Janet Briaud and Natalie Briaud Pine with Briaud Financial Advisors are a mother-daughter team who work to bring their clients the best financial planning services possible.
Janet Briaud, a certified financial planner, established Briaud Financial Advisors in 1986 to provide clients financial advice in a fee-only model (rather than taking commissions). Briaud has held leadership positions at all levels of the profession and has been featured in industry publications as well as Men’s Health magazine. In 2007, Natalie Briaud Pine joined the team, and after earning her certified financial planner designation, became a financial advisor and later partner in the firm. Now, the mother-daughter duo work together to bring their clients the best financial planning services possible. In the following Q&A, they offer financial ideas for those considering how to begin giving to charity.
How can I prepare myself for charitable giving?
To give yourself the ability to give to charity in the future, you first need to accumulate your savings and pay off any debts. Spend less than you earn to begin saving your money. In the meantime, you should focus on increasing your human capital—your ability to earn money—and on protecting yourself from major risks. Make sure you have insurance and avoid schemes that promise rapid gains. It’s important to remember that building wealth takes time and planning.
What advice do you have for paying off debt?
It’s financially best to start by paying off your highest interest rate debt first. However, many find that it is easier to start with the smallest balance first to develop momentum and stay motivated to continue reducing their debt. Regardless of which you choose, once you pay off the first loan you should put the payments from that into other debt. For example, say you owe $10,000 toward one debt and $8,000 toward another. Once you pay off the $10,000 debt, you can then direct the payments from the $10,000 loan toward your $8,000 debt, paying it off even faster than if you made minimum payments. Once all of your debt is paid off, you can direct your debt payments directly to savings to start building your retirement nest egg.
In what ways can I maximize my ability to save?
Accumulating wealth takes time. Your main goal should be to spend less than you earn. Sock your bonuses away and save your raises. Although it can be challenging, avoid increasing your lifestyle with your increase in income. Doing these things can open the door for you to retire earlier and increase your ability to give to charitable organizations.
Whether through budgeting or setting aside payments, you must find a strategy that works for you. When you do open a savings account, be careful not to withdraw money for “emergencies” here and there; doing so defeats the purpose of saving.
What options do I have if I want to give but don’t feel like I have the means to do so?
You can consider a couple of options to give financially when you still require access to your assets during your lifetime. The number one option would be to include a gift in your estate plans, especially including charity as beneficiary of pre-tax retirement plans. You can also give through pledges—donating manageable amounts over time. A good way to maximize those contributions is with matching funds such as corporate matching funds from your employer.
Another option is a donor advised fund which is like a charitable investment account. It allows you to contribute cash, securities or other assets to the fund and receive an immediate tax deduction. As the funds are invested and grown, they can be donated to a charity like the Texas A&M Foundation to benefit Texas A&M University.
And don’t forget the value and power of your time! Consider volunteering.
When I do have the means, what is the best way to give?
Assuming it is an option, you want to first give assets that have significantly increased in value (i.e. with high capital gains). A gift of real estate that has highly appreciated is a great gift asset. Or you might donate part of the business you’re about to sell, so that you would not have to pay taxes on the gifted portion. When you turn 70 1/2 and begin receiving distributions from your IRA, you also have the option of donating your distributions to charity for up to $100,000 per person without it going on your tax return. Whichever method you choose, you want to make sure you are giving in the most tax-advantageous way.
What do I need to know about establishing a gift after my lifetime?
Bequests in wills and gifts of retirement accounts are the most popular way to include the Foundation in your after-lifetime gifts. Keep in mind that your will does not control your retirement assets. Your will and your retirement are two completely different entities. The distribution of your retirement assets will be determined by whomever you name as the beneficiaries for your accounts, so it is vital to name these at every level. In addition, the ideal asset to give to charity is pre-tax retirement. All of the money (including the taxes owed) go tax-free to the charity, and the entire amount given is excluded from your taxable estate. For example, if you name the Foundation as the beneficiary of one of your assets, they will be able to use all the donated funds to support Texas A&M however you decide after your lifetime. When establishing a planned gift to be implemented after your lifetime, you need to consider all your assets, understand how they are titled and then determine which assets to donate.
For more information on strategies to maximize charitable giving, click here.
Disclaimer: This article is intended to share general information on topics related to financial preparedness for charitable giving. This article should only be used or referenced as a source for general advice. Visitors/readers should seek advice from a professional representative to better understand the best plan for their individual needs.
