Donor-Advised Funds: Flexibility in Creating Long-Lasting Impact

By: Melissa Wagner – Associate Financial Advisor

With only a few weeks until the end of the year, anticipation heightens for many of us: planning holiday gatherings, gift shopping, managing deadlines at work and the list goes on. Yet despite the task-oriented “must dos” of the season, many Americans look forward to celebrating generosity and promoting philanthropy, which takes center-stage in our country like no other time of the year.

Not surprisingly, charitable contributions increase as the year draws to an end but for many donors giving charitably is a year-round effort, especially if the mechanism by which they give offers substantial convenience and flexibility.

Convening at The Columbus Foundation—formerly home to ten Ohio governors since the early 1900s—Angela Parsons, J.D., Vice President of Donor Services and Development, and Carter Hatch, Planned Giving Officer, met with me in a classically-furnished library to discuss donor-advised funds, commonly known as DAFs.

“The DAF is a component fund of a public charity whereby the donor can recommend grants to their favorite charity,” Angela said. “With over 100 new funds this year and 1,000 existing funds sponsored by the Foundation, the DAF is one of the most popular charitable giving tools around.”

Why so popular? In a word: convenience.

Angela shared how the convenience of setting up a DAF and the flexibility in timing a person’s charitable giving makes a big difference for those charitably-minded busy individuals, families, and even corporations. Funds can be contributed to a DAF at any time enabling the donor to take an immediate tax-deduction. One convenient aspect is funds do not have to be granted to charity immediately.

“Some donors need to take their time and decide how they wish to impact their community,” Angela said. “Maybe they know they’d like to impact local social service or feeding programs, but they just don’t know which charities offer those services or who does it best.” The Foundation offers a Community Research and Grants Management team that helps to identify the most effective charitable organizations.

Another aspect of convenience and flexibility is the type of asset that may be contributed to a donor-advised fund. Its common knowledge that highly appreciated assets with a low tax basis (such as stock held for longer than one year) makes great gifts to a DAF.

Angela and Carter both smiled at this: “It’s not just cash anymore. You can contribute marketable securities, real property, LLC interests…we even had one donor contribute grain!”

Grain? Even commodities are acceptable gifts, provided the donor can allow time for an advising team to review.

What should a prospective donor know before considering a DAF? A few points to help you along your way:

  • Initial Investment: For many DAF sponsors, such as The Columbus Foundation, there is a minimum initial investment. In their case, $10,000 will get you started. Others, such as Vanguard will require a $25,000 minimum investment. Fees are a consideration when starting up a DAF. The Columbus Foundation does not charge a fee to set up the DAF but there are yearly investment/administrative fees based on the value of the account.
  • Deduction Amount: The deduction amount is the fair market value of the asset contributed if held for more than one year. The charitable deduction is limited to 50% of adjusted gross income (AGI) for cash gifts and 30% of AGI when contributing appreciated securities.
  • Types of Grants: DAFs can be created to support public charities in good standing. No political institutions or individuals may personally benefit. Grants cannot be made to private, non-operating foundations.

What are some creative ways to maximize giving through a DAF?

  • Get the entire family involved: Allow your children to make grants to charities based on their exposure to various service projects and fundraisers. This sets the stage for your future philanthropist!
  • Create in memorium gifts: A great way to honor your loved one is to establish a memorial fund in that person’s honor. The DAF could be used in lieu of flowers or naming a particular charity.
  • Include the DAF as part of the estate plan: A DAF can be funded at death as long as it is properly worded in your estate plan and a “fund manager” appointed to ensure your legacy continues after your death.

Angela and Carter believe that DAFs offer tremendous flexibility to today’s donor, but the real impact comes from sharing what is going on in the community and how to address problems. “The Foundation offers events throughout the year that brings light to local issues. People care deeply about what’s going on in their community,” Carter said.

The holiday season unites donors and communities like no other time of the year. With convenient tools like the DAF and charitable resources like The Columbus Foundation and many others, there is no limit to creating lasting impact.

For more information on The Columbus Foundation’s community events or donor services, please visit columbusfoundation.org. For more information on how charitable giving can enhance your financial plan, please contact your advisor.

Caring for Aging Parents

By: Jessa Fannin, CRPC®

Nearly 10 million adult children over age 50 care for an aging parent, according to a MetLife study[i] measuring the financial costs and sacrifices of family caregiving. It is a calling most feel compelled to answer. But the stress, lost income and depletion of assets can have lasting impacts, according to Lisa Walls, CFP®, Financial Advisor at Hamilton Capital Management.

