A few issues worth discussing are:
- Do current provisions still align with your clients’ wishes for their family?
- Are your clients leveraging all of the available gift tax exclusions?
- Are your clients’ charitable provisions still appropriate for their intentions?
Communities Foundation of Texas can be a great partner as your clients evaluate their estate plans, specifically with their philanthropic giving. Below are a few examples of the ways working with CFT can help with your clients’ year-end review:
How can clients streamline and tax-optimize their charitable giving?
Donor-advised funds: If you have a client that is passionate about supporting multiple charities every year, now is a good time to discuss how a donor-advised fund (DAF) at CFT can be an excellent tool for their giving. A DAF allows your client to organize their gifts to nonprofits including favorite local charities, places of worship, out-of-state alma maters, and even international nonprofits. CFT makes it easy for your clients as we handle the details and record keeping. Additionally, your clients can give stock and other appreciated assets to their DAF at CFT, often avoiding capital gains tax and simplifying tax receipts to provide their accountants.
How can clients support a specific charity while minimizing risk?
Designated funds and QCDs from an IRA: If your client has supported a specific charity for many years, intends for that support to continue and wants to be sure the funds are used effectively, a designated fund at CFT could be a great solution. Through a designated fund, your client can make tax-deductible gifts, both during their lifetime and through estate gifts, that are set aside to be used exclusively for a particular organization. CFT will make distributions from your client’s fund according to their wishes. One advantage to this type of fund is that the assets are out of creditors’ reach if the charity should run into financial trouble. Plus, a client who is 70 ½ or older can make Qualified Charitable Distributions (QCDs) up to $105,000 per year (increasing to $110,000 in 2025) from IRAs to their designated fund.
How can a charitable bequest help clients reap significant tax benefits?
IRAs and retirement plans: If your client intends to provide for charities in an estate plan and owns an IRA or other qualified retirement plan, naming a fund at CFT through a beneficiary designation achieves extremely tax-efficient results. Your client will avoid estate tax on the retirement plan assets flowing to the charitable fund, but it also spares any heirs an income tax event on the proceeds.
If your clients are contemplating any sort of charitable giving, please reach out to CFT. We can work with you both to determine solutions that meet your clients’ tax and estate planning goals and achieve their objectives for supporting their favorites charities. Contact Morgan Richards for more information on how CFT can partner with you and your clients prior to, and after, year-end.
