Podcast | Season 2 | Episode 06

The Description

What if your financial planning could include making a real impact? Join us in a riveting discussion with esteemed financial advisor Scott Marks, as we take a deep-dive into the world of charitable giving and how it intersects with financial planning. We'll guide you through the various types of charitable accounts, including the practical benefits of donor advised funds. The timing of your charitable contribution can play a vital role in your financial planning - and we'll help you navigate that. Remember, it's never too early or too late in life to consider giving back to the community. Our promise - your journey to strategic charitable giving starts here!

Meet Scott Marks:
For nearly a decade, Scott has guided his clients in planning for important life events, establishing legacies for future generations, and achieving financial independence. Through individualized financial planning, Scott and his team focus on serving the needs of high-net-worth families with a focus on retirement and legacy planning. Scott is passionate about improving the financial lives of those he serves and prides himself on being accessible, relatable, and transparent.

Scott graduated from Arizona State University with a degree in Supply Chain Management in 2010.  Drawn to the world of finance, he began work as a credit analyst in the commercial lending department with Alliance Bank of Arizona. 

After four years with the bank, Scott pursued a career as a financial advisor with Merrill Edge. During his time there, Scott provided investment guidance and built effective long-term financial plans for clients around the country.  

In August of 2016, Scott joined Summit Wealth Group to provide more holistic wealth management and planning solutions for his clients.  Scott is a Certified Financial Planner (CFP®), a Chartered Retirement Planning Counselor (CRPC®), and a registered representative with Commonwealth Financial Network® (a registered broker/dealer, member FINRA/SIPC).

In 2023, Scott Marks was honored with the Forbes Top Next-Gen Wealth Advisors Best-in-State award, recognizing his exceptional achievements and contributions as a Financial Advisor.

Scott lives with his wife, Alysa, in Cave Creek, AZ.  In his free time, he enjoys golfing, coaching his son Redford’s baseball team, and spending time with his daughters, Abby and Scarlett.

*2023 Forbes Top Next-Gen Wealth Advisors Best-in-State, created by SHOOK Research. Presented in Aug 2023 based on data gathered from March 2022 to March 2023. 3738 Advisors were considered, 1464 Advisors were recognized. Not indicative of advisor’s future performance. Your experience may vary. Click here for more award information.

Securities and Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.

Thanks for listening! Make sure to follow us on all the socials at @summitwealthgroup, so you don't miss an episode!

The Transcript 

Jessica

"Welcome to the Reach your Summit podcast, where we help you navigate the path to a better, more secure future. I'm your host, Jessica, here with Summit Wealth Group and we are going to be starting an episode today about charitable giving and kind of what that looks like in the financial realm. With us here today we have Scott Marks out of our Scottsdale Arizona office and he is a real treat to have. You are in good hands with Scott explaining all of this. So welcome, Scott. Thanks so much for being here with me."

Scott

"Well, thanks for having me, Jessica, yeah."

Jessica

"For those of our listeners and some of our clients that don't know who you are, would you tell us a little bit about yourself?"

Scott

"Sure, well, as Jessica mentioned, I'm a financial advisor here in our Scottsdale office. I've been an advisor now for about 10 years, but I've been in the financial industry for close to 15 years at this point. I got my start in commercial lending with banking and moved over to be an advisor about 10 years ago and never looked back, so I've really enjoyed just helping guide our clients and think about things outside the box and provide a more holistic approach to what we're doing than what you might expect."

Jessica 

"Well, that's awesome. And one thing that Scott will not tell you, but I will tell you, is that he was a recipient this year of a Best in State Award from Forbes Magazine. So congratulations on that. We're all really proud of you for achieving that. So, jumping into charitable accounts. I feel like before I started working for Summit Wells Group, I didn't even understand what this was. Never heard of it. I didn't know there was anything like this, and there's actually a few different types, correct?"

