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 content aims to provide general information about estate planning and charitable giving. We hope it’s helpful and informative. Suggestions for monthly content topics are welcome. We’d love to hear from you.

Standard Deduction Planning: Avoid Leaving Dollars Behind

The standard deduction is one of many items on the legislative “watch list,” especially in light of the upcoming elections. Without intervening legislation, in 2026, the standard deduction for individual taxpayers younger than age 65 is scheduled to drop from $14,600 to $8,300. 

While this may spell higher taxes for some taxpayers, the news could be positive for charitable giving. You’ll recall that the Tax Cuts and Jobs Act of 2017 increased the standard deduction significantly. As a result, only 9% of taxpayers itemized deductions in 2020 compared with 31% in 2017. Although certainly not the only factor motivating charitable giving, tax incentives play a role in donors’ decision-making about whether, when, and how much to give. Indeed, statistics recently released by the National Bureau of Economic Research indicated that the increased standard deduction resulted in $20 billion fewer charitable donations in 2018 alone.

The DeKalb County Community Foundation and your tax advisors are happy to work with you to map out a charitable giving plan for the next few years to navigate anticipated changes in the law.

For example, this year, you could consider using a technique called “bunching” to make two years’ worth of gifts upfront to your Donor Advised Fund to take advantage of the standard deduction while it is still high. 

If you determine that bunching is right for you, naturally, cash is easy to give in a year of higher-than-expected income. So, if you earn a large bonus this year, get a significant increase in compensation, take a job buyout, or experience a significant liquidity event, your surplus income could make bunching ideal. 

Most of the time, though, even when you deploy a bunching strategy, donating highly appreciated marketable securities is a better choice than giving cash because it is extremely tax efficient. Stock given to a public charity, such as your Donor Advised or other type of Fund at the Community Foundation, typically is deductible at the asset’s fair market value. The Foundation, in turn, pays no capital gains tax on its asset sale, thereby generating more dollars to support your philanthropic interests than if you had sold the stock and given the proceeds to your Fund. 

You can think outside the box and explore other assets that make great gifts to your Fund. As with gifts of other long-term appreciated assets, a gift of real estate or closely-held stock avoids capital gains taxes and results in more money for your favorite causes than if you had sold the asset, taken the tax hit, and donated the proceeds. 

The Bottom Line?

Now is a perfect time to look at your charitable giving plans so you don’t leave dollars behind. Your financial situation, as well as the charities you support, will benefit from your careful planning. Your tax advisors and the Community Foundation are here to help! 

– 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