In the News

I love October because it means we're gearing up for all the fun that happens before the New Year. October is National Estate Planning Awareness Month, and this month serves as an excellent nudge to pause and think about how you will account for your charitable giving before the end of the year.

Yes, there are strategies for your charitable contributions that can help maximize the impact of your estate planning, and this blog post is the Cliff Notes to my recent article in Wealth Management - Tax-Smart Charitable-Planning Strategies.

Picture this: A donor gives cash directly to charity or leaves a philanthropic gift upon passing away. But other tax-smart charitable planning strategies may be more impactful by marrying passion and purpose.

Have you heard of this story before? Were you the main character? Don't worry, our team at Your Dedicated Fiduciary® can guide you through this year's charitable-planning process.

"One of the benefits of serving high-net-worth estates in my practice is the opportunity to implement purpose-driven philanthropy and observe the fulfillment it brings families with charitable intent, regardless of size."

Common Charitable-Planning Vehicles

In the article, I break down the common charitable-planning 'vehicles.'

And for those who don't know, a 'vehicle' in the financial planning world refers to a specific tool designed to help achieve financial goals.

• Vehicle 1: Irrevocable Gifts - Main types include private foundations (PFs), donor-advised funds (DAFs), and qualified charitable distributions
• Vehicle 2: Split Interest Gifts - Main types include charitable remainder trust, charitable lead trust, and charitable gift annuity

"If your tax burden is a pain point in your estate, and you have charitable intent, using your appreciated assets for philanthropic giving is worthy of consideration."

The More You Know, The More Options You Have

None of these charitable-giving tax-reduction strategies are a one-size-fits-all, mainly because the real humans, families, and business entities are not all the same. My hope for those reading this is to learn something they didn't already know. And if you or your family, business, or organization fall in the high-net-worth tier, triple-check your tax-reduction strategies before the year-end, and ask if those strategies are maximizing your options.

DISCLAIMER STATEMENT: Generally, a donor-advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it; however, the donor, or the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though the money may not be dispersed to a charity until much later.

Vance Barse, founder of Your Dedicated Fiduciary®, noted, “When we look at common planning gaps, we really need to start with the basics. Core financial literacy is not even taught in this country. Clients often don’t know what time value of money is, or the value of compound interest, or even the fundamental differences between stocks and bonds — let alone what their broader financial picture is.”

Helping other financial advisors understand monetary policy, the Federal Reserve, and inflation is commonplace for Vance Barse, founder of Your Dedicated Fiduciary, who describes the Fed’s current rate-hike cycle as in its “eighth or ninth inning, but innings can take a lot longer than you think.”

“The age-old adage is that the Fed hikes until something breaks, and the one thing that hasn’t broken yet is core inflation ex-housing, which the Fed claims is its core metric,” Barse said.

While the wealthiest Americans may have an array of advisors and tools to help them with portfolio management, many still follow the most basic tried-and-true investing advice: Invest in what you know.

“A lot of ultrahigh-net-worth investors are fans of Warren Buffett and like the idea of buying stocks of companies whose products they use consistently,” said Vance Barse, financial advisor at Your Dedicated Fiduciary. “It’s very common for them to ask for our insight on those names,” he added.

Disclaimer: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please
contact your financial professional for more information specific to your situation.

Barse said that prudent financial planning starts and ends with the tax bill in mind. “Many of the CPAs out there are reactive tax filers, not strategic tax planners, and it really takes some expertise to understand which of the two you have in the tax world,” he said.

According to Barse, “Ultimately, the problem with thinking about tax season around tax filing deadline is that the real tax season for the current year is an all-year process.” October 1 through December 31 are the times when most advisors need to be making the proper tactical moves to ensure the best outcomes for their clients. “By the time we’re in tax filing season, for the previous year, many of the tax alleviation and tax reduction strategies for which a financial planning client is eligible are often off the table,” Barse said.

Barse said the historically high inflation has become a “regressive tax” that makes states with lower tax rates even more attractive.

“For many, the tax savings offered by a zero-state income tax state like Texas not only helps offset higher goods and labor costs, it can also be beneficial for employees given that there’s no state income tax,” he said.

“I think the 24-hour news reel on the banking crisis has served as great fodder for the masses to live in their amygdala function, which has resulted in a lot of panic calls because it reminds people of the fear that was so rife throughout the 2008 crisis,” Barse said, referencing the part of the nervous system that handles responses to threats and fear.

“It’s prudent to proceed with caution and really understand what’s in a portfolio and what due diligence and risk management measures should be employed, because we’re living in a world where monetary policy seems to change by the minute,” he added. He advises that individuals set emotions aside and look analytically at the situation and how it is different from 2008, not least because there is not as much leverage in the market.

“I just think that the playbook needs to be updated, both at the Fed and also with respect to stewards of capital and self-directed investors,” Barse added. He labels the lens through which those entities viewed markets and the economy from 2009 through 2021 as “the old playbook.”

According to Your Dedicated Fiduciary wealth strategist and founder Vance Barse, CPWA®, AIF®, many applicants aren’t even covering the basics of spellchecking and formatting their resumes.

Barse said, “It is mindboggling to me how many resumes I have received that have spelling and grammatical errors on them and that have inconsistent formatting. I’m not looking for a Monet here. I’m simply looking for something that is capable of being read and analyzed in a pretty efficient way.”

Vance Barse is the founder of Your Dedicated Fiduciary, an investment advisor firm based in San Diego, Calif., that has made centering women a bedrock of its practice: two-thirds of its clients are female-headed households.

In a conversation with Barron’s Penta, Barse says that if women aren’t part of the financial-planning conversation already, they should be. And if they lose their spouse before that can happen, they should be deliberate, not hasty, in finding a trusted advisor.

No one wants to think about losing a spouse, but it will happen at some point—and as all the statistics show, it’s far more likely for a woman to outlive her male partner. That’s why Barse tries to center female-headed households in his business model, but also why it’s wise for couples to make sure the wife has a say in the family finances before she’s all alone.

Vance Barse, wealth strategist and founder of Your Dedicated Fiduciary in San Diego, said his phone has been ringing off the hook with clients who have two basic questions.

“Across the board, first they want to know about the solvency of the banking system and whether they need to be pulling money out of banks, and second they want to know what idiosyncratic event happened that put SVB in that position, what the administration’s response was, and whether that was appropriate,” he said, referring to Silicon Valley Bank, one of two banks that were recently taken over by federal authorities.

Barse at Your Dedicated Fiduciary has been recommending laddering Treasuries since the Federal Reserve started raising interest rates early last year. He stacks three-month, six-month, and 12-month notes to allow a degree of flexibility as interest rates change. “So our clients aren’t new to the concept of T-bills,” he said.

But could the bank failures cause the Fed to stop raising rates, or even to lower them? At this point, Barse isn’t necessarily recommending clients move more assets into Treasurys. “That has to be evaluated on a client-by-client basis,” he said.