- Are you charitably inclined? If not, no judgement here, but stop reading. We have other ideas for you.
- Do you have annual tithing commitments to your church?
- What is a Donor Advised Fund?
- Are you planning on selling your private business but face a large tax bill?
Philanthropy can be an important strategic aspect of tax planning. A Donor Advised Fund (DAF) is a financial tool that allows donors to make a charitable contribution, receive an immediate tax deduction, and then donate from the fund at any point in the future. In the meantime, the funds can be invested by Essential Partners to grow tax-free, which creates more money to donate to your causes tax efficiently. Further, a DAF is the low-cost option relative to private foundations.
Consider a pest control business owner facing a large tax bill from the sale of their private company, a DAF offers a compelling strategy to mitigate tax exposure. By transferring a portion of the business interest to a DAF prior to the sale, the owner can receive a double tax benefit. The portion of the business that is donated to the DAF avoids capital gains tax, yet the full value of the donation can be used to offset income in the year of the sale.
Essential Partners serves client partners who have tithing commitments on annual “gains” that typically include gains on the sale of businesses and gains on income. First, the DAF reduces the tithing paid on the sale of the business as the gain on sale is reduced by the DAF contribution. Further, this tax advantaged DAF contribution provides an endowment which is intended to fund future tithing on all future investment profits earned on the business sale proceeds.
In other words…imagine getting a pile of cash in a business sale that you will earn interest/investment income on in the future to fund your lifestyle, yet all of the tithing on this future earned interest has already been pre-funded in the DAF, while also paying less taxes and less tithing on the business sale.
At Essential Partners, we help pest control business owners prepare for a sale across multiple dimensions including tax mitigation, investment management, trust & estate and cash flow planning while utilizing our Family Office Services pre- and post-sale.
This presentation contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this presentation will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Essential Partners, LLC does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Investment advisory services offered through Essential Partners, an SEC registered investment advisor.