Charitable Giving: Making Your Generosity Go Further

In our conversations with clients, charitable giving almost always starts with values, not tax rules. Clients typically want to support causes they care about, and the tax benefits are often secondary. That said, how gifts are structured can make a real difference in how much lifetime giving actually reaches the charity versus getting eaten up by taxes along the way.

Changes to the tax code have made this even more relevant than it’s been in the past. For 2026, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, with additional deductions for seniors. That’s a high bar to clear, and it means a lot of taxpayers who give modest amounts to charity each year aren’t getting any tax benefit at all, because their total itemized deductions (including charitable gifts) never exceed the applicable standard deduction.

There are also two new considerations for 2026 that impact charitable deductions. If you itemize deductions, the first 0.5% of your Adjusted Gross Income (AGI) given to charity is no longer deductible currently. For example, if your AGI is $300,000, the first $1,500 of what you give does not count toward your deduction, only the amount above that is deductible.

However, those taking the standard deduction can now deduct up to $1,000 (or $2,000 if married filing jointly) in cash gifts, above the applicable standard deduction. Therefore, depending on your situation, the best way to give in 2026 may be different from what it used to be, and it’s worth revisiting even if you haven’t changed your giving habits.

For itemized charitable deductions, you should also consider the different ceilings for how much you are able to deduct in any given year, which are percentages of your AGI. These percentages vary based on what type of property you are giving and to whom, ranging from 20% to 60% of your AGI. Disallowed deductions over these thresholds can be carried forward for up to 5 years.

A Few Strategies Worth Knowing

Bunching: If your annual giving doesn’t get you past the standard deduction, one option is to bunch several years of giving into a single year. For example, rather than giving $10,000 a year, you might give $30,000 once, then scale back for the next couple of years. In that bunched year, itemizing could produce a tax deduction that smaller gifts over time never would have. We usually suggest clients think about which years make the most sense to bunch into. A year with a bonus, a big capital gain, or a Roth conversion is often a good candidate, since you’re already going to have a larger tax bill to offset, and a bigger charitable deduction may reduce your tax bill and potentially your marginal tax rate.

Donor-advised funds (DAFs): A donor-advised fund can help make the bunching described above more practical. Schwab Charitable among other custodians offer these accounts, which may be thought of as a much simpler foundation. You contribute amounts to the DAF, get to take a charitable deduction that year, and then recommend grants to the charities you support from the DAF on whatever timeline works for you, whether that’s all at once or over several years. We like DAFs because they take the pressure off deciding exactly where every dollar goes right away. You get the tax benefit in the year of the DAF contribution and figure out the giving as you go.

For clients who want their adult children involved in the family’s giving, a DAF can be a nice way to start that conversation as the children can also be given the power to make grants and could be the successor owners of that “family charitable fund.”

Gifting appreciated stock: If you’re holding taxable investments that have grown significantly, donating the shares directly, instead of selling them and giving cash, is often the more efficient move. You can generally deduct the full fair market value if you itemize, and neither you nor the charity owes capital gains tax on the appreciation. We’ve seen this work particularly well for clients sitting on a concentrated stock position from years of investing or from equity compensation. It’s a way to reduce that concentration in a tax efficient manner while supporting a cause you care about.

This strategy is often paired with the DAF account described above to facilitate the gifting. This brings up another advantage of a DAF. Large gifts of appreciated securities can be made to the DAF, yet the DAF can make very small dollar contributions in cash. This removes the potential hassle of multiple small securities transactions.

Qualified Charitable Distributions (QCDs): As mentioned in our previous retirement tax planning article, for clients 70½ or older, Qualified Charitable Distributions let you send money from your IRA straight to charity so that those pre-tax dollars are never taxed. In 2026, you can direct up to $111,000 from an IRA this way ($222,000 for a married couple, if each spouse gives from their own account).

