Is there a big tax bill headed your way for this year that you’d like to minimize or eliminate?  If so, pay close attention… I’ll teach you a strategy that allows you to have your cake and eat it too.  I’m Bryan Ellis.  You’ll learn it RIGHT NOW in Episode 170.

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Hello, SDI Nation!  Welcome to the podcast of record for savvy self-directed investors like you!

Was 2015 a great year for you, and now you need a way to get a huge tax break to avoid throwing your money away in that great pit of waste called the Federal Government?

I’ve got just the thing for you.  It combines a HUGE present-day tax deduction… benefits for your favorite charity… and the ability for you to own and control your money – and even change your mind – in any way you want!

I’ve got to credit my colleague Tim Berry, tax attorney extraordinaire, for sharing this information with me.  He recently used this strategy to help a client of his getting a whopping $480,000 tax deduction.  Yeah… huge.

So here’s how it works, without the legal jargon.

What you do is you pick a charity that is important to you.  You also pick an amount of on-hand capital you have to contribute to that charity.

Hehehehe I can just hear some of you now… “so your big strategy is to get a charitable tax deduction?”  Hehehehe… no, there’s far more to it than that.  But think with me about this… what if you could get a huge charitable tax deduction right now… but spread out the contributions over many, many years… and even keep control of the money so you can invest it and keep the profits yourself in the mean time?

Yep… you heard it right.

So here’s how it works, with some of the details left out for easy understanding.

You – or better yet, your attorney – sets up something called a Charitable Lead Trust, and you specify your favorite charity as the beneficiary.  You then put a big lump of money into that trust, and you agree to pay that money to the charity on an annual basis over a very long period of time, such as 30 years.

This means that in the first years, you’re actually donating very, very little.  And you’re donating a whole lot more in the final years.

But here’s the important thing – in the mean time, you have near absolute control of that money, which you can invest for further profits.  And here’s the beautiful kicker:  You get to keep the profits – or virtually all of the profits – yourself.  Those profits go back to you, not to the charity.

Now that’s not the end of the cool thing about this strategy, but I want to make sure you understand where we’ve gotten to so far.  At this point, you have gotten a HUGE tax deduction for this year by doing little more than committing to give money to a charity over a 30-year period of time.  The IRS will allow you to take a deduction IMMEDIATELY in connection with the value of that commitment… and so you get to save big-time on your taxes this year. 

And truth be told… the amount of the contribution you have to make in the first several years is tiny… negligible, in fact.  But you still get to take the huge deduction up front, and you still get to control the capital inside that trust and invest it in any way you want… and don’t forget:  nearly all of those profits go back in your pocket.

Plus, you can change your mind at any time you want.  You could, at any time, take your money back out of that trust.  You would have to repay the portion of the tax deduction to which you’re no longer entitled, but you have complete control to take that money back anytime you want it.

And if you think about it… having to repay the tax deduction to which you’re no longer entitled… that’s pretty amazing too, because that’s not subject to penalties or interest.  It’s like a zero-interest loan to pay your taxes for the years between when you set up the trust and the day you close it.

So we’re already a bit deeper in the weeds on this than I want to be.  Bottom line:  If you had a good year this year, and you need a big tax deduction… you should SERIOUSLY consider the potential for wise use of a Charitable Lead Trust.

And, of course, if you don’t already have a lawyer who is intimately familiar with this strategy, I suggest you reach out to Tim Berry.  You can find his contact info at SDIRadio.com/tim.

Another variation of this idea that is far simpler and a better option if you’re totally committed to making a gift to charity is to use a Donor Advised Fund.  Think of a Donor Advised Fund as your very own “meta charity”.  It’s like a tax-favored investment account for the benefit of the charities of your choice.  So the way it works is:  You contribute money or assets to the fund, which generates an immediate tax deduction for you.  You can then grow that money through investments, and the profits from those investments accumulate tax free in the account.  And at whatever time you choose, you can distribute some or all of the money in that account – whether principal or profits – to the charities of your choice.

This works particularly well if you’re considering a large gift to a single charity, but you’d rather space out the giving over time so that the charity must remain frugal in their financial allocations.

How do you decide between a Charitable Lead Trust or a donor advised fund… or even a direct gift to a charity?  You’d do well to speak with Tim Berry or your own financial advisor, but my assessment is this:

If you’re absolutely certain that you want to give money to a charity and receive a full deduction for that contribution immediately, and you’re comfortable with the charity receiving the entire gift at one time, then a direct charitable contribution is for you.

If you’re absolutely certain that you want to give money to a charity and receive a full deduction for that contribution immediately, but you’d like to either invest the money to grow it before gifting it, or even just space out the delivery of the gift over time, then a Donor Advised Fund is for you.

And if you’re interested primarily in a present-day tax deduction that has positive benefits for a charity, but about which you can change your mind at any time and not be penalized, then the Charitable Lead Trust may be best for you.

That’s all for now, my friends.  If you missed the unusual brief update I published yesterday afternoon about a special investment opportunity, then check it out right now on iTunes or at SDIRadio.com.

And be sure to get on our update list by texting the word SDIRadio to 33444.

Join me tomorrow for another excursion into investment excellence.

And in the mean time… invest wisely today, and live well forever!

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