“We have clients who now live out-of-state. We’ve worked with them for nearly 20 years,” said Walls. “Dad was a long-time banking executive who now suffers from Parkinson’s Disease. His wife has Alzheimer’s.” Their circumstances are, unfortunately, not unique – but their family situation is. “They have 11 adult children!” explains Walls. She points to these clients as an example of how the family divides up responsibilities. “One child deals with communicating with us, and working through the financial planning involved with the decision to move into a retirement facility. One child deals with the retirement facility personnel. One deals with the long-term care insurance provider. One or two deal with the medical team,” Wall said.

Most of us don’t have 10 siblings, but we can divide responsibilities among various family members and friends. And that’s just one step in the process Walls recommends:

  • Begin the dialogue
  • Get financial records in order
  • Review the estate plan
  • Consider health care issues
  • Identify the care team

“These steps take time, and everyone will be much better off to begin early,” said Walls. “Ideally, that’s before there is a health crisis or cognitive decline issues.” Preparing a plan in advance of a health event or memory issues will allow parents and adult children to work together to address everyone’s needs.

The MetLife study calls elder financial abuse the “Crime of the 21st Century.” Seniors lose more than $2.9 billion per year to financial exploitation, primarily between the ages of 80 and 89. With more than 30 years of financial planning experience, Walls has developed recommendations that will help protect you and your family from this type of crime.

Hamilton Capital Management’s Women’s Exchange invites you and your family to attend “Caring for Aging Parents” on November 3rd from 5:30-7:30 p.m. at the Franklin Park Conservatory to help you Begin the Conversation. Walls will provide information and advice to develop a plan – whether you are the parent, or the child. Followed by Walls, Kathleen Carmody, President of Senior Matters Home Health Care will discuss ways to provide seniors with the best solutions to fit their needs – financially, emotionally and physically. Her mission is to provide seniors with the best quality of life possible with the input and resources available.

The presentation is intended to outline issues to begin thinking about, whether you are the senior or the adult child. Our goal is to highlight the importance of beginning a dialogue and to consider doing some planning before an urgent need arises. For more information, or to register to attend Hamilton Capital Management’s “Caring for Aging Parents,” click here. We look forward to seeing you at the Franklin Park Conservatory on November 3rd!

[i] The MetLife Study of Elder Financial Abuse, June 2011

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Hamilton Capital Management, Inc.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Hamilton Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

 

Do You Dream Out Loud? An Investment in Yourself

By: Andrea Masucci – Director of Retirement Plan Services

dream-out-loud-logo

Congratulations and thank you to more than 65 women who invested in themselves by attending the Hamilton Capital Management Women’s Exchange inaugural Dream Out Loud luncheon.  The Women’s Exchange focuses on enriching the lives of women through financial literacy along with personal and professional development to inspire confidence for women to meet the unique challenges we face in making financial decisions.

img_8980*Not all attendees were clients. It was a benevolent event.

As women, we devote time to caring for others, but often neglect taking care of ourselves, our whole selves, the part of ourselves that at our core we hear bubbling forth with, “I wish I could…,” “if I could only…,” and “one day I’m going to.”

The Dream Out Loud luncheon started with a vision to inspire and energize women to tap into the voice within that knows their Power and trusts they are here because they are ready to create their VISIONS TO REALITY. We connected them with women who have done it in their own lives and who make it their life’s work to relay to us all how you too can get there.

As a co-chair of the event I wanted to have fun with fresh ideas, like asking our Emcee, Jessa Fannin, to begin our lunch by leading you in one of my favorite group exercises of inviting our group to stand, hands on hips, imitating The Wonder Woman Power Pose, made popular by a TED Talk by Amy Cuddy, Associate Professor of Harvard Business School and author in her New York Times Best Seller “Presence.”  Amy’s latest research illuminates how adopting body postures that convey competence and power actually chemically change and prepare us to be powerful. If you feel powerfully, you will begin to think powerfully and be powerful.