If you’ve reached Required Minimum Distribution (RMD) age, a QCD can satisfy some or all of that requirement. Because QCDs are not included in your Adjusted Gross Income, they can also help keep you under the income thresholds that trigger higher Medicare premiums or additional taxation of Social Security.

In addition to lifetime gifting of pre-tax IRA assets via QCD, IRAs are also ideal to fulfill any charitable bequests at your passing by naming your charities as direct beneficiaries on the retirement accounts. A charity will have full use of IRA funds without income tax consequences unlike any individual beneficiaries.

Which Strategy Fits You

Everyone’s situation is unique, and the right combination of charitable giving strategies really depends on your age, income, and the composition of your assets, among other factors. A few questions we consider with clients:

  • Would bunching a few years of giving into a DAF this year actually save you more than giving smaller amounts annually
  • Do you have appreciated stock sitting in a taxable account that would make more sense to gift directly?
  • If you’re 70½ or older, would a QCD make more sense than making a cash gift, or even a contribution to a DAF, also considering whether you’ve started RMDs?
  • If you’re taking the standard deduction most years, are you at least using the new $1,000/$2,000 cash deduction?
  • Is this a year with a bonus, a large gain, or a Roth conversion where a bigger gift might help offset that?

Final Thoughts

Giving is about your values first, and we don’t think that should ever change. But a little planning around timing and how a gift is funded can mean more of it ends up where you want it, or it takes less assets to make the same after-tax gift.

We would rather see a client’s charitable dollars go further for the causes they care about than watch those same dollars get diminished simply because nobody looked at the timing or the funding source ahead of time. Your Wealth Advisor can help you evaluate charitable giving strategies as part of your broader financial plan, so your generosity has the greatest possible impact.

What Estate Planning Documents Do I Need?

Estate planning is often pushed to the bottom of the to-do list. If you are in your thirties or even twenties, focusing on your career or starting a family is often your primary focus.  The idea of building and passing along a legacy sounds like an abstract, far-off idea.

Regardless of where you are in life, there are steps you can take today that will protect you and your loved ones.

As a financial advisor and a former teacher, I work with a wide range of clients, many of them younger professionals. One of the most common misunderstandings I see is the belief that estate planning is only for people with significant wealth or those nearing retirement. But the fact of the matter is, if you’re an adult, you need some essential documents.

It’s important to note that financial advisors do not draft these documents ourselves. That is the estate attorney’s job. Our job is to educate and help you start thinking about the decisions that need to be made.   We take all the time needed to collaborate to make sure your estate planning strategy accurately reflects your family relationships, what you value most, and what you wish to leave behind.

Start with the Basics

In an ideal world, virtually everyone over 18 should have a last will and testament.

This is the foundation of most estate plans. A will is a legal document that lays out your instructions for what should happen to your assets when you die. It names the people or organizations you want to receive your property and appoints someone to carry out your wishes.

Your will can name guardians for your minor children, outline how debts and taxes should be handled, and even leave specific instructions for sentimental items or charitable gifts. But it doesn’t govern everything you own. Certain types of accounts and assets, like retirement plans, life insurance policies, or jointly owned property, pass automatically to the people listed as beneficiaries or co-owners, regardless of what your will says. That’s why it’s so important to make sure your beneficiary designations match your intentions and are kept up to date.

Without a will, the state decides who gets what according to its default rules. Writing a clear, legally valid will gives your loved ones a roadmap.

In addition, your estate plan should include the following documents:

Advance Directive or Living Will. This outlines your preferences for medical treatment if you’re in a terminal or irreversible condition and can’t communicate your wishes. It tells your healthcare providers and loved ones whether you would want life-sustaining treatment to continue or be withdrawn, and whether you want comfort care instead. This document supports your medical power of attorney by removing guesswork from deeply personal decisions.

