February 2024 Donor and Fund Holder Newsletter

Greetings from the community foundation, and happy February! 

In this month of Valentine’s Day when many people reflect on those they love, many fund holders at the Morton Community Foundation also reflect on the causes they care about and the organizations in our community they love. Many people use their donor-advised fund at the community foundation to make gifts to charity to celebrate Valentine’s Day, which is a bigger holiday for giving than many people realize. Americans spend $26 billion on Valentine’s Day gifts ($2 billion on pets!), including sending 145 million cards and 250 million roses. 

In this newsletter we announce our 2024 Community Grants and Scholarships, and we show how you can show the love for the charities you care about the most:

• Estate planning might feel like a burden on your to do list, but it’s actually one of the best ways you can show you care. Your loved ones, and the charities you care about, will appreciate your careful planning. And you’ll enjoy peace of mind knowing that you’ve got the documents in place to carry out your wishes, well before it’s needed. The Morton Community Foundation is happy to work with you and your advisors to structure a charitable giving legacy plan to achieve your goals for caring about the community you love. 

• At the Morton Community Foundation, we know that every gift matters. Whether you’ve established a donor-advised fund to carry out your annual giving to many different charities, or you’ve set up an unrestricted legacy fund to support our community’s greatest needs, you’ll be making a difference. The importance of every act of charity is a good reminder as you start implementing your charitable giving plans for 2024. 

• Fund holders and legacy donors at the Morton Community Foundation are often surprised to learn how the MCF can be involved in estate administration when a donor leaves a bequest. Our goal is to ensure that your charitable intentions are achieved, from structuring a bequest all the way through to the dollars flowing to the causes you care about the most. 

The MCF offers so many tools and services to help you support the causes you care about. We’re honored to work with so many dedicated fund holders, and we are excited to work with so many of you who are considering establishing a fund at the Morton Community Foundation to pursue your own philanthropic passions. If you want to read more about the over 100 funds established by others at the MCF, CLICK HERE.

Thank you for your partnership in improving the quality of life for everyone in our community. 

– Your staff at the Morton Community Foundation

Scott Witzig, Executive Director
Darcy Riddle, Administrative Manager

2024 Annual Spring Community Grant Cycle to distribute $91,000 to local agencies.

In 2023, the MCF's Annual Spring Community Grant Cycle distributed $75,000 in grants to local non-profit agencies, schools, parks and libraries to help them in the great work they do in and around our community.  The photo above shows a crowd of children and parents awaiting their turn to compete in the Pumpkin Festival Big Wheel Race.  The Morton Community Foundation provided a grant of a little over $1,700 to purchase new Big Wheel trikes for the race.  The Pumpkin Festival Big Wheel Race is a fundraiser for Kids' Muddy Madness for St. Jude each year.

Thanks to the generosity of our donors, our endowment funds are growing, allowing us to grant more and more each year.  The 2024 Spring Community Grant distributions will be $91,000.  Wow!  Just a few short years ago, we were distributing around $45,000.  But, even more astounding is that, because of the fact that donations take about 4 years to fully "vest", we are able to project that if no additional gifts were donated, we will be distributing just under $127,000 in 2028.  So, again, THANK YOU for your current donations as well as for the estate gifts that many of you are planning and/or have already planned.  More on planned giving in this newsletter.

See the entire MCF Community Grant History from 2003 to 2023 HERE.

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$36,225 in Scholarships available to Morton High School graduating Seniors

The photo above is the group of MHS Seniors who received scholarships in 2023.  Morton High School Seniors can stop by the MHS Counseling office to pick up a packet of information about all 2024 scholarships available to them.  The Morton Community Foundation is offering $36,225 in scholarship grants to qualified MHS students.  If you know of a graduating senior, make sure they apply for one or more of these scholarships.  There is a standardized application required for all scholarships, and then several scholarships also require an essay to be written.  The deadline for scholarship applications is Tuesday, March 12.  Read more about the available scholarships HERE.

