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Tax laws and the great unknown and tips for client conversations
Greetings from the Peninsula Community Foundation!
As the end of the year draws closer, we’re looking forward to working with so many of you to structure and fulfill your clients’ charitable giving goals for 2024. The community foundation is honored to be your very first call whenever the topic of charitable giving pops up during client conversations. What’s really exciting is to hear from attorneys, CPAs, and financial advisors that you’re no longer waiting for the topic to pop up because you’re bringing it up yourself! |
Here’s what’s trending this month:
In this issue we’re diving deeper into two topics:
Thank you so much for the opportunity to work with you and your charitable clients. It is our honor and pleasure! We look forward to your emails and phone calls as 2024 winds down, and we’re excited about continuing our conversations in 2025 and beyond.
- Our hearts go out to the millions of people affected by Hurricane Helene. Community foundations in the affected areas and across the country are making it as easy as possible to donate to relief efforts. Please contact the team at the community foundation to learn more about how you and your clients can help.
- Make a note on your calendar of these key dates that may be relevant to your clients, including National Estate Planning Awareness Week during October 21 - 27, National Philanthropy Day on November 14, and Giving Tuesday on December 3. These well-publicized events make it even easier to bring up charitable planning during client conversations.
In this issue we’re diving deeper into two topics:
- Election year dynamics make it even harder to predict potential changes to tax laws that could impact your clients’ charitable giving plans. The community foundation offers high-level observations about the major areas of tax policy that could be impacted by election results. As always, we’re committed to keeping you up to date, even in the absence of a crystal ball.
- Clients expect you to ask them about charitable giving. “Oh, I do that,” you might say to yourself. But don’t be so sure! Clients may have a different impression. The community foundation offers simple tips and techniques to help you meet clients’ expectations for including philanthropy in the conversation.
Thank you so much for the opportunity to work with you and your charitable clients. It is our honor and pleasure! We look forward to your emails and phone calls as 2024 winds down, and we’re excited about continuing our conversations in 2025 and beyond.
Michael Monteith
CEO, Peninsula Community Foundation of Virginia
CEO, Peninsula Community Foundation of Virginia
How election outcomes might impact philanthropic planningHumans crave certainty, and that is certainly not what we have right now during election season, especially where taxes are concerned.
Your clients who support charitable causes may be wondering how the election outcomes might impact their philanthropic plans. You’re probably wondering that, too! Of course, no one has a crystal ball. It is impossible to predict tax law changes, and that will still be the case to some extent even after the elections. So much can change between a tax proposal and what is ultimately enacted into law. Still, you’d at least like to have a general idea. In that spirit, let’s break down at a very high level where the proposals are trending and what might happen with charitable giving depending on the outcome of the November elections. |
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Capital gains tax
As always, the team at the community foundation stays on top of legal developments impacting techniques that are a good fit for your clients’ charitable planning. We’ll keep you posted during election season and throughout the year.
- Donald Trump has not yet formally proposed a new tax policy on capital gains.
- Kamala Harris has called for an increase on the top long-term capital gains tax rate to 28% for taxable income above $1 million. This change could translate into more incentive to give appreciated assets to funds at the community foundation and other charities.
- Trump could make income tax cuts permanent. These cuts are currently subject to next year’s scheduled sunsetting of provisions in the 2017 Tax Cuts and Jobs Act. Note that in this scenario, the higher standard deduction under the Act would presumably continue, reinforcing what many have observed as a chilling effect on charitable donations.
- Harris has proposed expanding several tax credits, but it is still unclear whether the higher standard deduction would be allowed to sunset.
- Trump has indicated that he will prevent the estate tax cuts (i.e., higher estate tax exemption) from expiring.
- Harris appears to signal that she would increase estate taxes, perhaps leaning toward the policies laid out in President Biden’s Fiscal Year 2025 Budget Proposal, which modeled tightening the estate tax. If the estate tax exemption were to drop according to the sunset provisions under current law, or if other changes were to increase the estate tax, high net-worth taxpayers would have a greater tax incentive to make large charitable gifts and bequests.
As always, the team at the community foundation stays on top of legal developments impacting techniques that are a good fit for your clients’ charitable planning. We’ll keep you posted during election season and throughout the year.
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At a loss for words? Tips for starting a charitable giving conversation
Attorneys, CPAs, and financial advisors certainly are not strangers to tough questions. Indeed, the mix of money, family, and mortality is a potent combination that almost always creates an emotionally-charged planning environment, whether the matter at hand is tax planning, updating wills and trusts, or structuring retirement portfolios.
