When Giving Meets Change: Taxes, Trusts, & Transitions

Your May Content

As the pace of the season begins to slow in our region, it offers a timely moment to reflect, recalibrate, and focus on thoughtful planning conversations. Whether you’re navigating clients’ complex life events, exploring advanced planning strategies, or responding to changes in the tax landscape, your role is critical in shaping outcomes that benefit both your clients and the community.

This month, we’re taking a closer look at three topics that may be gaining traction in your client conversations.

• Tax Season Offers an Opportunity For Conversations. You may already be well-versed in recent tax law changes, but many clients are just now starting to pay attention. Keep updated on key developments affecting charitable giving and practical reminders to help guide your client conversations in a shifting landscape.
• What Happens to Charitable Assets in a Divorce? Philanthropy is deeply personal—but in a divorce, charitable assets can raise complex legal and financial questions. It’s important to consider how charitable vehicles may be treated when a marriage ends and how proactive planning can help avoid surprises.
• Planning with Charitable Lead Trusts. Charitable lead trusts may not come up often, but are getting renewed attention, especially because of a recent IRS ruling, as a vehicle that can help clients achieve both charitable and estate planning goals.

As always, it is our honor to be your first call when matters of charitable giving arise during your client meetings. Gulf Coast prides itself on being your resource in the community for charitable planning and giving. It is our pleasure to work with you and your clients to help improve the lives of everyone who lives here.

Tax Season Offers an Opportunity for Conversations

For many attorneys, CPAs, and financial advisors, the tax law changes under the One Big Beautiful Bill Act are old news. That is not the case for many of your clients! While you’ve been busy reading dozens of articles and evaluating how the changes will impact your clients, many of your clients are just now learning about the changes, especially as issues came to the forefront for them during tax season. Even if you’ve been talking with clients about the changes for months, don’t stop. For many clients, now is the first time they’ll really be listening.

Here are five things to know:

• Mainstream media is picking up the pace in its coverage of charitable planning techniques. For example, the Wall Street Journal recently published an article about donor advised funds as a tool for tax savings and community impact. Many clients may not realize that Gulf Coast offers donor advised funds, along with other options for structuring a charitable giving plan to support their favorite causes and address critical community issues. Be sure to reach out to Gulf Coast whenever a client asks you about setting up a donor advised fund.  
• Thoughtful planning is especially important in light of the new floor on itemized charitable deductions. Starting in 2026, to be eligible for a deduction, a client’s qualified deductions must exceed 0.5% of adjusted gross income, essentially raising the threshold at which charitable giving produces a tax benefit. This could make it advantageous for some of your clients to “bunch” charitable contributions through a donor advised fund, allowing the client to front-load donations into a single tax year to cross the threshold.
• At the same time, under a “cap” provision in the new law, if a client is in the 37% federal income tax bracket, itemized charitable deductions are now capped at the 35% tax rate. In simplified terms, depending on other factors, this means that if a client donates $10,000, the tax break would be $3,500 instead of $3,700. In short, the floor and the cap add extra complexity to helping clients plan their charitable contributions.
• The new tax laws have changed the landscape for not only your clients who itemize deductions but also for those who do not itemize. Non-itemizers are now eligible for an “above the line” deduction of $1,000 for single filers and $2,000 for joint filers. Be aware, however, that the new deduction for non-itemizers does not apply to noncash gifts or gifts to donor advised funds. Because both noncash gifts and gifts to donor advised funds are important tax planning tools for many clients, this limitation is worth noting in your discussions.
• Finally, remember that donating appreciated stock held for more than one year is usually more tax-efficient than writing a check. That’s because it allows your client to avoid capital gains tax on the appreciation. What’s more, clients who itemize deductions will be eligible to claim a tax deduction for the full fair market value.

What Happens to Charitable Assets in a Divorce?

As you work with charitable clients over the course of your career, you’ll likely help dozens of married couples establish donor advised funds and other types of funds at Gulf Coast, structure charitable gifts in wills and trusts, establish charitable remainder trusts, and everything in between.

But what happens to charitable assets in the event of divorce? Over the last few years, in the wake of high-profile divorces, more and more advisors have been pondering this question. It’s certainly worth considering so you can be prepared if–and likely when–you encounter such a situation. It’s especially important as women play an increasingly important role in a couple’s philanthropy. Read our blog to learn how your awareness of women in philanthropy trends can apply to your day-to-day practice by clicking the button below.

