Entering into the season of joy and thanksgiving, your clients will be thinking about tax-efficient strategies they hope to employ before year-end.
As their advisor, starting these discussions now to maximize all available opportunities before December 31 is essential. You can turn to the Community Foundation for Greater Atlanta to provide many avenues to make charitable gifts and mitigate taxes.
Here are seven items to discuss with your clients around year-end charitable giving:
1. The value of a charitable tax deduction may never be greater than now. Your clients should review their financial picture with consideration of the projected income and tax rates this year.
Today, we are certain cash contributions can be deducted up to 50% of Adjusted Gross Income (AGI) and appreciated assets up to 30% of AGI. The market value of appreciated property held for more than one year can generally be deducted up to 30% of AGI.
Currently there is great uncertainty around tax reform and what that means for the value of charitable deductions. Many of the current proposals, while keeping the charitable deduction, dramatically reduce the value of a charitable gift. With the current tax rates and capital gains rates, charitable giving gives a great bang for your buck!
2. Appreciated stock donations offer many benefits. Stocks and other assets are performing well and offer deeper charitable impact than they may in the future.
Clients should consider donating now and not waiting until December when values may decrease. Most appreciated stock has a fair market value deduction and clients can avoid the payment of capital gains.
3. Donor-advised funds are our most popular and flexible option for charitable giving. Your client can lock in an immediate tax deduction by contributing highly appreciated assets or cash to a donor-advised fund.
Then, they can distribute those funds to their chosen charity or charities over time. These funds are invested and grow tax-free. You may even invest the assets for your client. Your client will also have access and can benefit from our deep knowledge of family philanthropy and the community’s nonprofits.
Donors may give grants locally, nationally or internationally to any nonprofit that is a registered 501(c)3 organization, religious organization or educational institution. And, they may give anonymously!
4. A number of donation options may take longer to execute than a donor might expect. Clients who feel rushed at year-end are more likely to be dissatisfied with their overall experience.
When donating illiquid assets or appreciated securities, some donors might miss the year-end deadline due to starting the process too late to reap the reward. Encourage your client to start thinking about year-end giving now to get the process underway. See our helpful chart for guidelines.
As you consider your clients’ tax planning and charitable gift options, contact us for consideration of gifts including:
• business interests
• privately-held assets
• real estate
• securities, including restricted stock
• other assets
5. Charitable Lead Trusts allow flexibility and generational wealth transfer options. Interest rates are at record lows and allow for financially advantageous estate planning. Many Community Foundation donors who use this vehicle have their donor-advised fund named the charitable beneficiary, offering the most flexibility.
6. Year-end is a wonderful time for a family meeting. Many of your clients rely on family and friends in their charitable planning and decision-making.
Family meetings are a valuable tool for engaging multiple generations to create a family’s philanthropic legacy. Encourage clients to put a family meeting on the calendar now, bringing families together before things get hectic.
The Community Foundation staff are experts in facilitating family meetings for donors with donor-advised funds.
7. End of the year may also be a time to examine estate plans. The Community Foundation for Greater Atlanta has experts in planned giving who manage the technical details and administrative tasks of estate planning in addition to offering the flexibility of changes without extra fees.
While the estate and gift tax applies only to those that exceed the $5.49 million per spouse ($10.98 million/couple) at a maximum rate of 40%, we have a number of ways to craft planned gifts and customize to your client’s charitable desires.
We hope you have a wonderful holiday season and if we can be of assistance please contact us.