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Estate planning: One of the best ways to show you care 

Money, mortality, and family relationships. Each of those topics alone can be tough for anyone to address head on, and when you combine them, it’s no wonder so many people put off setting up or updating their estate plans. Establishing a will, trust, and beneficiary designations forces a person to confront decisions about the ultimate division of their assets, and many people think estate planning is more expensive or more of a hassle than it really is. 

But, getting your affairs in order–well before you need to due to age or illness–is truly a gift to your heirs. It’s extremely stressful for surviving spouses, children, and other loved ones to be faced with the emotional stress and workload of financial disorganization and uncertainty, on top of dealing with grief. Updating your estate plan also allows you to make arrangements for gifts upon your death to your favorite charities.  

Many people choose to support their favorite charities in an estate plan through a beneficiary designation. As you work with your attorney and other advisors, be sure to review the beneficiary designations on your insurance policies and retirement plans. Pay close attention to tax-deferred retirement plans such as 401(k)s and IRAs. Typically, you’ll name your spouse as the primary beneficiary of these accounts to provide income following your death and 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 your fund at the Morton Community Foundation, is by far the most tax-efficient, 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. 

Please reach out to the team at the community foundation as you work with your advisors on your estate plan. We can:

• Review the many tax benefits of naming a fund/your fund at the Morton Community Foundation as a beneficiary of your IRA or other tax-deferred retirement account

• Provide bequest language for your will or trust, properly describing your fund using the correct legal terms 

• Provide language for a beneficiary designation, again properly describing your fund using the correct legal terms 

• Work with you to update the terms of your donor-advised fund so that your wishes are carried out following your death, whether that is naming specific charities to receive distributions or naming your children as successor advisors to your fund

We’ve all heard stories about the sad consequences of someone not having an estate plan, or even having out-of-date beneficiary designations. Estate planning documents, including wills, trusts, and beneficiary designations, often turn out to represent generous acts of clear distribution and conflict avoidance. An estate plan allows you to demonstrate how much you care about the people in your life as well as your charitable passions. 

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Big or small, every gift matters

Simplicity, efficiency, and effectiveness have long been cornerstones of working with the Morton Community Foundation to carry out charitable goals. Time and time again at the MCF, we see how easily donors who’ve established a donor-advised or other type of endowment fund are able to not only fulfill their big-picture charitable goals, but to act quickly to respond to critical needs in the Morton area as they occur.. 

Indeed, the flexibility of working with the Morton Community Foundation allows you to support the causes you love at a financial level that meets your charitable giving budget. Early in the year, many of our fund holders transfer highly-appreciated stock to their donor-advised fund, for example, at the Morton Community Foundation so that they are prepared to activate their annual giving right away. 

At every level of giving, philanthropy is a catalyst for improving quality of life. Indeed, anyone with a willingness to give can be a philanthropist. Whether you’re using your donor-advised fund to give $250 to a college or university, $2500 to a food bank, or $25,000 to an art museum’s endowment, you’re making a difference.

Consider that small donations from a large number of people can make a huge difference. This is especially true for responses to disasters and humanitarian tragedies. On the other end of the spectrum, very large donations to an organization can transform its ability to scale and serve a much greater population. 

In so many ways, whether gifts are large or small or somewhere in between, philanthropy creates the margin of excellence that helps communities, families, and individuals thrive. The team at the MCF is here to help you achieve satisfaction and impact with your giving at any level. 

What happens when I leave a bequest to my fund at the community foundation? 

Many donors and fund holders at the Morton Community Foundation have updated their estate plans to leave a bequest to their donor-advised or other type of fund.  You can set up a no obligation meeting with us to help you brainstorm all the options for leaving a legacy through the MCF.

Some bequests take the form of a “specific bequest,” which means that the fund at the community foundation receives a specific amount of money from the donor’s probate estate or trust. For example, for a specific bequest, your advisor might include a provision in your will as follows:

I bequeath $15,000 to The Community Foundation (taxpayer ID number and/or mailing address), a tax exempt organization under Internal Revenue Code Section 501(c)(3), to be added to the [Name of Your Fund], a component fund of The Community Foundation, and I direct that this bequest become part of the Fund. 