Medical Power of Attorney. This appoints someone to make healthcare decisions for you when you’re unable to make them yourself. That includes choosing between treatment options, approving surgeries, or making end-of-life care decisions with your medical team. Like financial powers of attorney, you can name co-agents or successors if your first choice is unavailable. This is one of the most important documents for young adults. Parents are often surprised to learn they can’t legally make medical decisions for their college-aged children without one.

Durable Financial Power of Attorney. This document lets you appoint an agent to manage your financial affairs if you can’t. That could mean paying bills, handling taxes, managing investment accounts, or buying or selling property on your behalf. You can name more than one person to serve together or separately. Some documents are written to take effect immediately, while others become active only if you’re declared incapacitated. You can also limit what your agent is allowed to do or give them wide authority, depending on your situation and level of trust.

HIPAA Authorization. This gives the people you name the ability to access your private medical information and communicate with your doctors. Unlike the medical power of attorney, which gives decision-making authority, this is about sharing information. You can choose what types of information to release and who can receive it. It’s helpful if you want a family member or friend to be informed but not necessarily in charge of your care.

Guardianship Designation. If you have minor children or dependents with special needs, this document lets you name who should care for them if something happens to you and your co-parent. You can also specify how those children will be financially supported, whether through a trust, a designated account, or other resources. Without this document, the courts will decide who steps in, which may not align with your wishes.

Without these important “living documents”, your loved ones could run into legal and logistical roadblocks during the kind of medical emergencies that can happen at any age.

If you don’t have these documents at hand, don’t panic. I or another advisor on the Tanglewood team would be happy to talk you through what to consider. And don’t worry if you don’t yet own a lot of property or have a fairly straightforward financial life. Anyone will benefit from having a plan set ahead of time.

Even those who have these documents still need to keep them up to date. When I talk to new clients who have already created estate documents, they are often years or decades old. Estate planning isn’t a one-and-done activity. Life changes. Families grow. You might get married, have kids, change jobs, or accumulate new types of assets. Each of these moments is a good opportunity to check in on your estate plan.

The Best Time To Start Is Today

I try to encourage my clients to think of estate planning as a conversation that remains open and that we can return to at any time. You are making your wishes known and easing the burden on your loved ones. You may not think you have much to sort out right now, but your family still needs direction. Your estate plan is as much for them as it is for you.

Estate planning is a living process that changes with your life. If you have questions about how to get started, my door is always open.

Education Funding with 529 Plans

In my experience providing financial counseling, I have fielded many questions with regards to the best ways to fund college education for a child or grandchild.

When it comes to selecting a vehicle for your education saving, there are a variety of options. However, often the best solution is a 529 plan. A 529 plan offers the benefit of tax-free growth and withdrawals for qualified education expenses.

A pre-paid in-state tuition plan is a specific type of 529 program. These plans have the most limited options for use and can have drawbacks if your student ends up not attending school or goes to an out-of-state school.

The 529 savings plan is the more flexible of the two accounts and can be used for a wider variety of costs, including associated expenses like room and board, and vocational apprenticeship programs. K-12 tuition expenses and student loan payments are also allowed up to $10,000.

Contribution limits are quite generous. In addition to an annual exclusion of $17,000 per person for 2023, one could also “superfund” a 529 plan by using up to 5 years’ worth of annual gift exclusions in one year. This could add up to $170,000 combined between spouses.

There are a variety of 529 plan providers available which offer a range of investments options, a common choice being a target enrollment fund which begins with more growth oriented strategies and becomes more conservative over time as your student approaches starting school. This provides the real advantage of potential long-term appreciation of your savings above and beyond the rising costs of education.

If your student does not use all of the 529 funds for whatever reason, the beneficiary could be changed to another family member including even yourself.

As a last resort, non-qualified distributions can be made for needs other than education, like helping your student with a home down payment. These distributions would be subject to taxation on the growth in the account plus a 10% penalty. A distribution as a result of receiving a scholarship would be an exception to this.

At Tanglewood, we are pleased to answer any questions you may have about how best to fund education for your student. Please reach out to your Wealth Advisor to begin the conversation.