Lisa Panos, a Martha Beck Certified Life Coach, challenged us to uncover, breakthrough and rewrite old, untrue stories that keep us stuck and feeling powerless.  Lisa immediately captured our minds by sharing how she discovered and stopped listening to a false belief she once had about “how to be successful, what she should and should not do in her career and family, and how to achieve the perfectly shaped and toned arms” she thought would make her happy.  She led our hearts with her fun, fresh approach to personal and professional development as well as her passion for forging meaningful, authentic connections and helped us “Create What We Crave” to take fearless action to live lives we love.

Mary McCarthy, CEO of Your Management Team, Inc., business consulting has implemented her vision into a reality and co-founded the Women’s Small Business Accelerator, an organization dedicated to helping women business owners develop concepts and launch their business ownership dreams through empathy, mentoring and education.  By teaching us “The Value of Your Time,” we calculated the dollar value of each hour in a day and identified potential beliefs that threaten who and what control our time.  We learned how perfecting “The Pause” when being asked to do something gives us the moment to reflect and say no when you do not have time or do not want to do the activity. As women, we feel pressure into saying yes more than no. By saying no, you allow yourself to be free to focus your time and energy on the things you want to prioritize.

As we soaked in the energy and vibrancy of these powerful women speakers, we asked our guests to write down at least one dream they have been waiting to make happen.  Whether it be traveling to a new place, taking a promotion, or having the relationship you have always dreamed about with yourself or another person.  Writing it down became the first step to making it a reality.

A few people were called on to voice their dreams.  It was refreshing to hear from so many that shared their dreams, ranging from writing and publishing a book, campaigning to pass legislation, going to watch the Macy’s Thanksgiving Day Parade to having  your family willingly complete household responsibilities like picking up their own dishes.

“All the ladies at my table were raving.  They said the whole thing was so well done and that they loved the warmness of it.  We liked that it wasn’t scripted and it was refreshing to have someone talk about real issues,” said one of our guests.

A very special mother was invited by her entrepreneurial daughter who said, “My sweet mama cried all the way home and said she wished she had gone to a luncheon like that when she was younger.  She regrets not following her dreams and stepping outside of her comfort zone when she was younger.”

One young professional commented, “I thought it was GREAT! The speakers were very knowledgeable and it really got me thinking. I don’t usually think too much about my dreams.”

Not only did we enjoy Mozart’s Café hosting our lunch with fabulous live piano music, we were able to grant a Mentor Match Scholarship through the Women’s Small Business Accelerator from the proceeds raised.

My favorite part of the event happened at the end.  With renewed energy and focus on our dreams emanating from our guests like beams of light, our emcee once again asked us to stand and recreate the Wonder Woman Power Pose.  By this time, with visions of our dream in mind and written on a card, she asked us to wait for the count of three and all together join in using our voices to speak our DREAM OUT LOUD.

If you attended this event and spoke your dream out loud, you can’t stop now!  As one of my favorite quotes says, “The day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.”  Your dream is as unique and beautifully individual as you are.  You are only limited by the beliefs you hold in your thoughts and you are the only one responsible for your thoughts.  Center your thoughts on that dream, hold it as the identifier of what makes you, you.   By being known by others by your dream, watch who and what come your way that begin to align with your dream, and those that do not step out of your way.

As many powerful women and men in my family, circle of friends and professional muses have inspired me, I too want you to feel the feeling of being free when you live outrageously big dreams.  Surround yourself with people that will give you support and solid direction personally, professionally and financially.

Thank you to my co-chairs Kitty Hedges and Jackie Leuby who brought amazing experience and talent and made the creation of the Dream Out Loud lunch flow smoothly.  Thank you to our executive team at Hamilton Capital Management, Inc. that believed in our vision over 4 years ago and partners with us to host several Women’s Exchange events each year where over 500 women have attended.  Thank you to all those on our Investment Management, Financial Planning and Operations teams that work together so that our client’s dreams of financial security and prosperity become a reality.

November 3, join us at the Franklin Park Conservatory to discuss “Caring for Aging Parents.”  For future Women’s Exchange events, you can find our schedule on our website at www.hamiltoncapital.com.

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Hamilton Capital Management, Inc.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Hamilton Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

2016 Smart CEOs Rise to the Challenges of Top Talent Perks

By: Andrea Masucci – Director of Retirement Plan Services

CEOs are faced with many new challenges from managing growth expectations, to reducing technology expenses, to finding and hiring talented new employees where the post-recession talent pool has dried up to a puddle.  Keeping your company running smoothly depends upon knowing what the increasingly mobile and transient workforce of young professionals are seeking.  One of the top 3 demands of this workforce in 2016 is expanded employee benefits.  Employees are seeking perks, and these perks add up to be the difference that increases your employee retention and reduces the hidden costs not hitting your profit and loss statement associated with employee turnover.

