Ingram's December 2022

A: Nothing significant. We’re looking at going into 2023, no significant changes are on the horizon, but like any year-end, there’s always an opportunity for individuals to take advantage of tax planning strategies. As part of the 2017 tax changes, we had an increase in the standard deduction, which resulted in fewer itemized returns, and a doubling of the estate-tax exemption; those are big changes that can create less incentive to make charitable or planned gifts at death. Frommy standpoint, I haven’t seen any large trend that way—people who want to make a gift are going to do it. The tax planning is great and should be part of the discussion, but people want to support things that are important to them. Bunching of charitable gifts have become more popular. A taxpayer who decides to make a gift to charity over multiple years can bunch that in one tax year so he can itemizes, then in subsequent years, use the standard deduction. Previously, you would have charitable gifts at the same amount each year, but the tax law suggest it may be better to bunch in one year. And the transfer of appreciated stock is always popular, are there appreciated stocks that can be given. A: That’s always an interesting part of our practice, dealing with multiple gen erations. For the senior generation, it’s part of the broader issue in terms of com municating to their kids the things that relate to their estate plan and their legacy. It’s hurdle for a lot of people to get over in terms of bringing their kids into the discus sion. Once they’ve cleared that hurdle, it’s easier to bring the kids into the fold on the more philanthropic side, because that’s part of the plan. When a client sets up a donor advised fund or private foundation, they’re instantly thinking about where their kids fit in, whether as trustees of the foundation or advisers on the donor-advised fund, decid ing what role their kids will play. If they are comfortable with having them take part, then yeah, it’s a process of getting them acclimated and educating them on what the family goals are and the types of organiza tions they’ll support. Q: What about the challenge of giv- ing on a family level?

the tax on those accounts. That’s a common theme when working with clients, to imple ment testamentary gifts structured through qualified-plan accounts. Q: Are gift amounts changing? A: We’ve seen that to be the case, in no small part because of how large IRAs are proportionally on people balance sheets, especially with recent retirees and the Baby Boomer generation. So there’s been growth in IRAs over the past 20 or so years, and with the numbers of employer-sponsored plans, remainder interests for beneficiaries have grown. You have a generation who has spent all these years in the work force and have these accounts that have grown tax-free over decades, and we’re seeing some huge retire ment accounts that make up the largest asset on people’s balance sheets. Planning for those accounts is a big part of what we do and our estate-planning process. If there are charita ble goals, it’s natural to look at those account as a way to facilitate charitable contributions. Q: Are you seeing significant shifts in the causes and organizations that rece ive funding from donors? A: Traditionally, a lot of our clients include their church or school or college they’ve attended or supported, or where their kids attended. Those are always going to be popular. What I think has been a trend since the pandemic, if you go back to that first summer with social unrest and issues, a number of natural disasters occurred, and more recently, the Ukraine war, we’ve seen the numbers reflect increased giving to human-service organizations and also environmental organizations. What you see is just with current events and what’s going on the world, people are responding to where the needs are and giving to those types of organizations. You’re always going to have causes that are deeply personal and important for individuals that are not driven by the news or what’s going on largely in society—it’s about their church, their school, organizations they have volunteer with are always important in giving.

“When a client sets up a donor-advised fund or private foundation, they’re instantly thinking about where their kids fit in.” — Joseph Growney Partner Lathrop GPM

Q: How are those dollars being directed? A: Certainly within donor-advised funds, we’ve seen an uptick in more spe cialized funds—faith-based, in particular. At the same time, we still see a number of private foundations being set up, especially with larger gifts, and if control by the family is a factor. A: The use of qualified plans and IRAs is a trend, as well as a smart tax strategy. If you’re using an IRA to make a qualified charitable distribution from the required minimum distribution, that is really smart tax planning for a lot of retirees. Also, using those same accounts and qualified plans to name charities as beneficiaries at death, because that’s also very tax efficient, as part of the overall estate plant to get more tax-free assets to families. With an IRA or qualified plan assets passing to charity, due to their tax-exempt status, charities won’t have to pay Q: Any looming changes on the tax front, or related guidance there?

Q: Anything looming on the tax front for donors?

51

I n g r a m ’ s

Kansas City’s Business Media

December 2022