Welcome to the EPAC Corner! We are pleased to bring you this content from the Estate Planning Advisory Committee (EPAC) of the DeKalb County Community Foundation. If you have any questions about the information below or the EPAC group, please contact Community Foundation Executive Director Dan Templin at 815-748-5383 or dan@dekalbccf.org. 

The EPAC Corner celebrates one year this month! The content aims to provide general information about estate planning and charitable giving. We hope it’s helpful and informative. Please know that we welcome suggestions for monthly content topics. We’d love to hear from you.

Get Ahead of the Year-End Rush

Holidays and tax planning (although very different in how they are celebrated!) are year-end traditions. No doubt you’ve got the holidays covered, and perhaps your advisors are already helping you ensure your tax planning is in place. It’s a good idea to familiarize yourself with several essential year-end charitable giving techniques and deadlines so you can be prepared for conversations with your attorney, accountant, and financial advisor, as well as the DeKalb County Community Foundation. We stand ready to assist!

1.) Standard deduction reminders:

Remember that the 2023 standard deduction for single taxpayers ($13,850) and married filing jointly ($27,700) is up nearly 7% over 2022. While this increase allows for more relief from income tax for most filers, it also sets a higher bar to exceed for those who itemize deductions. Keep your household’s standard deduction amount in mind when you tally your deductible expenditures, including your gifts to charity. Reach out to the Community Foundation for help.

2.) Itemization and bunching:

If your total deductions are at or under the standard deduction amount for 2023, but you and your advisors determine that your particularly high income this year means you could benefit from increased deductions, a “bunching” strategy may be a good fit for you. “Bunching” means you are “front-loading” charitable donations into the current year, knowing that you plan to make these donations in future years. By structuring a large year-end gift to your Donor Advised Fund at the Community Foundation, you could surpass the standard deduction threshold to further reduce your taxes in 2023. Then, your favorite organizations can receive support from your Donor Advised Fund not only this year, but also in subsequent years. This allows you to provide predictable, steady support for the causes you love. Our team can help you build a strategy!

3.) Stock, not cash:

As you prepare for year-end giving, don’t automatically reach for the checkbook! Gifts of long-term appreciated stock to your Donor Advised or other type of Fund at the Community Foundation is always one of the most tax-savvy ways to support your favorite charitable causes because capital gains tax can be avoided. Similarly, if you are a business owner, you can work with your advisors and the Community Foundation to explore how you might give shares in the business to your Fund at the Community Foundation as a part of your overall estate plan. Not only will transfers be eligible for a charitable deduction during the year of transfer (and at fair market value if you held the shares for more than one year), but also these gifts could potentially reduce income tax burdens triggered upon a future sale of the business.

4.) QCDs from IRAs:

As always, keep in mind that the Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $100,000 from your IRA to certain charities, including a Field Of Interest, Designated, Community Impact, or Scholarship Fund at the Community Foundation. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means you avoid income tax on the funds distributed to charity. We can work with you and your advisors to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.

5.) Fingers crossed on deduction legislation:

Keep an eye on the Charitable Act, which, if passed, would permit a deduction for charitable gifts that exceed the standard deduction. The Charitable Act proposes to restore the pandemic-era “universal charitable deduction” and raise the cap from $300 for individuals ($600 for joint filers) to approximately $4,600 for individuals ($9,200 for joint filers). This could be a game-changing incentive for your favorite charities–and for you!

6.) Don’t miss year-end deadlines:

Please reach out to the Community Foundation to find out when certain transactions must occur to be legally completed during this tax year, including checks to your Fund at the Community Foundation which must be postmarked or hand-delivered no later than December 31. Gifts of marketable securities also need to be fully transferred by December 31, so please work with your advisors to contact them in plenty of time to process and receive the transfer.

– Matthew L. Brown, local attorney and member of the DeKalb County Estate Planning Advisory Committee

Established in 2020, the DeKalb County Estate Planning Advisory Committee (EPAC) comprises of local professionals providing estate planning services, including attorneys, trust officers, CPAs, wealth advisors, and insurance agents. The purpose of the EPAC is to raise awareness and understanding of the Community Foundation as a resource for professional advisors and their clients, assist with efforts to deliver effective estate planning education to the general public and notify estate planning professionals on topics relevant to the intersection of estate planning and philanthropy.

Matthew L. Brown