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The Great Wealth Transfer and Your Clients

A massive shift in wealth is already underway. As Baby Boomers pass their assets to Gen X and Millennial heirs, an estimated $124 trillion will transfer in the U.S. through 2048. Of that, $105 trillion will go directly to heirs, while $18 trillion is expected to be directed toward philanthropy.

This transition presents an opportunity—not only to help clients structure their estate plans efficiently but also to ensure their charitable wishes are carried out. Engaging clients in conversations about philanthropy now can lead to more meaningful, tax-efficient giving strategies that align with both personal and financial goals.

Bridging the Knowledge Gap

Many clients have a strong desire to give but may not be aware of the most effective ways to do so. Even affluent clients often default to writing checks to their favorite charities rather than exploring more strategic approaches.

Advisors can play a key role in educating clients about options like:

• Gifts of Appreciated Stock: Donating securities instead of cash can maximize tax benefits by avoiding capital gains tax while allowing for a full charitable deduction.
• Donor-Advised Funds (DAFs): These offer a flexible, tax-efficient way to manage charitable giving over time.
• IRA Beneficiary Designations: Naming a charitable fund as the beneficiary of an IRA can reduce estate and income taxes while supporting meaningful causes.

Advanced Strategies for Ultra-Wealthy Clients

Clients with a high net-worth have a unique relationship to philanthropy, often using it for wealth preservation and tax efficiency. These clients may need more sophisticated giving strategies that help them focus on reducing tax burdens while still creating a charitable legacy.

Some strategies that the Athens Area Community Foundation recommends are:

• Gifts of Complex Assets: Business owners can donate closely held stock, reducing capital gains tax and directing proceeds to charitable causes.
• Charitable Trusts: Structures like charitable remainder trusts (CRTs) and charitable lead trusts (CLTs) offer income streams while still supporting philanthropy.
• Endowed Funds: Clients who want to create an impact can establish funds at the community foundation that support causes in perpetuity.

These approaches to estate and financial planning mean that advisors can help clients achieve both their charitable and legacy goals.

Why Legacy Planning Shouldn’t Wait

It’s easy to delay conversations about charitable bequests, but incorporating philanthropy into estate planning sooner rather than later ensures that client wishes are fully realized. Naming a fund at the community foundation as the beneficiary of an IRA, for example, can provide significant tax advantages while making a long-term charitable impact.

The key is proactive planning. Addressing charitable intentions early in the estate process allows for thoughtful giving strategies that align with overall financial goals.

Now is the time to engage clients in conversations about philanthropy. Contact the Athens Area Community Foundation to learn how we can support your work in helping clients make a meaningful, long-term impact with their wealth.