Why, then, are so many advisors reluctant to bring up charitable giving during client meetings when the topic itself is so uplifting? In some cases, you may feel like you don’t know enough about the technical tax planning aspects of charitable giving to be able to offer sound advice. In other cases, you may be concerned about taking the planning process off course into areas where the client doesn’t want you involved. Or maybe you don’t feel you have a good enough grasp |
of the client’s big picture to truly recognize opportunities for charitable planning that are a win-win for the client’s favorite causes and the client’s tax and financial plan.
Guess what? There is no need to worry! The community foundation has you covered. Consider the following:
Clients are expecting you to bring up charitable giving; studies reveal a disconnect between what clients and advisors assume and perceive. So, if you think to yourself, “Oh, I asked about that,” think again because the client may disagree. Did you approach the question with sincere interest, or were you just checking a box?
What’s important here is that the community foundation team is your technical back up! You absolutely do not need to know the ins and outs of the charitable deduction rules, the details of Qualified Charitable Distributions. If you’ve built an expertise around charitable giving in your practice, that’s terrific, but it is not necessary. Our team is just an email or a phone call away. Please reach out the moment a client expresses interest in charitable planning. We’re happy to support you and be part of the team to meet the client’s objectives.
And this does not need to be hard.
While plenty of resources offer excellent suggestions for how to bring up charitable giving in conversations, many advisors tell us that they have to keep it even more simple. We understand that you don’t have time to ask a briefcase full of questions. That does not mean, however, that you can’t have a meaningful conversation. Even just two minutes is plenty if you show genuine interest in the client’s intentions and connect the client to us.
For example, the charitable planning part of a client meeting could be as simple as this:
“Okay! Now that we’ve taken a look at your retirement projections, beneficiary designations, and portfolio allocation, let’s check in on charitable giving. Bring me up to speed on your involvement with community organizations.”
Then, let them talk. If they’re not involved in any community organizations, they’ll tell you. And if they are, they’ll tell you that, too.
If the client is indeed involved in community organizations, let them know that you are happy to connect them to the team at the community foundation, or, better yet, tell the client that you’d be happy to invite a professional from the foundation to your next meeting. Your priority as their advisor is to bring professionals to the table to help achieve their charitable giving goals.
Of course, this sample dialogue is over-simplified for illustration purposes. But truly, it does not need to be much more complicated than that. Next time you meet with a client, give this simple approach a try. You might be surprised at how easy it is, and how much the client appreciates your interest in areas of their lives that go beyond dollars-and-cents transactions and legal documents. It is the community foundation’s honor to work with you and your charitable clients.
Guess what? There is no need to worry! The community foundation has you covered. Consider the following:
Clients are expecting you to bring up charitable giving; studies reveal a disconnect between what clients and advisors assume and perceive. So, if you think to yourself, “Oh, I asked about that,” think again because the client may disagree. Did you approach the question with sincere interest, or were you just checking a box?
What’s important here is that the community foundation team is your technical back up! You absolutely do not need to know the ins and outs of the charitable deduction rules, the details of Qualified Charitable Distributions. If you’ve built an expertise around charitable giving in your practice, that’s terrific, but it is not necessary. Our team is just an email or a phone call away. Please reach out the moment a client expresses interest in charitable planning. We’re happy to support you and be part of the team to meet the client’s objectives.
And this does not need to be hard.
While plenty of resources offer excellent suggestions for how to bring up charitable giving in conversations, many advisors tell us that they have to keep it even more simple. We understand that you don’t have time to ask a briefcase full of questions. That does not mean, however, that you can’t have a meaningful conversation. Even just two minutes is plenty if you show genuine interest in the client’s intentions and connect the client to us.
For example, the charitable planning part of a client meeting could be as simple as this:
“Okay! Now that we’ve taken a look at your retirement projections, beneficiary designations, and portfolio allocation, let’s check in on charitable giving. Bring me up to speed on your involvement with community organizations.”
Then, let them talk. If they’re not involved in any community organizations, they’ll tell you. And if they are, they’ll tell you that, too.
If the client is indeed involved in community organizations, let them know that you are happy to connect them to the team at the community foundation, or, better yet, tell the client that you’d be happy to invite a professional from the foundation to your next meeting. Your priority as their advisor is to bring professionals to the table to help achieve their charitable giving goals.
Of course, this sample dialogue is over-simplified for illustration purposes. But truly, it does not need to be much more complicated than that. Next time you meet with a client, give this simple approach a try. You might be surprised at how easy it is, and how much the client appreciates your interest in areas of their lives that go beyond dollars-and-cents transactions and legal documents. It is the community foundation’s honor to work with you and your charitable clients.
The team at the community foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.
For more information about establishing a fund, please contact [email protected]/757.327.0862