In these situations the community foundation will be ready to receive your bequest, typically as soon as the estate is settled. 

In other situations, you may want to leave a bequest of a portion of the remainder of your estate after all specific bequests, expenses, and taxes have been paid. These types of bequests are called “residuary” bequests. The language can look something like this:

I leave all the rest and residue of my property, both real and personal, of whatever nature and wherever situated, and assets, including all real and personal property, tangible or intangible, to The Community Foundation (taxpayer ID number and/or mailing address), a tax exempt organization under Internal Revenue Code Section 501(c)(3), to be added to the [Name of Your Fund], a component fund of The Community Foundation, and I direct that this bequest become part of the Fund.

Because the amount of a residuary bequest cannot be determined until all of the assets in an estate have been identified and valued, and all expenses and taxes have been paid, the designated charity (in this example, a fund/your fund at the community foundation) will not receive the full amount of a residuary bequest until the estate is completely settled. Typically, however, the estate’s personal representative or trustee will make what is known as a “partial distribution” to the residuary beneficiary (or beneficiaries as the case may be), as soon as the personal representative has enough information about the assets and liabilities to confidently do so.

Did you know you can leave a bequest that supports multiple funds at the MCF and/or charities…even if those charities are not located in Morton?

Many donors have created endowment funds either during their lifetime or through their estate plan that provide annual grants to multiple charities, even charities that are not located in Morton. For example, we have a fund established by a donor through her estate plan that annually grants to 8 charities, none of which are located in Morton. They’re all charities that the donor was passionate about during her lifetime. One of the 8 charities is the Crazy Horse Memorial in the Black Hills of southwestern South Dakota. We can accommodate grant distributions to any 501(c)(3) charity, or your alma mater, or your church…whatever your passion. Let’s have a conversation.

The team at the Morton Community Foundation looks forward to working with you and your advisors to establish bequests to fulfill your charitable legacies. 

January 2024 Donor and Fund Holder Newsletter

Happy New Year from the Morton Community Foundation! 

We hope your 2024 is off to a good start!

Many of you have been fund holders and fund advisors at the Morton Community Foundation (MCF) for years, and we are grateful. Some of you established a donor-advised fund, field-of-interest fund, scholarship fund, or unrestricted fund in 2023, and we’re so glad you did. Others of you are evaluating whether to start a fund at the community foundation in 2024. We are here to answer your questions, and we look forward to working together!

Here’s what we’re covering in this issue:

• As you build your charitable plans for 2024, remember that you can work with the Morton Community Foundation to achieve your goals for supporting favorite charities with gifts this year and also establish plans to ensure that your support for these causes continues far into the future through tax-savvy “planned giving” techniques. 

• Don’t leave your loved ones in the dark. As you compile lists of financial and personal information, be sure to include information about your donor-advised or other type of fund at the community foundation. We can help document your intentions.

• The new year brings new numbers! Be sure you’re up to date on the various IRS thresholds and inflation adjustments that could impact your charitable giving and tax planning through your fund or funds at the MCF.  

As always, please reach out anytime! 

Your Morton Community Foundation Staff:

Scott Witzig, Executive Director

Darcy Riddle, Administrative Manager

Planned giving pointers

As you’ve chatted over the years with the professionals working at your favorite nonprofits, you’ve likely heard the term “planned giving.” You may have even wondered what the term means–even if you have already structured so-called “planned gifts” to support your favorite charities! 

Here are a few pointers to help break down the concept of planned giving, along with ways the Morton Community Foundation can help you achieve your charitable goals.

It may help to think of “planned giving” in contrast to what’s sometimes called “current” or “annual” giving. For example, when you write a check (or, ideally, give highly-appreciated stock) to a charitable organization such as your fund at the MCF, you’re transferring those funds right away in a relatively straightforward manner. You also may be making annual gifts to several charities, and from time to time you may also make gifts to a favorite charity’s endowment or reserve fund at the Morton Community Foundation. 

