Welcome to summer!

If you are taking a break from the heat to do some mid-year charitable planning, you may find the following tips helpful.

As always, our team at the Community Foundation for the Ohio Valley is happy to help you achieve your charitable goals. Please reach out to Director of Donor Services Liz Paulhus to learn more about how easy it is to implement these tips.

Donate appreciated stock to your fund.

We know how easy it is to simply write a check when you want to grow your fund with us or start a new fund. However, it really does pay off to consider whether appreciated stock would be a better way to give.

When you give shares of long-term appreciated stock to the Community Foundation, you can be eligible for a charitable tax deduction at the fair market value of the shares. When we sell the shares and add the proceeds to your fund, no one is hit with capital gains tax. By contrast, if you were to sell the shares yourself and then give the Community Foundation the proceeds from the sale, you would end up making a much smaller gift to your fund.

If you can take advantage of QCDs, do it.

Instead of receiving your IRA distributions and then cutting checks to charities, there is a smarter way to give that reduces your taxable income. If you are 70 ½ or older, you can make what is called a Qualified Charitable Distributions (QCD) for up to $105,000 from your IRA to any charity, including all funds at the Community Foundation except Donor Advised Funds. If you file taxes jointly, your spouse can also make a QCD from his or her own IRA within the same tax year up to $105,000 for a total of up to $210,000 a year.

If you are subject to the rules for Required Minimum Distributions (RMDs), QCDs can count toward those RMDs.

Review your IRA beneficiary designations.

As you review your assets and how they are titled, pay close attention to tax-deferred retirement plans such as 401(k)s and IRAs. Typically a spouse is named as the primary beneficiary of these accounts to provide income following your death or to comply with legal requirements. But as you and your advisors evaluate whom to name as a secondary beneficiary of these tax-deferred accounts, don’t automatically default to naming your children or your revocable trust.

You and your advisors may determine that naming a charity, such as a fund at the Community Foundation, is the most tax-efficient and streamlined way to make gifts to your favorite causes upon your death and establish a philanthropic legacy.

A bequest like this avoids not only estate tax, but also income tax on the retirement plan distributions. That’s why non-retirement fund assets may be better-suited to pass to children and grandchildren.

Start paying attention now to the estate tax exemption sunset.

The estate tax exemption – the total amount a taxpayer can leave to family and other individuals during their life and at death before the federal gift and estate tax kicks in – is scheduled to drop sharply after December 25, 2025.

For 2024, the estate tax exemption is $13.61 million per individual, or $27.22 million per married couple, an increase over 2023 thanks to adjustments for inflation. Later this year, the IRS will issue inflation adjustments for 2025.

For 2026, without legislation to prevent it, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person.

If you might be impacted by this change, please reach out to us now so that we can work with you and your advisors to explore how charitable giving techniques can help you avoid estate tax and leave a legacy for the community.