Serve a Greater Purpose in Your Clients' Estate Tax Planning through Charitable Giving
Understanding your clients’ charitable giving goals is vital to successful estate tax planning. 2015 was America’s most generous giving year ever, according to a report by Giving USA Foundation. Last year Mark Zuckerberg and his wife, Dr. Priscilla Chan, pledged to use 99% of their Facebook stock “to join people across the world to advance human potential and promote equality for all children in the next generation.” In addition, according to the Case Foundation’s 2015 Millennial Impact Report, 84% of millennial employees made a charitable donation in 2014. Americans are more inclined to be charitable than ever before. No matter the walk of life, they are making significant societal impacts through charitable giving.
Chances are, many of your clients would like to give back but aren’t quite sure how to go about doing so or what charities they would like to benefit. They may also have concerns about how to ensure that they meet their own personal and family financial needs while still minimizing their estate tax exposure. It is definitely a balancing act, and as their estate tax advisor, they may look to you for thoughtful and insightful advice as to how to structure a plan that ensures the most tax advantageous approach and meets all of their objectives.
Start the Conversation
To fully understand what is important to your clients and to help them make the most of their charitable giving, it is essential to find out exactly what fills them with passion. Is it a local Humane Society, donating to low-income families, non-profit organizations, or aiding a cactus conservation organization? Once you’ve uncovered their interests and feelings surrounding a cause, you will be in a much better position to help them define targets aligned with their personal principles. An essential next step is to perform due diligence around your client’s designated giving targets, including confirming that the chosen charitable organizations are legitimate, reputable, and sustainable.
Determine Charitable Goals
Once your client has selected the charities to which they would like to donate, a well-crafted estate plan will be essential to effectively carrying out their intentions. Answers to the following client questions will be the foundation of that plan:
- How much do you want to donate to charity?
- How much of your estate would you like to preserve for your family, dependents, and other beneficiaries?
- When and how do you want to give to charity — during your lifetime, at death, or for a set time period?
- How important is minimizing estate tax exposure to you?
Don’t Overlook this Valuable Resource: the Charity Itself
Many major charities have a Charity Development or Planned Giving Department that specializes in helping donors structure their gifts in the most advantageous way. They not only work with donors, but also with their estate planning team of attorneys, accountants, and financial advisors to ensure the gift is directed appropriately and legally sound.
Formulate the Best Plan
In order to formulate a comprehensive estate tax plan that incorporates charitable giving, client philosophies, values, and goals must be considered. Many questions arise such as what assets to give and when to give them. Still another important question is how a gift to a charity is made. Will it be an outright gift or through a charitable trust? To determine the best options for your clients, it is important to consider and compare the details, subtleties, and estate tax consequences of various charitable giving strategies.
BNA Estate & Gift Tax™ Planner from Bloomberg BNA, with its built-in, accurate calculations, and up-to-date federal and state tax law, lets you easily model complex “what-if” planning scenarios, such as charitable giving through split-interest trusts. With a complete understanding of your clients’ interests and goals, you will be in position to provide a well-researched and comprehensive estate tax plan that will offer the peace of mind that goes with knowing their wishes will be fulfilled long after they’re gone.