By contrast, a “planned gift” is more complex and forward-looking than current or annual support of your favorite charitable causes. Making structured future transfers to charity is often referred to as “planned giving” because, well, these gifts require planning. Here are examples of common “planned gifts”: 

• A bequest in your will or trust allows you to name a charity, such as your fund at the Morton Community Foundation, to receive a certain dollar amount, or a percentage of your estate, following your death. The MCF can work with you and your advisors to include a bequest in your estate plan using the proper bequest language. 

• Beneficiary designations on life insurance policies, and especially on retirement plans, can be effective tools for making bequests. The Morton Community Foundation can work with you and your advisors to complete the paperwork required to properly designate your fund at the community foundation as the beneficiary of life insurance or IRA assets, including reviewing with you the many tax benefits of using retirement plans to fund your bequests. 

• Setting up a charitable trust, such a charitable remainder trust, is often an effective way for you to ensure that money will flow from your estate to a charity, such as your fund at the MCF, in a way that meets both your philanthropic intentions and your financial goals (including retaining an income stream and triggering an up-front charitable income tax deduction). A charitable gift annuity is another type of “split interest” arrangement, whereby you can retain an income stream and designate a charitable beneficiary to receive a future gift. Charitable trusts are complex, and we’re here to walk you and your advisors through the process every step of the way. 

Please contact the team at the Morton Community Foundation. We’d love to work with you to set up planned gifts to support your favorite causes, as well as work together to ensure that you’ll meet your charitable goals for current giving in 2024. 

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Providing guidance for loved ones about your charitable giving

Whatever their age or health status, most people are aware that they need to document important financial and personal information for loved ones, just in case the unexpected occurs. We’ve all heard stories about someone’s family member who passed away and left little, if any, information about where to find bank accounts, passwords, estate planning documents, life insurance policies, and other information. No one wants to leave their loved ones in the lurch with scant information, but it’s often hard to get motivated to write it all down in one place.

The start of a new year is an excellent time to get organized and provide your next of kin or key advisors with the information they’d need to take care of your affairs if something were to happen to you. The list of “must haves” includes the obvious: Will, trust, power of attorney, birth certificate and marriage license, titles to cars and boats, deeds to property, car keys, bank accounts, investments and advisor contact information, life insurance policies and contact information for the agent, funeral wishes, and, critically, passcodes and passwords to devices and accounts. 

What might not be obvious, though, is that you also ought to leave your loved ones with information about your charitable giving, including details about favorite charities you’ve supported over the years and information about your donor-advised or other type of fund (or funds) at the Morton Community Foundation. In many instances, one member of a family has managed a family’s or a couple’s donor-advised fund, for example, while others have not been as involved in the mechanics. Be sure to include your funds at the MCF on your list of key information, and include the Morton Community Foundation’s contact information. You might also like to include a copy of your donor-advised fund agreement outlining successor advisors, as well as login credentials to the community foundation’s online fund portal. 

The Morton Community Foundation is happy to help you put together documentation about your donor-advised fund and charitable wishes to include with the information you provide to your loved ones so they are not completely lost as they navigate how to carry out your philanthropic wishes. Even better, we’re happy to work with you anytime to show your family members exactly how your donor-advised or other type of fund works so that they are involved and participating with you in your philanthropic pursuits during your lifetime.

Making it easy for you to share the joy of giving, and also helping ensure that family members have the information they need, are top priorities at the Morton Community Foundation. We are honored to work with you to help make your philanthropy easy, effective, and rewarding for everyone involved.

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Clean slate: Tips for charitable giving in 2024

A new year is such a great time to plan and reboot. Cliche as it may be to talk about resolutions this time of year, it’s tough to deny that January represents a clean slate for “to do” lists, goals, and your overall mindset.

As you think about your 2024 charitable giving goals and priorities, here are a few items to consider: 

You may have more capacity to give to charity.

