Hello! As the Delta variant threatens pandemic recovery, and talk of tax reform continues, it’s no wonder 2021 may be generating more questions than answers. In this issue of our advisor newsletter, we’re covering topics illustrating how important it is to stay on top of trends in charitable planning. As always, we’re here to help. Our goal at your Community Foundation is to serve as a steady, reliable partner and as a source of timely information and ideas that enable you to serve your clients even in the face of uncertainty. Let us know how we can help.
Helping clients include charitable giving in their financial planning is part of financial advisor Wil Peña’s job that he enjoys. Through the planning process, Wil works with clients to figure out a charitable giving strategy and best approach that makes the most sense for his client’s unique situation. “Most people naturally want to help others,” says Wil. “It is not too hard to find people’s affinity for a cause they love and want to support.”
Helping people with their finances is purposeful work that is extremely gratifying to Wil. He enjoys helping individuals, families, and small businesses put together a long-term plan to protect and grow the fruits of their labor – money.
Wil has been involved in the financial services industry for more than 16 years. He transitioned from the telecom industry to financial services when he became a banker in Islamorada in 2004. After working extensively with clients on investments and retirement planning, he opened his own consulting practice. Earlier this year, he joined Fidelity Investments and works from his home in Key Largo.
Charitable giving is always part of the planning conversation, especially for those clients who have the means to make philanthropy part of the plan. They are not only able to take advantage of tax benefits, but also are pleased to use their money to support good causes. “These clients make an impact that can leave a mark on society and leave a legacy for their families and communities to enjoy after they are gone,” says Wil.
Being involved in the community is important to Wil and he recently joined the Community Foundation’s Upper Keys Advisory Council, where he will help build philanthropy in the Keys, especially the Upper Keys. “I believe we are all born to serve one another,” he says.
He and his wife, Barbara, have enjoyed living in Key Largo for 31 years. “It’s a peaceful loving community where we enjoy a serene lifestyle near the ocean,” says Wil. Their two Jack Russell Terriers, Tobias and Hershel, keep them busy, too. “There’s never a boring moment living with Jack Russells,” he says. “It’s a blessing to have been able to fulfill a childhood dream of living on an island.”
Lack of information and knowledge about the types of strategies available is one reason some clients are unaware about the benefits of charitable giving. “Professionals can help identify the pros and cons of different ways to get started,” says Wil. “The process can seem more complex than it has to be. The Community Foundation is one way that can help an individual or a business get started with their philanthropic goals.”
Contact the Community Foundation for assistance at firstname.lastname@example.org or call Jennifer McComb at 305-292-1502.
Wil Peña is a financial planning advisor with Fidelity Investments Transition/Estate Services and works from his home in Key Largo.
With high buyer demand, tight inventory, and low mortgage rates, the Florida Keys real estate market is soaring. And while it may seem attractive to sell property right now, some financial planners also suggest looking into a Charitable Remainder Trust (CRT) as one long-term planning option.
A CRT is a “split interest” charitable planning tool that allows your client to transfer an asset to an irrevocable trust, retain an income stream, and earmark what’s left (the “remainder”) to pass to a charity or charities of the client’s choice.
For example, your client could establish a fund at The Community Foundation of the Florida Keys to receive the CRT’s assets following the termination of the income stream, for example, on the client’s death. The client’s fund at the Community Foundation can provide for distribution of those assets to hospice, animal rescue, an arts organization, or whatever causes the client feels passionately about and wants to support.
Because the Charitable Remainder Trust qualifies as a charitable entity under the Internal Revenue Code, here’s what happens from a tax perspective:
Contrast this with an alternative scenario in which your client sells the property, realizes a $1.8 million capital gain, pays tax on that gain, and ends up with, say, $1.5 million (probably less!) with which to invest, give to charity, and draw from for income. And, in this situation, the proceeds would be included in the client’s estate for estate tax purposes.
When you spot a client who might benefit from a CRT, talk to your Community Foundation or other professional advisor about this giving option.
According to the recent Giving USA report, Americans’ bequests to charity totaled nearly $42 billion last year. That’s a tremendous amount of charitable giving flowing to community organizations from donors after they die. Still, it’s a fraction of the $324 billion Giving USA reports was given to charities in 2020 by living individuals.
As you work with your philanthropic clients, consider not only the benefits of building philanthropic components into clients’ estate plans for distribution after death, but also consider helping your clients make meaningful gifts during their lifetimes.
Here are three tips for encouraging your clients consider “giving while living” as part of their plans:
The team at your Community Foundation can help you assist your clients with a philanthropy plan, starting with the basics. Here are three talking points to help you begin the conversation with your philanthropic clients:
Need more tips and talking points? We can help. Call Jennifer at 305-292-1502 or visit cffk.org.
The Community Foundation of the Florida Keys now accepts cryptocurrency as an option for giving. As cryptocurrencies’ profiles rise in the marketplace, your clients are likely to begin asking questions about the possibility of using cryptocurrency holdings as part of their charitable giving plans.
Interest in this technique has spiked recently, especially after the University of Pennsylvania’s announcement of a landmark $5 million gift of bitcoin to support the Wharton School’s Stevens Center for Innovation in Finance.
In many ways, advising clients about charitable gifts of cryptocurrency parallels the strategies you routinely use to advise clients about a gift of any highly-appreciated asset. For example, cryptocurrency gifts require documentation similar to what’s necessary to substantiate gifts of real estate, closely-held stocks, and collectibles.
The IRS has issued guidance for charitable gifts of cryptocurrency, including confirmation that the usual rules apply for a “contemporaneous written acknowledgment,” even though cryptocurrency is treated and reported by the charity as a non-cash gift.
The team at your Community Foundation is ready to assist you and your clients who may wish to donate cryptocurrency to a donor-advised fund or other type of fund.