Tax Changes make NOW the Time to Consider the Community Foundation for Your Clients
2013 may pose a far different tax picture than we will experience in these last months of 2012. Bush -era tax cuts may expire; they may be modified; or they may be extended. Options # 1 and #2 will mean your clients will face hikes next year on ordinary income, capital gains, dividends, and estate and gift taxes.
If you have clients holding significantly appreciated stocks or other assets that they are thinking about selling, consider advising them to act this year as the capital gains rate may increase dramatically next year. If you have explored what we call "the soft side" of financial planning with them and have discovered that they are already charitably inclined, you can add great value to your relationship with them by suggesting that they gift these appreciated stocks and assets through the community foundation here. Further, maximizing deductions in the last few months of 2012, especially charitable deductions, is suggested in light of proposed caps on charitable deductions next year.
Whether they set up a fund at a community foundation, or donate to an existing fund here (i.e. animal welfare, education, arts/culture, community impact), their investment grows tax-free and with a donor advised fund your client can select the charities to which contributions are given. An added benefit to them is the ability to take the full tax deduction the year in which the gift is made, and then taking years to pay it out to charities they select as needs and special projects arise.
The community foundation can handle non-cash as well as cash assets to fuel a fund. Clients who own closely-held companies, but may have few liquid assets, may consider donating company stock, valued for tax purposes, and re-purchased from the Foundation by the company at fair market value. The proceeds could then be placed in a fund in your client's name and used for charitable purposes according to the client's interests and favorite charities, either here locally or elsewhere in the nation.
Clients who may have a private foundation will find compelling reasons to either sunset their foundation into a donor advised fund or establish a fund through a grant from the foundation to help satisfy the annual 5% payout rule.
Let the community foundation help you add even greater value to your relationship with your clients. Give us a call at (912) 268-4442 or email lowen@coastalgeorgiafoundation.org