The IRS issued inflation adjustments for important thresholds such as the standard deduction, Social Security cost-of-living adjustments, annual exclusion gifts, Required Minimum Distributions, Qualified Charitable Distributions, and levels of income for each tax bracket. Talk with your advisors about how these adjustments might impact your charitable giving goals–or even create opportunities for you to do more to support your favorite causes in 2024.

You may soon get a charitable deduction even if you do not itemize.

Many eyes are on the Charitable Act, which, if passed, would allow even non-itemizers to deduct certain charitable gifts on their income tax returns. This legislation has generated strong public support; 77% of Americans are reportedly in favor of the proposed “universal” charitable deduction.

You’ll likely still receive requests to fund disaster relief efforts.

Disaster giving is likely to remain high on the fundraising radar, meaning you will likely continue to get requests for donations to support disaster-related causes. As always, please reach out to the Morton Community Foundation to strategize about effective deployment of your charitable dollars to help people who need it most in the wake of disasters and humanitarian crises. 

This is a good time to review your estate plan without being rushed.

The beginning of the year is an excellent time to be sure your estate plan is in order. Many people scramble at the end of the year to execute tax planning transactions, which is understandable, but this often leaves little time for a thoughtful, strategic evaluation of the various components that make up a comprehensive estate plan, including financial planning, retirement planning, tax planning, investments and wealth management, business succession planning, planning for disability, evaluating wills and trusts as children get older and needs change, and, of course, charitable planning. 

Reach out to the Morton Community Foundation as you and your advisors evaluate the steps you’d like to take in 2024. We’re here to help ensure that you achieve your charitable giving goals in the most tax-savvy and impact-minded way possible so that you can continue to help the causes you care about the most.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.

December 2023 Donor and Fund Holder Newsletter

Hello from the Morton community foundation! 

As you gear up for the holidays and build your year-end checklist, the community foundation is here for all of your charitable giving “to do’s.” Whether you’ve been a fund holder at the community foundation for years, or you’ve just established a fund or are considering doing so, our team can help.

In this issue, we're focusing on three topics to help enrich your experience with charitable giving. 

Beyond the donor-advised fund. Many of you have established a donor-advised fund with the community foundation or are considered doing so. Donor-advised funds are terrific vehicles and there are good reasons for their popularity. What you might not know, though, is that your donor-advised fund can serve as an important hub for all of your philanthropy and pave the way for you to expand your giving strategies into issue-specific giving, family giving, and legacy giving. Learn how the community foundation can serve as your comprehensive philanthropic partner.

Structure helps family philanthropy thrive. Families don't always get along perfectly, which is no surprise! But there's no need for even minor family disagreements to derail well-intentioned charitable giving that allows a family to rally around favorite causes. Remember that the community foundation can serve as a sounding board, advisor, and facilitator, whether your family organizes its giving through a donor-advised fund, private foundation, or a combination of both. 

Sunset is coming. Winter days are not alone on the horizon! No doubt you are hearing more every day about the scheduled sunset of the gift and estate tax lifetime exemption. Without intervening legislation, the exemption will drop back down to 2017 levels--which means it will be cut in half. That's huge, because many more families will find themselves potentially subject to future estate tax. Charitable giving can help, though! This is a good time to talk with the team at the community foundation about how to start planning your charitable giving to reduce the potential impact of the lower exemption in 2026. 

Wishing you a very Merry Christmas!

Scott Witzig, Executive Director

Darcy Riddle, Administrative Manager

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Grant buys thermal imaging camera for Morton Fire Department to aid in finding victims in a smoke-filled room.

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Your donor-advised fund: Think “hub,” not “autopilot”

Perhaps you established a donor-advised fund (DAF) at the Morton Community Foundation years ago, or you set up a donor-advised fund more recently. Or maybe you are considering establishing a donor-advised fund at the community foundation this year to help you keep your giving more organized and involve your children and grandchildren in your philanthropic priorities. And, finally, if you already have a donor advised fund that is held elsewhere, remember that you can make grant recommendations from your DAF to support the Morton Community Foundation’s operations, it’s Morton Impact fund (Used for annual Community Grants), or to any of over 100 other endowed funds held at the MCF.

