverage something like a donor advised fund.
So again, under 70.5 or over seven and a half, donor advised fund works for you. A qualified charitable distribution only makes sense if you're over 70.5. But I had a client recently that was getting ready to retire. Was going to have some large payouts at the end of the year, not only for salary bonus, restricted stock units, other things, but their income was going to be much higher this year than in the future years while they're retired.
And so what we decided to do was take some additional dollars, fund a donor advised fund that would cover their charitable giving needs for the next 5 to 7 years. So that way they got the tax deduction in the year that they needed it most, which was the year that they had hired.
To me, it's about having a conversation with your advisor in terms of what do I like to do with my dollars, what gives me happiness in terms of vacations and giving to charitable organizations, but also, what does my income look like this year versus next? I know Beau, one of our advisors. He's talking with a client right now that's looking to do some large Roth conversions.
They're starting to take their IRA, pay the tax on it now to convert those dollars to Roth. They're going to be in a higher income-earning year this year.
They're going to look to a donor advised fund as an opportunity to help reduce some of those taxes, but fulfill their giving needs.
I think that's a special thing about, you know, both the donor-advised fund and the qualified charitable distribution is that it's not just a tax planning strategy. Right. We're pulling into retirement planning. We're pulling in estate planning.
I know we've talked about clients, you know, that have brought their children along with the donor advised funds, just to kind of show them, hey, this is how we give to, you know, the organizations that we care about.
These are the missions that we want to help support. And if you know, the client passes away, they can, you know, list the next set of people that will come in and help, you know, guide those funds. And I think that's really cool to do that as a family unit.
Yeah, that's been really cool to see over the years. As we've introduced a donor advised fund to some clients, they set up something called successor participants. So if something were to happen to the parents, the kids can now step in as the owners of that donor advised fund and they can distribute those monies to the charities in the future.
You don't have to just have the money directly go to charities upon your passing.
You can sort of have your legacy live on and transfer those values that are important to you.
And what a great legacy. Yeah, they're leaving a legacy of giving and showing them how to do it.
Yeah, it's a wonderful look. A lot of clients want to teach their kids the value of a dollar, living within their means, investing in the power of compounding, but also the impact that you can make with your dollars to others in need. And, this is a great way to do it, I love it. So what are some ways that Morton can really help?
Obviously there's the financial planning aspect and running projections to determine the amounts that make sense or the strategies that make sense for you. But if someone's looking to do this, how can we best help?
You know, I think it's having that conversation. Obviously we know our clients, so we are going to be able to filter out a few things, right? Are they over 70.5? If not, then we know we're looking just at that donor advised fund. Where are their assets that they're wanting to give? Is it in a taxable account or is it in that individual retirement account.
Because that's naturally going to dictate where we're pulling from. Sometimes it's a hybrid of the two. We'll do a little bit of the qualified charitable distribution and we might save that donor advised fund for those big years. I even have a client who they don't have those massive swings on income. They just know that they're going to consistently give.
So they bunch up, you know, 3 to 5 years at a time so that they can now deduct that from their taxes in one calendar year. And then just just distributed over, you know, the coming years.
So by bunching their charitable giving into one year, they're able to get over that standard deduction and get a larger benefit. Yeah.
It's a lot easier to drive from a tax perspective because it's one time.
I love those donor-advised funds. It's like what were the contributions I made this year. That's my charitable deduction. I don't have to keep track of all the organizations that I sent money to.
It is a nice, clean thing that, to keep track of.
I think it's easier to send the money out too, though, from that donor advised fund. You. You've used that as well, I have.
I mean, it's 4 or 5 clicks of a button. You know, I was former golfer at San Diego State. The coach there today was my teammate back in college. My wife and I sent some money, to San Diego State, the athletic department, and I was able to earmark it specifically for the men and women's golf programs.
And it was extremely easy. And painless. I was surprised that he called me up and he said, hey, I got the check, I received it, and, you know, it said it was right from you, and it was a matter of a few days of clicking the button. And the money showed up. I was I was pretty excited.
It's great that they made that user interface so simple to use. Yeah.
Austin, thank you so much for, you know, having this conversation with me today. But again, we talked about a number of different things that you can deploy as far as your charitable giving, anything from a donor-advised fund to a qualified charitable distribution, or even talking to the charities directly to see if they can receive stock or mutual fund grants.
There are so many more options beside this. We've had clients that have, you know, taken advantage of charitable remainder trusts and other types of strategies. If you're curious or you want to have conversations with us about what might make sense for you, please reach out to your Morton Wealth Advisor. Thank you.
