“Charitable Planning Opportunities”
Just as art often imitates life, so too does the charitable planning process reflect life’s experiences.
In recognizing charitable planning opportunities there are certain defining moments or situations that may call for unique planning solutions.
Sometimes the client will be aware of these situations, but more often than not it will be up to the professional advisor to explain and recommend options that open a discussion with a client about using charitable planning to help solve an estate, tax and/or financial planning problem.
Charitable planning opportunities tend to fall into four broad categories. Often they overlap, giving the professional advisor a range of options from which to choose.
Some of these include:
Sale or Disposition of Highly Appreciated Capital Asset
Many high-net worth clients usually have the bulk of their assets tied up in a very small number of assets. Perhaps it is a closely held family business or a family farm or other real estate holdings. The client might hold a number of stock options that are ready to mature, or the client may own marketable securities that have a low cost basis and significant capital appreciation. Regardless of the asset, the client may be in a position to unlock some of the appreciation, eliminate the capital gains tax and create a philanthropic masterpiece through the use of charitable planning strategies.
Need to Generate Income for Self or Others
The past ten years have seen unprecedented growth of personal wealth in the form of portfolio appreciation. However, when the clients seek to re-shuffle their asset allocation to produce more income and diversify their portfolios, they will be hit with a substantial tax on their gains. This gives advisor and client a chance to be creative in their approach to converting paper gains to cash flow, saving taxes, and turning non-deductible items into tax deductible ones while addressing charitable objectives.
Estate Planning
Perhaps the most opportune time to talk with a client about charitable planning strategies is when doing estate planning. Based on the current status of the federal estate and gift tax system, clients in the top brackets could pay as much as 55% in federal estate taxes plus income tax on IRD assets as well as state inheritance, depending on the state in which they live and/or own property at the date of death.
Philanthropic Planning
There are times when clients initiate the philanthropic planning discussion. It is at these times when the professional advisor can be most helpful to the client, since charitable intent and interest have already been expressed.
_____________________________________________________
The Art of Charitable Planning - See:
_____________________________________________________
Legal Disclaimer
The information provided herein is for informational purposes only and should not be interpreted to constitute legal and/or tax advice. Donors and other interested parties should consult their legal and tax advisors regarding their specific situations.
_____________________________________________________
Copyright. The Forum of Regional Associations of Grantmakers 2000.