Whatever the case may be in your situation, it’s a great idea to consider a few best practices for ensuring that your donor-advised fund is making the biggest difference possible for the causes you care about. Life gets busy, the months fly by, and it's tempting to put your donor-advised fund on autopilot. But that would be a missed opportunity. 

By now, you likely know that a donor-advised fund offers the convenience of a one-stop-shop: You make tax-deductible contributions of cash (or, ideally, appreciated stock) to the fund, and then recommend grants to your favorite charities. Make sure you’re leveraging your donor-advised fund to execute the full range of your charitable giving each year. You’ll find it so much easier to keep track over time of where you’re giving, and how much. 

As the hub of your charitable giving, the community foundation certainly makes it easy for you to use your donor-advised fund for your annual giving to charities. But that’s not all. As you work closely with the community foundation, you’re likely to discover even more ways our team can support your philanthropic activities:

– We can help you establish a designated or field-of-interest fund to complement your donor-advised fund. A designated fund allows you to support a specific charity over the long term, while a field-of-interest fund focuses your support on a particular area of community need by leveraging the community foundation’s expertise. If you are over the age of 70½ and you own one or more IRAs, your designated fund or field-of-interest fund can receive Qualified Charitable Distributions up to $100,000 per year per spouse, bypassing your taxable income.

–We can work with you and your attorney to help you establish a bequest in your estate plan to support your favorite causes beyond your lifetime. Many fund holders at the community foundation name their donor-advised funds, field-of-interest funds, designated funds, or even the community foundation itself, as beneficiaries in their wills and trusts, and especially as beneficiaries of IRAs and other qualified plans because doing so delivers significant tax benefits. What’s more, the community foundation offers opportunities for our legacy donors to get together and learn from each other as a group. If you’re not involved as a legacy donor already, please reach out and we’ll fill you in! 

–We can help you and your family learn more about your favorite nonprofit organizations and the issues they are addressing so that you can become more informed and effective philanthropists in our community. The community foundation team’s unparalleled, deep knowledge of local issues and organizations is a real advantage for you and your family. When you better understand the needs of the community and how your favorite nonprofits are addressing those needs, you’ll be better equipped to structure your giving so that it makes a difference in measurable ways. You’ll enjoy your charitable giving a lot more, too.   

We hope you’ll consider your donor-advised fund–and your connection with the community foundation–as the hub of your philanthropy. The team at the community foundation is here to help you make the most of your donor-advised fund and related strategies so that you’re not only putting your money to work to improve the quality of life in our community, but you’re also achieving financial and philanthropic goals for your overall charitable giving.

Structured philanthropy: A process relieves the pressure

Helping families create a meaningful structure for their philanthropy is a service of the community foundation. That structure and the resulting discipline are increasingly important as both wealth and charitable giving more frequently span multiple generations. Indeed, spontaneous and unstructured conversations around wealth and philanthropy can be a source of family discord. 

By being part of the discussion–whether formally or informally, at the table or behind the scenes–the team at the community foundation can help families resolve issues and smooth out the edges around common intra-family challenges, including communication, decision-making, and charitable giving. 

Here are a few of the ways the team at the community foundation can help:

–Serving as a coach to foster thoughtful, intentional, and inclusive family conversations, even if the community foundation team member is serving simply in an “ice-breaker” role. 

–Offering guidance from the position of a facilitator to assure that all voices are heard, particularly as views across generations can differ. 

–Helping a family structure a series of discussions that employ a phased-in or “dimmer-switch” approach, beginning with values-centered discussions to identify common ground and progressing to systematic funding and allocation conversations and decisions. 

The community foundation can work with a family under a variety of circumstances. For example:

–Many families have found that a donor-advised fund at the community foundation meets all of their charitable giving needs, and they appreciate the community foundation taking on the administrative burden associated with tax filings and administration. In some cases, a family with a private foundation decides to close their private foundation altogether and transfer the assets to a donor-advised fund at the community foundation.

