Charitable Planning in a Shifting Tax Landscape

It’s an election year, which means you may have more questions than answers as you work with your advisors to build out your financial and estate plans. In particular, the looming sunset of key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017 has created some uncertainty.

For many taxpayers, the potential sunset of the TCJA’s higher estate tax exemption is top of mind. Unless Congress intervenes, the exemption is set to fall after December 31, 2025, from roughly $27 million per couple to approximately $14 million per couple (depending on inflation adjustments).
If you are among those who would be affected by the estate tax exemption’s precipitous drop, it’s important to know that charitable strategies can fit nicely into a gifting plan that would help offset the sunset’s impact.

If you’re a business owner, for example, you could explore launching a gifting program now to transfer shares of the business not only to your heirs to take advantage of the higher exemption, but also to a donor advised or other fund at Greater Cincinnati Foundation. With these gifts, you could reduce the value of your taxable estate while also executing a business transition and philanthropy plan that aligns with your overall intentions regardless of the tax laws.

Gifts to charities are deductible for gift and estate tax purposes (as well as for income tax purposes) and therefore will also reduce the value of your taxable estate without using your exemption.

Given the uncertainty about what might happen with the estate tax exemption, some people are updating their estate plans to increase a bequest to a donor-advised or other fund at the Greater Cincinnati Foundation. This would help blunt the impact of estate taxes, and the bequest can be adjusted during your lifetime as planning goals and estate tax laws evolve.

Greater Cincinnati Foundation is here for you! Our team is happy to help you navigate the opportunities presented by potential changes in the tax law. It is our pleasure to work with you and your family to maximize your charitable goals.