By The Advocates
This illustration is based on a real fact pattern for a real client with a real outcome. You should discuss the facts of your situation with your advisor. Don’t have one? Click here to set up a free, no obligation appointment with us.
No real client names will be used and, in the absence of a better idea, I’m going to name this couple after some of my kids’ pets. Meet Buck and Starfire. Here’s their situation:
- They have no mortgage and pay $3,250 in property taxes.
- Their property tax and sales tax deductions total around $5,000 each year.
- They donate ~$45,000 to charity annually.
- They are RMD eligible because they are over age 72.
- They don’t need the roughly $50,000 distribution their RMD status dictates.
- Their current tax bracket is 24% because they have
- other sources of income.
- And finally, their 2023 standard deduction is $29,200.
DECREASING THEIR TAX BURDEN
People with circumstances like Buck and Starfire’s may benefit from the solution we implemented for them, the QCD (Qualified Charitable Distribution).
A QCD allows you to stop donating to charities out of pocket and instead donate directly from your IRA. For Buck and Starfire, this means $45,000 less income each year. Most of their RMD is satisfied with the QCD and they no longer need to itemize.
As a result, their taxable income drops by $24,200, saving them $5,808 each year and $58,000 over the next decade.
POM-POMS OVER CAPES
Here’s a not-so-secret secret. “The Advocates” is a confusing name for a financial planning firm. It’s been nearly 7 years since we changed it and we still occasionally get mistaken for a non-profit, a legal (or related) firm, or even an architecture firm.
Once I began answering phone calls with the new name, clients would occasionally taunt me with a little good-natured razzing. One asked me if we all got “capes” with the name change. Were we purporting ourselves as superheroes?
I don’t hate the idea, but I can think of some regulatory bodies that might take issue with such a portrayal. However, I can safely report that none of us have donned capes, at least not for work purposes.
I’d trade my cape for a pair of pom-poms anyway. We’re less hero and more cheerleader with financial expertise and a deep desire to help.
We love to see clients win, in big ways and little, whether they’re exuberant about it, or apathetic. We know not every client will have these kinds of wins; there are no guarantees. Undaunted, we are determined to give our best to every client we work with.
We rejoice in the helping. That’s why we call ourselves The Advocates. I think it fits.