Charitable Giving & Your Client’s Estate Plan


By: HeirSearch.

One of the common challenges legal professionals may face in the probate process is handling their clients’ charitable giving. And whether you’re advising clients on tax strategies in life or for their estate and legacy plans, there are many factors to consider in fulfilling your fiduciary duty.

Let’s dive into strategies for maximizing your clients’ charitable impact while ensuring they leave as much as possible for their loved ones.

Whether advising your clients on tax strategies in life or for their estate and legacy plans, there are many factors to consider.

Uncover their purpose

Tax incentives aside, giving should come with a sense of purpose. When advising a client on charitable donation options for their will and estate planning, you are, in fact, talking about the final donation they will ever make.

Taking the time to understand your client’s values will help to ensure their legacy gift is one they and their loved ones can feel proud of.

One strategy is to help your client develop a mission statement–a foundation that establishes useful giving parameters. Their mission statement could include the geographic scope of their interests, what causes they resonate with, and where they may already be giving or have given.

Your role as an estate or financial advisor will also require due diligence.

Make sure that the charities your client is interested in are in good standing, and discover the area of greatest need for the charity. Knowing where the greatest need lies could present the opportunity for a more impactful memorial gift.

Pay less to leave more

One of the first questions your client will likely have about their estate is, “how can I ensure I minimize my taxes so I can leave as much as possible for my loved ones?”

Gifting plays a critical role in achieving this objective. Each state has its own rules for inheritance tax, so make sure you are up to date on the current policies. Federally, as of 2022, the gift, estate, and generation-skipping transfer tax exemptions are $12,060,000 per person and will increase to $12,920,000 in 2023.

Many estate and financial planners incorporate a popular tax-saving option into their strategies: Donor-Advised Funds (DAFs). Suppose your clients have deductions that exceed $25,900 for a married couple or $12,950 for an individual taxpayer (2022 figures). In that case, DAFs can be essential in leaving a financial legacy with minimal tax implications for their beneficiaries.

Helping your client understand how taxation differs between gifted and inherited assets will need to be part of your conversation.

Leaving an asset in an estate rather than gifting during their lifetime can save a beneficiary significant capital gains tax. Assets where inheriting is more advantageous than gifting include real estate and cryptocurrencies.

What happens in an intestacy?

As an estate and legal professional, if you have not already, you may one day work on an intestacy. In an intestacy scenario, a state’s laws determine the line of succession. In most states, the surviving spouse and any surviving children of the decedent have the first claim to the estate.

When there is no spouse or surviving children, living grandchildren may inherit their parent’s share of assets. After that, the estate passes on to other heirs according to degrees of consanguinity.

It is vital that you engage your clients as early as possible in conversations about estate planning. A current estate plan prevents exorbitant probate costs for their family and ensures that their family and philanthropic endeavors are supported for years to come.

Do you need help establishing Heirship?

If you’re facing a challenge identifying missing or unknown heirs of an estate or are probating an intestacy, HeirSearch can help.

HeirSearch’s professional researchers identify and locate missing or unknown beneficiaries and heirs for probate. We work exclusively with executors, administrators, trustees, fiduciaries, bank and trust officers, and their counsel to establish kinship and identify shareholders for legal purposes.

Since 1967, we’ve successfully completed tens of thousands of worldwide searches. We proudly offer no-cost, no-obligation consultations, court-ready reports, and reasonable, non-percentage-based fees.

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