–Some families leverage the community foundation for the full suite of its charitable giving services, often using a donor-advised fund in much the same way they’d use a private family foundation, only with increased privacy and no need to create a separate legal entity, thanks to the community foundation’s umbrella 501(c)(3) status.  

By consulting with the team at the community foundation, and leaning into the structure that’s right for them, families can help their favorite community causes—and keep the peace across generations.

Three things every philanthropist must know about the gift and estate tax sunset

The shorter days of fall and winter aren’t the only sunsets creeping up on people these days. If you’ve met with your estate planning attorney and tax advisors recently, you’re probably aware that the gift and estate tax exemption–the total amount you can leave to family and other beneficiaries during life and at death before the hefty federal gift and estate tax kicks in–is about to drop, rather precipitously. 

Without legislation to prevent it, on January 1, 2026, the exemption will drop from $12,920,000 per person (that’s the 2023 exemption) to about half of that amount, depending on annual inflation increases. As the date gets closer, tax planning decisions get tougher. Make aggressive moves now to activate gifts to family members? Or hold out to see if legislation intervenes to prevent the sunset? 

Understandably, some philanthropists are beginning to get concerned about what their legacy might look like when (and if) the exemption drops. Add to that uncertainty the fact that a person’s date of death is among life’s great unknowns, it’s no wonder that for the relatively few taxpayers who may be impacted by gift and estate taxes—at least for now—there’s both concern and confusion. 

Here’s a quick review of the facts: 

–For 2023, the estate tax exemption is $12.92 million per individual, $25.84 million per married couple, and for 2024, the exemption rises to $13.61 million and $27.22 million, respectively, adjusted for inflation, as recently announced by the IRS. 

–The IRS will issue inflation adjustments for 2025, too. 

–For 2026, the exemption is scheduled to fall back to 2017 levels, adjusted for inflation, which would roughly total $7 million per person. 

Here are a few strategies you might consider evaluating with your tax advisors now to advance your estate plan and your philanthropy plan:

–If you are a business owner, you could explore launching a gifting program to transfer shares of your business not only to heirs, taking advantage of the higher exemption, but also to your donor-advised or other fund at the community foundation. The objective here would be to begin intentionally reducing the value of your estate, assuming that the estate tax exemption will rise, while also executing a business transition plan that meets your overall intentions regardless of the tax laws. (As with any gift of a hard-to-value asset, securing a qualified appraisal is essential, as is timing; shares can’t be gifted to a charity if a sale is effectively already in process. The IRS watches both very closely.)

–Annual exclusion gifts ($17,000 per gifting spouse per recipient in 2023, increasing to $18,000 in 2024) to family members and other individuals are an effective way to reduce the value of a taxable estate without eating into the lifetime gift and estate tax exemption. Indeed, many philanthropic individuals use the annual exclusion technique as inspiration for their charitable gifts. Gifts to charities are deductible for gift and estate tax purposes (as well as for income tax purposes) and therefore also serve to reduce the value of a taxable estate without eating into the exemption. Some philanthropists report that they like the idea of making annual exclusion gifts to each family member and then using their donor-advised fund at the community foundation to make annual exclusion-amount gifts to each of the charities they support. 

–Work with your tax advisors to run various financial scenarios to determine whether the exemption sunset will affect you and if so, to what extent. If you find yourself looking at a potentially significant taxable estate in a couple of years, consider increasing your bequests to your donor-advised or other fund at the community foundation. Amounts passing to the community foundation or other qualified charity upon your death are not subject to estate tax. This means your charitable priorities will receive 100 cents on every dollar in the taxable portion of your estate, while your family and other beneficiaries could receive 60 cents on the dollar–or even less. 

As always, the Morton Community Foundation is here to help you navigate the opportunities and pitfalls presented by changes in the tax law. It is our pleasure to work with you and your advisors to maximize your charitable goals. 

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.