A Note from Joe

I hope this email finds you and your loved ones well in the wake of recent hurricanes. As the year comes to a close, philanthropy begins to take center stage as many charitable organizations ramp up their event and solicitation efforts. 

Gulf Coast is dedicated to assisting you and your charitably inclined clients as 2024 comes to a close and they wish to maximize their impact! Keep an eye on important year-end giving dates as your clients consider the best way for them to give.

Year-End Giving Need to Knows

Your November Content

Now that the days are officially shorter, we are even more committed to staying on top of legal developments and curating content to save you time. We’re covering three topics in this issue that have risen to the top of our research:

- If you only have 60 seconds to get up to speed, check out our best practices for hurricane recovery, how your clients define “wealthy” and why it matters for their philanthropy, and important year-end giving reminders about ways Gulf Coast can help. All below!

- As we await what lies ahead regarding the expiration of the TCJA at the end of 2025, Gulf Coast offers factors to consider as you advise your clients … and as you continue to watch and wait.

- As our region continues to grow, your client base is more and more likely to include ultra high net worth families. It’s important to understand how multiple charitable giving vehicles, including a donor-advised fund at Gulf Coast as well as possibly a private foundation, play a role in a client’s overall philanthropy strategy.

Whether we are working together to structure a family’s donor-advised fund, a gift of real estate, endowed support for a favorite nonprofit, or a Qualified Charitable Distribution to a field-of-interest fund at Gulf Coast, our team enjoys and appreciates every minute. We love serving as your first stop for all things philanthropy.

A Quick Peek: Three Insights to Consider

You’re busy as 2024 draws to a close! The team at Gulf Coast is committed to researching, curating, and keeping you up-to-date on the latest trends and developments that could impact your clients’ charitable giving strategies. If you only have 60 seconds, we recommend scanning these three quick updates. 

Best practices for donating to hurricane recovery efforts 
As your clients continue to support hurricane recovery efforts, keep in mind that even in disaster response situations, tax rules still come into play. Make sure you’re aware of how the IRS addresses “qualified disaster relief” related to both donors and recipient charitable organizations. Please reach out to the team at Gulf Coast anytime to learn more about how your clients can ensure that their hurricane recovery dollars are making the biggest difference possible. When disaster strikes our region, we help facilitate charitable giving for rapid response to provide life-sustaining support.  And when disaster strikes elsewhere, we help support our Community Foundation partners across the country.  

Charitable giving can help bridge generations’ definitions of “wealthy”
The recently-released Bank of America Private Bank Study of Wealthy Americans is a must-read (or at least a must-skim) report because it offers insights into shifting views on wealth, and it also highlights a disconnect in inheritance expectations. Notably, younger individuals tend to rally around a definition of “wealthy” in terms of having the means to live a life of purpose and make a difference. Older generations are more likely to define “wealth” in financial terms. Important for charitable planning is the finding that older generations may not be planning to leave the inheritance that their children and grandchildren expect. Working with Gulf Coast to help clients establish a multi-generational charitable giving plan makes it easier to get expectations out in the open and keep the entire family meaningfully involved in the family’s wealth over the long term. 

Must-know tips for clients’ year-end giving 
We know you’ve got a lot on your plate as the end of the year approaches. Even if charitable giving does not appear on the surface to be a burning issue in client meetings, it’s still crucial that you keep in mind a few essential charitable giving techniques because your clients do care. Please scan these three important techniques, and please reach out to Gulf Coast on any matter related to charitable giving. 

1. Encourage clients to consider giving highly-appreciated stock, not cash, to their funds to their favorite causes including their donor-advised fund at Gulf Coast, thereby maximizing tax benefits.

2. Help clients evaluate a “bundling” or “bunching” technique to make gifts to a donor-advised fund at Gulf Coast, exceeding the currently high standard deduction to be able to itemize. Then, donor-advised fund assets can be used over the next few years to support clients’ favorite causes.

3. Help clients who are 70 ½ and older make Qualified Charitable Distributions (QCDs) directly from IRAs to designated, scholarships, or field-of-interest funds (donor-advised funds are ineligible recipients) at Gulf Coast–up to $105,000 per spouse. Plus, QCDs satisfy RMDs! 

Reach out to your Gulf Coast team today! November is the time to set things in motion so you don’t get caught up in the year-end rush. We are here for you.