One of the obvious benefits that keep top young professional talent at your company includes the benefits offered through a 401(k) plan.  How can you make your 401(k) plan as healthy as the organic foods this crowd craves?  Nothing says “healthy company” like a Safe Harbor 401(k) plan with managed investment portfolios.

A Safe Harbor 401(k) plan has a minimum of a 3% employer contribution that is 100% immediately vested.  In 2016, an employee under the age of 50 years old can contribute from their paycheck up to $18,000 in a 401(k).  Along with the benefit of their contributions being tax deductible, you as an employer, take a tax deduction for the 3% employer contribution to each employee in the plan.  Limits for employees and employers aggregated contributions can be maxed out at $53,000 for 2016.  What additional benefits do Safe Harbor 401(k) plans offer to your individual 401(k) account as a company owner?  It allows you and your highly compensated employees (anyone with a salary of $120,000 or more or own 5% of the business) to make the maximum salary deferral contributions to their own accounts even if the other employees want to make limited or no contributions to the 401(k).

However, with today’s busy young professionals and volatility of the markets, will they be uncomfortable taking a gamble on which asset classes to place their investment?  Will they be equipped with the knowledge of a top ranked investment manager to know what percentage to allocate to each asset class for their maxed out 401(k) contributions?  Recent studies show by offering Managed Investment Portfolios, employees earn up to 7% more on average than do-it-yourselfer investors1.

By offering Hamilton Capital Management’s Dynamic Asset Allocation Model Investment Portfolios through your companies’ 401(k) plan, you won’t be left uncomfortable watching your 3% Safe Harbor employer contribution get invested by employees in high risk, low return investments due to unfamiliarity with investing or chasing market performance.

______________________________________________________________________________
1 Data taken from 2011 Quantitative Analysis of Investor Behavior, DALBAR, Inc., March 2011
Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Hamilton Capital Management, Inc.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Hamilton Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

 

 

Buying or Leasing a Car?

By: Jacqueline Leuby

It’s that time of year again, when vehicle manufacturers release the newest models. Every time you turn on the TV, there is an ad for the latest new car which you could drive today! And, who doesn’t love driving a new car? Before you give into the dealerships, you should consider several financial factors.

First, you need an accurate picture of what can you afford. A good method in assessing your financial picture is creating a budget. Here is a link to Charles Schwab’s Monthly Budget Planner guide for creating a budget: Click here

Review your budget and ask yourself these questions:

  • How much are you willing to allocate in your budget towards a monthly car or lease payment?
  • Do you have money in your savings to use for a down payment?
  • Consider the cost of ongoing expenses:
    • Car insurance premium
    • Gas
    • Routine maintenance

Determine your price limits. Then, evaluate how long do you want to keep your car?

If you want a new car every three years, leasing may be the best option for you. If you plan to drive your car until the wheels fall off, buying may be the best option.

Leasing

A lease is a contract in which you (the lessee) pay the lessor (owner) for use of the asset. When leasing a car, you are only paying a portion of the car’s value. You agree on the amount of miles (e.g. 36,000) and the period of length (e.g. 3 years). With this method, you could lease a more expensive car and pay less than buying the same car.

Pros

  • Always under warranty
  • Do not pay for major maintenance
  • Typically monthly payments are lower than loan payments

 

Cons

  • Penalties for excess wear, tear, and mileage
  • Early termination of contact can be costly
  • You never own the car

 

The most important item to know when considering a lease is having a good understanding of your average annual miles. If you lease a car and you use more miles than allowed in your contract, you will most likely be penalized with a fee. An example is for every mile you exceed, you will pay $0.20. This seems like a small amount, but if you go over by 5,000 miles, you will pay an extra $1,000.

Helpful tip: When negotiating a lease, always ask the dealership for the selling price of the car.  The lease payment will always be based on the lease value, which is the difference between the sales price and the lease end value. If you can negotiate the sales price down, you can lower the amount you will pay for the lease.

Buying

Buying the car means you are the owner. You can purchase the car with financing or cash.

