As the days are getting shorter, we’re already hearing from attorneys, CPAs, and financial advisors that you’re ready to get a jump on year-end charitable planning for your clients.

In the spirit of staying ahead of the curve, we’re covering three topics this month that can help you as you begin to talk with clients about the remaining “must-do” items for 2024, including charitable giving.

  1. Procrastination is a very common human reaction to tasks that seem daunting. Estate planning, tax planning and financial planning can sometimes fall into this category. Unfortunately, clients who put things off for too long often miss out on opportunities to further their goals. San Diego Foundation (SDF) offers tips for using charitable giving as a “gateway” topic for bigger conversations about essential year-end planning.
  2. Your clients who are business owners and philanthropists will appreciate your suggestions about incorporating charitable giving into their succession plans. This is a good time to have that conversation, given legal developments and upcoming tax law changes.
  3. As always, SDF stays on top of trends that impact your work with charitable clients. We’re sharing updates so you can stay current on popular planning techniques, how the election year may influence charitable giving, and what’s ahead on the calendar to help motivate your clients to complete their planning to-do lists.

Thank you for the opportunity to work together. We are grateful.

Charitable Planning Can Help Ease Client Procrastination

Procrastination is a drain in ways that go far deeper than the incomplete task itself. We know this intellectually, but it can be so hard to break the procrastination habit. It seems that the more daunting the task, the harder it is to tackle.

This surely is a major reason some of your clients routinely put off important planning discussions. And of course, many of those discussions are tax-sensitive, which means year-end can get very hectic and stressful for clients who wait until the last minute.

Advisor with couple

As the year begins to wind down, consider tapping into your clients’ philanthropic interests as a catalyst to motivate them to start addressing year-end planning items right now rather than waiting until November or December. You may discover that the uplifting topic of philanthropy makes it easier to at least start a conversation. Then, the conversation can evolve to include not only charitable giving topics but also other tax planning topics that need attention.

Here’s how this could work with a client:

  • Review the charitable components of your client’s estate and financial plans, including provisions in wills and trusts, beneficiary designations, donor-advised funds (DAFs), prior years’ tax deductions, and historical gifts to favorite charities.
  • Reach out to your client to suggest that you meet–or at least jump on a call–to discuss 2024 charitable giving plans and other items.
  • Open the conversation by briefly recapping the charitable planning components already in place and your client’s history of giving. Then ask the client about their plans for 2024.
  • As you talk with the client about charitable intentions, bring up various charitable giving tools and opportunities that match those intentions. In each case, use the charitable discussion as a springboard for general tax planning items that need to be addressed before year-end.
  • For example, if a client who is over 70 ½ mentions wanting to support a particular need or organization in San Diego, you can suggest that you loop in the SDF team to potentially establish a field-of-interest or designated fund, which can then receive distributions from the client’s IRA up to $105,000 annually per spouse. This, in turn, opens the door to discuss Required Minimum Distributions and other elements of retirement planning in general.
  • If your client mentions that they are already dreading gathering tax receipts for 2024 charitable donations, suggest that the client consider setting up a DAF at San Diego Foundation to serve as a convenient and rewarding “hub” for charitable giving. Going forward, the client can conduct the bulk of their giving using the donor-advised fund and avoid the mad scramble for receipts. If the client already has a donor-advised fund, make sure they know how to use it most effectively and reach out to SDF for help. What’s more, discussing charitable donation receipts presents a nice opening to remind a client about other paperwork that may need to be gathered or completed to meet overall estate and financial planning goals.
  • When your client talks about charities they plan to support before year-end, remind your client not to automatically reach for the checkbook. Most of the time, highly-appreciated marketable securities (or other highly-appreciated, long-term assets) are ideal gifts to a client’s fund at San Diego Foundation or other public charity because the client is eligible for a tax deduction at the assets’ fair market value, and the proceeds from the sale of the assets will flow into the client’s fund at SDF free from capital gains tax. That means more funds are available to support your client’s favorite causes. Conveniently, the conversation about highly-appreciated stock can segue naturally into a conversation about overall stock positions.
  • Philanthropy topics can naturally lead to even more topics that are sensitive to year-end timing, such as annual exclusion gifts, estimated tax planning, and updating wills and trusts before the extended family gathers for the holiday or travels together overseas.

