May 2023
Professional Advisor Newsletter
Hello and Happy May!
As you and other advisors emerge from a busy tax season, your attention may be turning to estate and financial planning for your clients, which could include how to capture charitable bequests through IRA beneficiary designations. Like us, you're likely also watching and wondering how the IRS's increased budget may affect your high income-earning clients and their charitable giving plans. And, as always, you want to keep up with the latest news and planning trends that will help you serve your philanthropic clients. We're covering all of those topics in this newsletter.

As always, the community foundation is here to help you and your clients navigate the various options for charitable giving. We’ll help give you the insights and confidence you need to develop plans that enable your clients to provide the charitable support they intend while also keeping the clients’ activities well within the boundaries of the law.    

It is our honor and pleasure to work with you and your clients. We look forward to talking with you soon!

Retirement plans to charity: Understanding the "trifecta" of tax benefits
Over the last few months, many advisors have noticed an uptick in client inquiries about leaving their IRAs and other retirement plans to charity. If you’re wondering why, it likely has a lot to do with the buzz about Qualified Charitable Distributions, which allow those who’ve reached the age of 70 ½ to direct up to $100,000 annually to qualified charities (such as a designated or field-of-interest fund at the community foundation), avoiding both the need for an RMD (if they’ve reached age 73) and the income tax hit.  

It’s probably more than just the QCD, though, that has spurred your clients to ask questions. More and more, charitable planning with IRAs and other qualified retirement plans is a topic in financial and mainstream media. A case in point is a September 2022 article in the Wall Street Journal, irresistibly titled “Win an Income-Tax Trifecta With Charitable Donations.” If you subscribe to the Wall Street Journal, the article is well worth your time. 

When your client names a public charity, such as a donor-advised or other fund at the community foundation, as the beneficiary of a traditional IRA or qualified employer retirement plan, your client achieves extremely tax-efficient results. 
Tax scrutiny: Should clients worry about the IRS's bigger budget?
A major portion of the $80 billion scheduled to be invested in Internal Revenue Service upgrades is earmarked to “increase tax compliance among wealthy taxpayers and businesses,” according to the IRS’s plan. Indeed, the IRS is investing upwards of $47 billion toward enforcement efforts, an amount that towers over the next-largest item on its spending plan, which is just over $12 billion slated for technology enhancements.

Little doubt remains that your high income-earning clients can expect more oversight and less room for error. This reality is of concern to attorneys, accountants, and financial advisors who are responsible for helping their clients adhere to the tax laws with integrity. 
Here's what we're reading
As you talk with your clients about charitable giving, are you leading with tax benefits? Deferring philanthropy topics until November and December? Not looking at the big picture? If so, you may want to rethink your approach, according to a recent article. The article also points out the importance of engaging specialists to assist you in advising a client about how to make a difference in the community. The team at the community foundation specializes in charitable giving and community impact. We’re just a phone call away. 

Our team also enjoyed digging into the latest study on family philanthropy, particularly because it reinforced so many of the best practices we already deploy here at the community foundation as we work alongside you to help your clients and their families make a difference in the lives of others for generations to come. We look forward to working together on practical solutions to engage your clients, their children, and their grandchildren in comprehensive philanthropy planning that moves the needle for the organizations and causes they care about. 

Finally, as the dust settles on tax season, and as we look ahead to what the charitable deduction might look like in future years, we appreciated the perspectives in this piece about the surprising benefits of a complex tax code. More proof that it is always possible to look on the bright side! 
Whidbey 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.  
Thank you for letting Whidbey Community Foundation assist in your charitable efforts!