February 2025 Professional Advisor News

Tax legislation could be a wild ride this year, but there are still opportunities for you to add value to clients’ charitable intentions during the estate and tax planning process. GiveWell Community Foundation (GWCF) offers several “evergreen” planning techniques that aren’t deeply dependent on the potential tax changes on the horizon. 

Watching for signs on what might happen with the Tax Cuts and Jobs Act is creating anxious moments among many professional advisors. As tax professionals, an ever-evolving regulatory climate requires almost daily tracking to catch the most up-to-date predictions, keeping an eye on the estate tax sunset in particular. But the uncertainty shouldn’t stop you from working with your clients on their charitable giving plans. Here are three techniques for working with philanthropic clients that are important to consider, regardless of what happens with the estate tax:  

Pair up a designated fund with QCDs for clients over 70 ½. 
If your client has supported a particular nonprofit organization for many years, intends for that support to continue, and also wants to be sure that the funds are used effectively, a designated fund at GWCF could be the perfect fit. Your client can make tax-deductible gifts – during life and through estate gifts – that are set aside to be used exclusively for a particular organization. The Community Foundation makes distributions from the fund according to the client’s wishes. An advantage of a designated fund is that the assets are out of creditors’ reach if the nonprofit organization were to run into financial trouble. Plus, a client who is 70 ½ or older can make Qualified Charitable Distributions up to $108,000 in 2025 from IRAs to a designated fund. 

Help clients deploy their retirement accounts to leave a lasting legacy.
If your client intends to provide for nonprofit organizations in an estate plan and owns an IRA or other qualified retirement plan, it’s a good idea to explore the possibility of establishing and naming a fund at the Community Foundation as the beneficiary of that plan. Your client achieves extremely tax-efficient results. Certainly, estate tax is avoided on the retirement plan assets flowing to the charitable fund, but even if estate tax is not an issue for the client, income tax is also avoided. Indeed, the income tax hit on retirement proceeds left to heirs can be steep. 

Consider a donor-advised fund.
Especially if your client supports many different nonprofit organizations every year, a donor-advised fund at the Community Foundation can be an excellent tool to help a client organize their giving to favorite nonprofits, such as local organizations, places of worship, or an out-of-state alma mater. Clients appreciate how easy it is to support multiple nonprofits while the Community Foundation’s systems and structures keep track of everything. Plus, clients can give stock and other appreciated assets to their donor-advised funds, often avoiding capital gains tax and simplifying tax receipts to provide their accountants when tax time rolls around. 

As always, our professional staff is here to assist! We look forward to working with you and your clients to support the causes that mean the most to them. 

As you’ve no doubt noticed, 401(k)s are growing. That means many of your clients may have even more capacity to structure their charitable giving in tax-savvy ways using their retirement accounts as a catalyst. Get in touch with the professional staff at GiveWell Community Foundation to explore just how powerful these assets can be to achieve clients’ philanthropic goals while also aligning with their estate and financial plans.

As a professional advisor, you’ve probably seen the news that the number of 401(k) accounts with balances topping $1 million had risen by 9.5% to 544,000 as of the third quarter of 2024, up from 497,000 in the second quarter.

Notably, many of these 401(k) accounts wind up in IRA rollovers. Indeed, an estimated 10 million rollovers occurred last year with assets totaling more than $1 trillion rolling into new employer-sponsored plans or IRAs, fueled in part by workers changing jobs on average every four years. What this means for your work with clients is that you’ll want to be sure to identify and keep track of all retirement accounts and evaluate the most optimal disposition for each through a client’s estate plan.

The growth of 401(k) accounts and IRAs also translates to more opportunities for charitable giving among your philanthropic clients. Here’s why:

• Although a charitable bequest of any type of property can help achieve a client’s estate planning and legacy goals, retirement accounts are especially powerful. When your client names a public charity, such as a donor-advised or other fund at the Community Foundation, as the beneficiary of a traditional IRA or 401(k), your client achieves extremely tax-efficient results. That’s because the charity does not pay income taxes (or estate taxes) on those assets. By contrast, if the client were to name children as beneficiaries of an IRA, for example, those IRA distributions to the children are subject to income tax (and potentially estate tax), and that tax can be hefty given the tax treatment of inherited IRAs.

• If your client is deciding how to dispose of stock and an IRA in an estate plan and intends to leave one to children and the other to for charitable purpose, leaving the IRA to charity and the stock to children is a no-brainer. Remember, the client’s stock owned outside of an IRA gets the “step-up in basis” when the client dies, which means that the children won’t pay capital gains taxes on the pre-death appreciation of that asset when they sell it.

• Additionally, clients who are 70 ½ or older can make tax-efficient gifts directly from an IRA to a qualified charity (including certain types of funds at the Community Foundation other than donor-advised funds), up to $108,000 in 2025. This is known as a “Qualified Charitable Distribution.”

The Community Foundation is always happy to work with you to ensure that your clients are maximizing their assets to fulfill their charitable giving goals, both during their lives and through legacy gifts. Want to know more? Let’s start the conversation!

It’s common for clients and their families to wonder where to begin as they think about incorporating charitable giving into their plans in a meaningful way. GiveWell Community Foundation can help get everything organized! With lots of options to choose from, our professional staff can provide options for a roadmap to help your clients achieve both their financial and charitable goals.