SDF is here to help you serve your charitable clients every step of the way, every month of the year. We understand that late-December transactions are often unavoidable. The net-net is that we’re happy to work with you according to your clients’ schedules, whether that means getting a jump on a new year and processing stock gifts in February, helping you plan in September for year-end, or preparing fund agreements in December.

Closely-Held Stock is Having a Moment

Business owner with colleagues

Giving stock is an important strategy for any private business owner to explore. Not only can these gifts help implement a business succession plan that calls for transferring the business to the next generation if that is your client’s goal, but they can also help your business owner client achieve charitable goals and avoid estate tax.

In light of recent legal developments and pending tax law changes, more and more financial and estate planning advisors are encouraging their clients to consider implementing gifts of closely-held stock to a fund at a community foundation or other public charity. Notably, two developments could have a big impact on your work with these clients:

  1. The estate tax exemption sunset set to occur at the end of next year continues to loom large. Without intervening legislation, a lot more of your clients will need to wrestle with the reality that their estates likely will be subject to a hefty tax, causing many clients to rethink both the timing and methods to transfer business interests. Making gifts of closely-held business interests to a fund at SDF is likely to become more attractive to a broader cross-section of your client base.
  2. Valuation has always been a critical factor in any type of tax or estate planning. This is certainly still the case with substantiating the value of closely-held business interests that your clients transfer to a charity, such as a fund at SDF. And now, the additional wrinkle presented by the Supreme Court’s decision in Connelly v. United States makes things even more interesting. The Connelly decision impacts the way business interests are valued for estate tax purposes. In Connelly, the Supreme Court held that life insurance proceeds indeed ought to be included in the valuation of a company without offsetting the redemption obligation. This could translate to higher taxable estates for your business owner clients, creating a further incentive to leave a portion of closely-held stock to charity. The decision is also a reminder that careful planning can potentially avoid pitfalls.

Please reach out to us to learn more about how our team can help as you work with your business-owner clients to navigate legal and tax developments that could significantly impact future plans for their privately-held companies.

The San Diego Foundation team keeps a finger on the pulse of current events and legal developments that could impact the way you work with your charitable clients. Below are three notable items that you’ll likely want to keep in mind this fall.

Election year implications.

Naturally, as a financial, legal, or tax advisor, you’re very interested in how the results of the November elections could impact tax laws. What you might not know, though, is how significantly an election cycle can impact nonprofits’ fundraising efforts. Keep this dynamic in mind as you meet with clients who serve on nonprofit boards. These clients will appreciate the fact that you’re aware of the challenges. They’ll also be glad to know that you’re happy to loop in the SDF team as a resource to structure and accept complex gifts as charities double down on fundraising efforts this year.

Snapshot of giving trends.

If it feels like more clients are asking about giving techniques such as crowdfunding, using appreciated stock to support charities, and setting up donor-advised funds, you are not imagining it. These trends are real! It’s smart to stay up-to-date at a high level so that you’re generally aware of what’s going on with philanthropy. Beyond that, the only information you need is our phone number. We are honored to be your first call anytime a client mentions that they’d like to launch or update a charitable giving plan. In most cases, SDF can provide tools and services that will help your client achieve their goals. In any event, we’ll help you figure out a solution, whether or not we ultimately plays a role.

For your calendar.

If you’re in search of tools to help motivate clients to move forward with financial and estate planning, be sure to note that National Estate Planning Awareness Week is coming up. October 21 – 27, 2024 is this year’s designated timeframe to help the public understand the basics of estate planning and the reasons it’s so important. The original House of Representatives resolution includes key points that may spark messaging ideas for your client outreach. We’re happy to share best practices for encouraging clients to get serious about planning all aspects of their estates, including the legacies they’d like to leave to their favorite causes and the community they love.

Learn More

For nearly 50 years, we have partnered with an extensive network of wealth advisors, estate planning attorneys, tax planners and other financial advisors to help high-net-worth clients and families achieve financial planning objectives and charitable giving goals while maximizing tax deductions.

If you want to learn how we can help meet your clients’ financial planning and charitable giving goals in 2024, contact me at (858) 245-1508 or jrogers@sdfoundation.org.

Partner with SDF