Scott

"Well. So when a lot of people think about charitable giving, you can obviously give money directly to a charity whenever you choose to and from a tax planning perspective, of course, if you itemize your deductions, you can get a deduction for anything you give to charity. So a lot of people think about donating clothing to Goodwill. They'll go and give you a tax receipt that allows you to deduct a portion of that. If you itemize your return, you can also donate cash, like if you give money to your church or you give money to a charity or you purchase something at a silent auction at a charitable event. Sometimes you can get a tax deduction for that as well. That's our more direct charitable giving. But what a lot of people don't know about is there are multiple ways that you can go and create charitable accounts where you can give the money all up front and then give to the charity or charities later on. Oh, okay, so there's a few different types of charitable accounts. The simplest one is what's called a donor advised fund, and when you give to a donor advised fund, you get the tax deduction for that gift in the year in which that gift is given. So let's say, for example, you gave $50,000 into a donor advised fund. You can then keep the money inside of that charitable account and give the money out to charities of your choice over the next 10, 15, even 20 years. The benefit to you is that you get the charitable deduction on the front end and you don't get any deductions when you give the money away later. But it gets the charitable deduction all in the front end. So for those of us that are charitable inclined in the future and wanted to get a tax deduction for it right away, that's a really good option. Donor advised funds are also a really good tool because inside of those accounts you can continue to invest the money and as you invest it in the future, there's no tax implications of any of that. So if you were to give $50,000 into that account, that can grow to $100,000. You can give it away and there's no additional taxes to you. The other benefit of using a donor advised fund is you can actually gift appreciated investment positions into that account. So, for example, if you had bought a stock or mutual fund for $10,000 and it grew to $50,000 over time, you could give that $50,000 to the donor advised fund and there are no tax consequences for going and selling that inside of the donor advised fund. So it's a really good option for those who have invested for a long time and maybe have some extra money that they'd like to give to charity but also don't want to sell it and give themselves tax consequences for it."

Jessica

"One of the things I also have noticed when I was working in an office is that charitable accounts and donor-defied funds would come up a lot in the end of the year and we're talking about it at the end of the year. What is the deal with that? Why is this something that people tend to bring up now?"

Scott

"Well, it's typically, everyone waits until the end of the year to start thinking about the amount of taxes that they're likely to owe that year. When you start thinking about your tax planning, you start thinking, okay, well, here's the amount I'm gonna own taxes. If I'm intending to give money to a charity, that'll help reduce the amount that I'm gonna pay in taxes. So a lot of people start thinking about charitable contributions at the end of the year and, of course, the deadline for a charitable contribution in a given tax year is the end of the year, so the 31st of December, and I much appreciate it when clients give me at least a month's notice before we start thinking about these things. So, yeah, it's good that we're good that we're talking about it now, but it's good to have a little, a little extra time For us to go and make those, those contributions. Another time that folks are thinking about this not just at the end of the year but at the end of their career. As you near your retirement, you're typically near the highest earning years of your career and that allows you to get the most benefit out of a charitable tax deduction. And typically, when you retire, your taxable income ends up being quite a bit less in retirement than it was while you were working. So it's a good option for us to use a tool like a donor advice fund to Make contributions in the last few years of your retirement. That kind of funds your Charitable goals later on in life. So you can give that money away in your retirement whatever you choose to. But you get the benefit of getting that tax deduction during the years in which that tax deduction is most meaningful for you, in those higher earning income years."

Jessica

"Okay, so that makes a lot of sense as well. Of course, you want to be charitable and have that giving spirit and at the same time, it have some benefits for you Instead of advantages. As far as tax planning goes for clients, this may be kind of a curve ball, but do you feel like you have had a client that you've seen be able to do something really cool by having a charitable account?"

Scott

"Absolutely so. I've got a few stories about this, but okay, one of the ones that comes to mind One of our clients had some appreciated stock positions from a, basically from working at a company. A lot, a lot of people will work at a specific company over a number of years and they'll accrue a large amount of that company stock and one of the best ways to be able to diversify that stock without Having to create tax consequences for yourself is by donating it to a donor advice fund. So by donating it to that fund you get your tax deduction. You're able to sell the stock inside the fund, diversify it out to something that's a little more conservative so that you can donate that money later. So that's one of the advantages of doing that and in this specific situation the client was able to go and fund a Water conservancy project from where they were from. Oh, wow so the cool thing about a donor advice fund is you have as the donor, you have the ability to recommend gifts inside of that fund and as long as they're, as long as the charity is a 501c3, as long as it's a true nonprofit, you can pretty much give money to any charity that you choose, and a lot of clients have found donating to charities that are close to home, somewhere maybe where you grew up, where you want to support a specific charity that was meaningful for you in your life or, in this case, a Conservancy project at a lake where they they grew up, which is kind of cool to be able to go and and support that project in the place where you came from."