What Now: The Election and What That Means for Philanthropy

Many eyes are on the election aftermath seeking clues about what might happen to the tax laws. Of particular interest is the much-analyzed sunset of the higher estate tax exemption, scheduled for the end of 2025 absent intervening legislation. “Absent intervening legislation” is the key, of course. The November 2024 elections will not immediately change estate tax laws, and it’s a long road from here to there.

That being said, it will be many months before we know the impact we’ll face as planners. With the estate tax exemption set to drop from $13.61 million per person in 2024 to approximately $7 million per individual on January 1, 2026, a lot is at stake. Should a high-net worth taxpayer start making aggressive gifts now to family members and a donor-advised or other type of fund at Gulf Coast, anticipating that the sunset will indeed occur? Or take a “wait and see” approach? 

Planning is further complicated by the dangers of waiting until the last minute. Not only is it tough to pull off a complex estate plan or business succession plan quickly, but it’s also dicey because the IRS likely will be on the lookout for situations to invoke the step transaction and reciprocal trust doctrines. 

So what can you do? First and foremost, if you are working with charitably inclined families who would be impacted by the estate tax exemption sunset, please reach out to us right away to start looking at options. And if you aren’t sure whether a client is charitably inclined, now more than ever it’s time you take a moment to ask the question. And the easiest way to ask is this simple statement, “many of our clients are interested to learn how charitable giving can reduce or eliminate tax liabilities via a variety of planning tools, would you be interested in learning more?” The stakes are too important not to plan for tax efficient gifting strategies.

We look forward to many conversations with you and your clients as estate tax developments unfold! 

Which Way To Go: Navigating Multiple Charitable Strategies

Charitable giving is always an important strategy to discuss with your clients. Many high net worth individuals are philanthropic and charitable gifts may reduce taxable income and avoid estate taxes. Charitable giving strategies are particularly relevant as you and your clients address the possibility of increases in income and capital gains taxes for high earners as well as increased estate taxes due to the looming exemption sunset.

What’s also notable is research indicating that the number of “ultra high net worth" families (over $30 million) has increased dramatically over the last two decades. Globally, 157,000 individuals represented $14.2 trillion in 2004 and by 2024, 426,000 individuals represented $49.2 trillion of wealth. Fast forward to 2027, and this group is expected to grow to over 500,000. America alone is home to 756 billionaires and many of the world’s millionaires–nearly 22 million people. 

So why does this matter to you? It matters because wealthy families will rely increasingly on their attorneys, CPAs, and financial advisors to help them navigate savvy tax planning strategies, including charitable giving. And many of these families are very generous, so don’t underestimate your clients’ desire to get involved in charitable giving. We at Gulf Coast have the pleasure to witness first-hand the generosity and impact our donors are having in our community.  

Indeed, you may already be working with families who use private foundations to fulfill their charitable giving goals. In many instances, these private foundations were established by previous generations before donor-advised funds became widely available. As donor-advised funds become more popular, for lots of good reasons, please reach out to the team at Gulf Coast to explore a parallel strategy where your clients can carry out their charitable intentions using both a donor-advised fund and a private foundation.   

In some cases, your clients may want to consider closing a private foundation and transferring the assets to a donor-advised fund because of the many administrative and tax benefits, as well as the value of being able to lean on the knowledgeable team at Gulf Coast. Our team can help walk through the steps for shutting down the private foundation, which include securing board approval, making sure final expenses will be covered, transferring the assets to a donor-advised fund, filing the appropriate dissolution documents with the state, and submitting the private foundation’s final tax return reporting its dissolution and transfer of assets. 

Whether your client pursues philanthropic goals through a private foundation, donor-advised fund, charitable remainder or lead trust, or combination of tools, we are here to help! Please reach out to our team to discuss the ways your clients can support causes that align with their values and passions, create a lasting legacy that extends beyond their lifetime, involve multiple generations in philanthropic efforts, and foster an overall sense of family unity and shared purpose. 

Your Resource.

As you serve your philanthropic clients, we strive to be your resource and sounding board. Understanding the charitable side of the equation allows us to serve as a secondary source for you as you manage the primary relationship with your clients.

Connect with us anytime! It’s our pleasure to work with you in partnership as you help your clients achieve their charitable giving goals for this year and many years beyond tomorrow.