Hello from the Morton Community Foundation!
Thank you for the opportunity to work together as you serve your philanthropic clients. We are grateful for the many ways our team collaborates with attorneys, CPAs, and financial advisors.
As always, we’re committed to staying on top of legal developments and curating that 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 insights and tips for hurricane relief, how your clients define “wealthy” and why it matters for their philanthropy, and important year-end giving reminders about ways the Morton Community Foundation can help.
You and other financial and tax advisors are on pins and needles about what might happen with the tax laws and especially the estate tax exemption. The Morton Community Foundation offers factors to consider as you advise your clients … and as you continue to watch and wait.
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 the Morton Community Foundation 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 the Morton Community Foundation, our team enjoys and appreciates every minute. We love serving as your first stop for all things philanthropy.
Be aware that GivingTuesday is the Tuesday following Thanksgiving, Tue, Dec 3. Make sure your clients know this, especially if they are Caterpillar employees or retirees. Why?
In support of Giving Tuesday, the Caterpillar Foundation will provide a limited-time 2:1 match through their Matching Gifts Program for global employee and U.S. retiree gifts made December 2-6, 2024 (or once the match total reaches $2M USD). This includes donations to any of the 100+ individual endowment funds with the MCF. Since the total dollars available for the 2:1 match are limited to $2M USD, you’ll want to get your donations made as early as possible, preferably Monday, Dec 2. Employees/retirees may donate up to a total of $500 in increments of no less than $25. Example: A donation to their favorite MCF fund of $500, will trigger a $1,000 donation to that same fund by the Caterpillar Foundation, for a total gift of $1,500.
Wishing you and your family all the best for the Thanksgiving holiday.
The Morton Community Foundation Staff
Scott Witzig, Executive Director
Darcy Riddle, Administrative Manager
Three insights worth a quick peek
You’re busy as 2024 draws to a close! The Morton Community Foundation 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 relief efforts
As your clients continue to support hurricane relief 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 the Morton Community Foundation anytime to learn more about how your clients can ensure that their hurricane relief dollars are making the biggest difference possible. When disaster strikes our region, we help facilitate charitable giving to legitimate efforts that make a real impact. 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 the Morton Community Foundation 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 the Morton Community Foundation on any matter related to charitable giving.
Encourage clients to consider giving highly-appreciated stock, not cash, to their funds at the Morton Community Foundation, thereby maximizing tax benefits.
Help clients evaluate a “bundling” or “bunching” technique to make gifts to donor-advised funds, 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 charities.
Help clients who are 70 ½ and older make Qualified Charitable Distributions (“QCDs”) directly from IRAs to designated or field-of-interest funds (donor-advised funds are ineligible recipients) at the Morton Community Foundation–up to $105,000 per spouse. Plus, QCDs satisfy RMDs!
Reach out to the Morton Community Foundation 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? Why the elections won’t immediately change tax laws
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.
For starters, the new Congress will not be sworn in until January 2025, and only after the session begins will Congress initiate the budget reconciliation process which is ultimately required to make tax law changes. The budget reconciliation process typically starts with the President submitting a budget to Congress. Then, both chambers of Congress pass budget resolutions with reconciliation instructions. Then, committees draft legislation to meet the budget targets, and the budget committees consolidate the bills into a single omnibus bill. Then, each chamber votes on its respective omnibus bill.
What all of this means is that the status of the estate tax exemption is still very much up in the air. And this means that financial, tax, and estate planning is going to be difficult for many more months. 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 the Morton Community Foundation, 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 the Morton Community Foundation right away to start looking at options. And if you aren’t sure whether a client is charitably inclined, you absolutely must ask them. It’s always important to talk about charitable giving, and especially right now when the stakes are so high.
We look forward to many conversations with you and your clients as estate tax developments unfold!
Navigating multiple charitable strategies for ultra high net worth families
Charitable giving is always an important strategy to discuss with your clients. Many high-net-worth individuals are philanthropic, of course, and charitable gifts 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.
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 Morton Community Foundation 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. The MCF 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, or combination of both, 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.
The team at the Morton Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.