Jessica

"Yeah, really give back to a community, like you said, that you came from. That raised you. What a cool thing to be able to do. Is there anything else in particular that I'm not asking you? That could be an advantage or Something that you feel like people don't really know about when it comes to charitable giving."

Scott

"So we talked about you know, of course giving gifts directly to charities. We talked about a donor advice fund. There are more complex options for charitable giving as well. Okay, so there is something called either a charitable lead trust or a charitable remainder trust, and these get complicated. You need to get attorneys involved. The nice thing with the donor advice fund is all you need is one of your advisors with Summit and we can set that up, we can fund it, we can do all of it. The charitable remainder trusts and charitable lead trusts are a little more complicated options and effectively, what it allows you to do is donate money to a charity. You have to choose the charity on the front end, but then it allows you to go and receive income from that donation over time during your lifetime. So, as an example, if you, let's say you donated $500,000 to a charitable remainder trust, you get a certain amount of money as income from that $500,000 while you're living, and then whatever's left over goes to the charity. So you get the benefit of a tax deduction on the front end for making the donation, you get the benefit of receiving income for your lifetime from that trust and then whatever's left over goes to the charity. When all is said and done, there's a lot of complicated rules and regulations related to that. The other option is the charitable lead trust, where the charity gets the money right on the front end but then pays you for your lifetime. There's charitable annuity trusts, so there's all kinds of different trusts that you can set up with an attorney and if you're wanting to give money, I guess the situation that I would think about is if one of our clients maybe doesn't have children or anyone that they want to give their money to. They may want to give it to a charity in the future, but they also need to be able to use that money for income during their lifetimes. So that's a good option for them to be able to go and say, okay, I'm going to designate the charity that I want to give this money to right away, but then I'll also be able to receive income from that over my lifetime, and then whatever's left over they get to keep because I don't need it anymore."

Jessica 

"Yeah Well, and I feel like this is type of account that really can be beneficial, no matter what stage of life you're at, because either you're on the younger side and you're able to continue building it year after year while you're working, or even if you're in your later years, there's a lot of benefit to opening it at that point as well, instead of, like we're kind of mentioning in the beginning, just donating here and there to different causes, just out of your pocket."

Scott

"I think, when I'm thinking about clients that are maybe still in their earning years, in their 40s, 50s, 60s, when they're not quite ready to retire, but they're also wanting to be charitable, wanting to get the tax benefits of that, building up a donor advice fund in your younger years is a great tool when you're not sure exactly what you want to give it to. Maybe you have charitable goals that you know you want to give some money to a charity but you don't exactly know which one it is yet. A donor advice fund is a great tool for that because you don't have to choose which charity you want to give it to right away. You'll have a pool of money that you can go and give away in the future and you have discretion on which charity that is at the time that you choose."

Jessica

"Definitely as this time of year in the spirit of giving and spirit of being charitable. This is a great thing to ask your advisor about, to think about if this is a great option for you as a client as well. A lot of advantages on both sides. You get the joy of giving back to communities and also some tax planning benefits for clients themselves. That wraps up our episode on charitable giving and different types of charitable accounts. Thank you so much for listening. Tune in next week and we are going to be talking again with Scott about financial goal setting for 2024, to really set yourself up for the new year. So we will see you back then. Thanks for listening to the Reach, your Summit podcast, brought to you by Summit Wealth Group. If you enjoyed this episode and would like to help support the podcast, please share it with others and subscribe so you don't miss an episode. If you have any questions or topics that you'd like us to cover, please email us at info at info@summitwealthgroupcom ."