Pros

  • No more car payments after car is paid off
  • Do not have to fix wear and tear if you do not want to pay for it
  • No potential penalty for the miles you drive

Cons

  • Car might not be under warranty
  • Maintenance costs normally increase as cars become older
  • Typical monthly payment are higher than lease payments

 

 

Helpful tip: Call your car insurance agent ahead of time and ask him or her to estimate your new car insurance premium.  Your premium can be greatly affected by the year and model of your car.

Take your time selecting a car.  Sometimes the car dealership will tell you the deal ends today and they are not willing to negotiate with you. If that’s the case, they might not be the dealership for you.  Good car dealerships will work with you!

Whether you lease or buy a car, it is a big financial transaction which will impact your savings and monthly budget.  Before deciding, review these tools to assist in your decision:

 

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Hamilton Capital Management, Inc.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Hamilton Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

Consider These 5 Points Before Purchasing a Second Home

By:  J. Ryan Chambers, CFP®

We have all thought about it. You are sitting down in your favorite coastal vacation spot or warm weather winter retreat in the desert for a relaxing lunch and you think to yourself: “Should I consider purchasing a second home here?  Can I afford the home?  I love coming here.”

Likely, we can all agree imagining ourselves living a few weeks or months out of the year in Florida or Arizona is a fun exercise, but when reality sets in, individuals must consider the personal and financial impact a second home may have on their future.

  • Savings Come First: Some may consider the luxury of a second home more important than saving for future needs. Individuals still working should fill their short-term, retirement, and education savings buckets first.  If retired, it’s critical the individual understands if their retirement income and portfolio assets can handle the weight of additional home expenses.
  • Added Expenses: Many forget the joys of a second home come with additional costs of a possible mortgage, property taxes, insurance, furnishings, and utilities/maintenance.  In fact, some of these costs may be higher than what the individual is use to paying at their primary residence.  For example, insurers may charge a higher premium for a second home because the owner will likely not be on the property as often or they are located in potential disaster areas (example: hurricanes). 
  • Emergency Cash: A second home comes with a second set of everything: a water heater, roof, or air conditioner. Additional dollars should be set aside for potential unexpected large expenses that may arise.  Consider how people tend to take care of small problems on their primary residence quickly which can eliminate a bigger problem from occurring.  This may not be the case on a second home as little problems can become big if the owner of the property is only at the home part-time. 
  • Consider Renting: The novelty of anything new goes away overtime which is likely the case for a second home.  Individuals may grow tired of the location or miss out on having the flexibility to stay longer periods in other destinations with a second residence.  Renting a home in desirable destinations may be a better option than buying as it will provide flexibility and allow others to incur the extra costs of a second home.
  • Investment Opportunity: Second homes can be looked upon as an investment or additional stream of income if rented for part of the year, yet if these are factors individuals should consider if the location of choice is desirable for vacationers as the homes proximity to attractions, restaurants, or beaches could drive its future value or rents.

When evaluating the viability of purchasing a second home, a conversation with a qualified financial advisor and other trusted professionals should be the first step before taking the plunge on a purchase that can have lasting effects on someone both emotionally and financially.

Women’s Exchange Successful Wine and Canvas Event for Military Survivors and Widows

It was an evening of painting, socializing, education… and so much more. More than 30 military survivors and widows attended Hamilton Capital Management’s “Women, Wine and Canvas” event on April 27th.

                  HCM’s Women’s Exchange asked attendees to share with us their best advice when posed with the question, “What can you do for me?”

Clearly, many of these women had never been asked such a thing before. Their answers were not only humbling, but enlightening.

“Learn to accept help when offered. You can still be strong and have help.”

“Sometimes, people don’t know what to say. So, help put them at ease by thanking them for their thoughtfulness.”

“Find out what your likes are.”

“The best advice I ever received was to learn to say “no.” Sometimes when something tragic happens, everyone wants to help you. But it’s O.K. to say you don’t need anything or to be alone.”

“Make sure you are aware of where all of the paperwork is kept. Know all of the passwords for your accounts and computer. And be sure you are named on all of the accounts.”

                Their advice sheds light on the unique circumstances many of these women faced. While tragedy is the bond they all share, hope is what they have going forward. With the guidance of a trained instructor, every woman left with her own masterpiece. Below is a picture of our own Women’s Exchange team with their paintings.

Women, Wine and Canvas

Women, Wine and Canvas is one of several events being sponsored by the Women’s Exchange this year. All of our events help to address the unique financial needs of women – at various ages, stages and incomes.