From a legal standpoint, charitable giving during marriage is not purely personal—it is often subject to the same rules that govern other marital assets. In community property states, for example, assets acquired during marriage are generally considered jointly owned, and spouses owe fiduciary duties to one another regarding the use of those assets.

The implications extend beyond outright gifts. Philanthropic vehicles such as donor advised funds, private foundations, and charitable trusts can also become points of negotiation in divorce. These structures may no longer be considered part of the marital estate once funded, but questions about control, governance, and ongoing advisory privileges can still create tension between spouses.

For attorneys, CPAs, and financial advisors, the takeaway is clear: charitable planning does not exist in a vacuum. Conversations about significant gifts, especially those made during marriage, should include coordination with legal counsel and, where appropriate, documentation of mutual intent. Encouraging clients to align on charitable decisions in advance can help avoid disputes later and preserve both financial and philanthropic goals.

Planning with Charitable Lead Trusts, Rare but Useful

Charitable lead trust is far from a household phrase. This article will only focus on non-grantor charitable lead trusts vs the more popular grantor lead trust.

You may not run across the need for one very often in your practice. However, in certain client situations, they can be an attractive giving tool. At Gulf Coast, we can establish a donor advised fund or another type of fund to serve as the income beneficiary of a charitable lead annuity trust (CLAT) established by a client.

It’s worth briefly reviewing the basics of a CLAT because they are having a moment!

Here’s what’s going on:

• The Internal Revenue Service issued Private Letter Ruling 202614004 on April 3, 2026, addressing whether a CLAT can be terminated early by accelerating its remaining payments to charity.
• The ruling involved a CLAT that so significantly outperformed expectations that the trustee proposed distributing all remaining annuity payments in a lump sum to a donor advised fund and then winding down the trust.
• The IRS concluded that this early termination would not trigger self-dealing penalties, would not be treated as a taxable expenditure, and would not result in a termination tax, largely because the payment was made to a qualified public charity and fulfilled the trust’s charitable purpose.

Of course, as is the case with all private letter rulings, PLR 202614004 represents the IRS's non-precedential interpretation of tax law and is binding only between the IRS and the specific taxpayer who requested the ruling. Still, private letter rulings are often cited to show the IRS's probable position.  

So why is this seemingly obscure private letter ruling relevant as an indicator of the IRS’s likely position in similar future situations? Here’s why:

• CLATs are generally subject to private foundation rules, including strict prohibitions on self-dealing with “disqualified persons.” In this instance, however, the IRS emphasized that a public charity (including a donor advised fund sponsor) is not considered a disqualified person for these purposes, allowing the accelerated payment without adverse consequences.
• PLR 202614004 highlights that charitable planning vehicles like CLATs may offer more flexibility than previously assumed, particularly when circumstances change or when a trust significantly outperforms projections. What’s more, the ruling reinforces the importance of understanding how technical rules—such as self-dealing restrictions—apply differently depending on the type of charitable recipient involved.

Charitable lead trusts are extremely complex and can be structured in different ways to achieve a client’s specific tax objectives.

Charitable lead trusts are extremely complex and can be structured in different ways to achieve a client’s specific tax objectives.

A client like this could establish a non-grantor CLAT and name a donor advised fund at the community foundation as the income beneficiary. The CLAT would make fixed annual payments to the donor advised fund for a term of years. The donor advised fund, in turn, could support the client’s favorite charities via the client’s grant recommendations. Gulf Coast generally recommends that the grantor not serve as the sole advisor to the DAF in this structure. While permissible, doing so may invite additional IRS scrutiny, particularly if the arrangement appears to allow the grantor to retain excessive influence over the ultimate charitable distributions. In certain cases, this could raise questions regarding the completed gift nature of the CLAT or potential private benefit concerns.

Instead, naming children or other independent parties as advisors to the DAF or establishing a clear succession plan can help reinforce the charitable intent of the structure, reduce perceived retained control, and strengthen the overall defensibility of the arrangement.

At the end of the trust term, any remaining assets in the CLAT would pass to the client’s children or other heirs, often without triggering additional gift or estate tax, assuming the trust was structured properly and investment performance meets or exceeds IRS assumptions.

For clients who want to enjoy charitable giving during their lifetimes and reduce estate and gift taxes on highly appreciating assets, a CLAT is worth a look.

Remember that a CLAT is just one of several charitable giving vehicles through which Gulf Coast can help your clients achieve their charitable and estate planning goals. As always, please reach out to our team when working with a charitable client, regardless of where that client is along the charitable giving journey.