Leaving a charitable legacy is often a priority among high net-worth families. But for attorneys, CPAs, and financial advisors who serve those families, fulfilling this client priority is sometimes easier said than done. That’s because it often seems like there are so many moving parts, ranging from legal structure, advisory roles, bequests, and savvy grant making.

The best place to start? Helping your clients get organized.

Many families make it easier on themselves by organizing their charitable giving through a family donor-advised fund at the Community Foundation. The process of organizing charitable giving itself creates much-needed clarity around the family’s philanthropic purpose, goals, and passions. This is because without an organized approach to family giving, children and grandchildren may lack understanding about their parents’ and grandparents’ processes for making decisions about which nonprofits to support.

Consider this scenario:

“Before we got everything organized through the Community Foundation, our family seemed to take a shotgun approach to charitable giving,” commented the daughter of an entrepreneur who formed a family donor-advised fund leading up to the sale of a business.

Her mother, the entrepreneur, had underestimated the confusion: “Nearly every check I’d ever written to a nonprofit organization was aligned with my commitment to supporting a healthy workforce in our community. Without a healthy workforce, my business would never have been successful. Now, though, I see that because I was not involving the rest of my family in my giving and explaining why I was supporting certain causes, it might have looked chaotic to them.”

Establishing a charitable fund at the Community Foundation can be a very effective solution for many of your clients who are launching a multi-generational giving strategy. Here’s why:

• Community Foundation services are extremely flexible, personalized for each fundholder and can be used to engage multiple generations of family in the process of charitable giving. Donor-advised funds, for example, are popular because they allow your client to name children and grandchildren as successor advisors.

• When your client organizes charitable giving through a Community Foundation donor-advised fund, the client can make a large transfer of cash or marketable securities that is immediately eligible for a charitable deduction. Your client then can recommend gifts to favorite nonprofit organizations from the fund when the time is right. This is especially useful in the case of clients who sell a business, receive a bonus, or for another reason experience a large influx of taxable income in a single tax year.

• Establishing a donor-advised fund at the Community Foundation can be a much better choice for your family-oriented clients than a donor-advised fund offered through a national or commercial donor-advised fund sponsor. That’s because at a Community Foundation, your clients, as well as their extended family, are part of a community of giving and have opportunities to collaborate with other donors who share similar interests.

• The Community Foundation can work with a client and the client’s family on a charitable giving plan that extends for multiple future generations. The experienced team of philanthropic advisors at the Community Foundation supports strategic grant making, family philanthropy, and opportunities to gain deep knowledge about local issues and nonprofits making a difference.

• Finally, the Community Foundation’s tools, resources, and record-keeping make it much easier for families to communicate across generations about the family’s charitable giving purpose and goals for long-term impact.

We welcome the opportunity to work with you and any of your philanthropic clients to establish an enduring and rewarding family philanthropy program that is customized to meet each client’s unique purpose.

You understand your clients, and we understand philanthropy. Let’s connect.

As tax time approaches, you may encounter one or more of three scenarios related to the timing of IRA distributions, business succession planning, and opportunities to give appreciated stock. To help, GiveWell Community Foundation offers insights in a “if this, then that” mini case study format.

As professional advisors, you are well aware that you have clients’ attention when tax season rolls around. This makes it a great time to cover tax planning strategies for the current year and beyond. To help incorporate charitable giving topics into your tax season client conversations, we’ve put together tips to address three scenarios where the Community Foundation can assist your efforts.

Evaluate QCDs sooner rather than later. 

If: Your client missed the 2024 deadline for a Qualified Charitable Distribution.

Then: Make sure the client took an RMD for 2024 (if required to do so). Start planning now for 2025 QCDs, paying very close attention to the required process. A QCD is an excellent tool for your clients who’ve reached the age of 70 ½ to give to a designated, field-of-interest, or unrestricted fund (donor-advised funds are not eligible), but if the client waits until the last minute at year-end, there might not be time for the transaction to be completed by December 31 as required. Plus, QCDs executed early in the year can help avoid negative effects of the “first-dollars-out rule” so that the QCD can count towards your client’s 2025 RMD.

Watch for charitable giving opportunities in business succession planning.

If: Your client is beginning to consider exit strategies for a closely-held business.

Then: Reach out to the Community Foundation right away. Gifts of closely-held stock to a charitable fund can be a very useful component of a business succession plan. That’s because a client can gift shares of the business, which in turn means that no capital gains tax will apply to the gifted portion when the business eventually sells. The proceeds of the gifted shares flow into the fund to be used for your client’s charitable priorities. Keep in mind that timing is crucial; if a deal is in the works at the time the shares are transferred to the charitable fund, the charitable deduction is in jeopardy.

Consider gifts of appreciated stock early in the year.

If: Your client’s stock portfolio made big gains last year.

Then: Evaluate whether it might be wise to make gifts of appreciated stock to a fund at the Community Foundation early in the year, rather than waiting until the end of the year. If certain stock positions are high right now, it’s worth considering whether a gift in the very near future could be a good move to maximize charitable dollars. As a reminder, gifts of stock to a public charity are eligible for a charitable deduction in the amount of the stock’s fair market value at the time of transfer. And, when the stock is sold so that its proceeds can be deployed to further your client’s charitable goals, no capital gains tax will apply.

Our goal is to be your go-to sounding board for any client situation where charitable giving is an option. Please reach out anytime you and a client are discussing philanthropy. In most cases, the Community Foundation can help. Even if our tools are not a fit, we will point you in the right direction!