CICF News / 2012 / November / News Post
November 20, 2012
Helping Your Clients Avoid Oops

Mark Robbins is a CPA and vice president of the Legacy Fund. He can be reached at

The “fiscal cliff.” Will Congress steer us away or will we go over the edge on December 31, 2012 when so many pre-Bush tax cuts are set to expire? Every tax planner knows increases in tax rates—ordinary income, interest, capital gains, dividends, gifts, and estates—are possible.

Your clients don’t want to make a mistake because an “oops” could be costly in terms of taxes. Part of your fiscal cliff tax advice could include how 2012 could be the best year in the foreseeable future to make charitable gifts. For example, the Obama administration is considering capping the charitable income tax deduction of higher income individuals at the 28% marginal rate. Also, unless Congress acts the gift and estate tax exemption will decrease from $5,120,000 in 2012 to $1,000,000 in 2013 with the top rate moving from 35% to 55%. Ouch.

But the fiscal cliff is not the only reason to have charitable conversations with your clients. Once the dust settles on the tax changes, they will begin to operate in the new normal—operating or selling a business, making charitable gifts, serving on boards, considering estate planning issues—and need good advice for the long term.

Roughly 67% of donors want their professional advisor’s input when making charitable decisions, according to the 2010 Bank of America Merrill Lynch Study of High Net Worth Philanthropy. Clients trust you. They don’t want to make an important financial move without your input.

Some Clues

What are the clues that your client may need and welcome a conversation about giving?

  • You see generous or consistent charitable contributions on their tax return.
  • You notice that some of their contributions are non-cash.
  • You observe that they have significant low-cost basis assets.
  • You notice that they have multiple homes and don’t use them as much anymore.
  • You recognize that they have an estate tax issue.
  • You know they serve on non-profit boards or volunteer for organizations.
  • Your client has a private foundation or has created a 501(c)(3).

Some Questions

Clients need to hear information about giving more than once. Your clients are smart people. But tax-smart charitable giving, especially more complicated scenarios, just need time to soak in. This is a process, not a single conversation. Here are some questions to break the ice.

Giving Annually

  • Do you plan to make charitable contributions this year? How much?
  • Do you have any outstanding pledges to charities? How do you plan to fulfill them?
  • Are you aware of the tax advantages of giving appreciated non-cash assets?


  • What non-profits or causes are you most passionate about and why?
  • What non-profit boards do you serve on?
  • What organizations do you volunteer for?

Estate Planning

  • How long has it been since you updated your estate plan?
  • Who are the beneficiaries of your life insurance policies? Do you have a paid up policy you no longer need?
  • Have you considered making a gift to charity through your estate?
  • (For larger estates) Based on the current value, your estate will pay estate taxes. Would you like to hear how you can minimize that through charitable giving?
  • (For regular retirement accounts) Who are the beneficiaries of your retirement accounts? Are you aware that leaving those to someone other than a spouse will trigger IRD income taxation? Leaving all or a portion of those to charity will avoid the tax.

Appreciated Asset or Business Sale

  • Do you have any appreciated assets you are considering selling?
  • Have you heard of a charitable remainder unitrust? It could help you reduce taxes when selling an asset for more than cost basis, receive an income, and give to charities you support. This could be a nice retirement supplement.
  • Is your company considering a sale or ESOP? There may be a way to reduce taxes by including charitable giving before the sale.

Private Foundations and Donor Advised Funds

  • Would you consider creating a donor advised fund to centralize and simplify your giving?
  • (For private foundations under $5 million) Would you consider transferring your private foundation to a donor advised fund to reduce your costs?
  • Would you consider opening a companion donor advised fund to accept part of the 5% required private foundation distribution, giving you more flexibility on your giving?

Tools to Help

You may look at some of the questions above and want a bit more information on the specifics so you can speak confidently with your client. CICF and Legacy Fund are here to help. Community foundations provide the needed connection between donors, professional advisors and non-profits. We are your partner, providing you with resources as you help your clients reduce taxes and experience greater joy in giving.

If you want to walk down the path of charitable influence with your clients, begin here.

  • Attend continuing education – We provide a free three-hour course each year and several workshops to help donors better understand how to make their phianthropy more powerful and rewarding.
  • Read about charitable givingGiving USA provides information on giving trends. Also, every two years Bank of America and Merrill Lynch produce a study about high-net worth philanthropy. The most recent study was completed in 2012 and is available online.
  • Develop a free seminar – We can help you develop an informational seminar at your office as a value-add for your clients. Key concepts could be discussed in a broad and engaging way.
  • Create a handout for clients – Take some of the key questions discussed in this article and create a handout that you could use with your clients. It will help plant seeds in their mind.

Become a Hero

You may think you are just a mild-mannered advisor. But you can become a super hero to your clients. Help inspire them toward philanthropy.

Here is an interesting statistic per the 2010 Giving USA study. Roughly 20% of estates claimed a deduction for a charitable bequest in 2009. Yet less than 3% of estates are large enough to be subject to the federal estate tax. The lesson: many people are willing to make a charitable gift for reasons other than taxes. They simply need someone to encourage them.

Each year, roughly two-thirds of the new funds created at CICF and Legacy Fund come through the influence of a professional advisor. Helping clients with giving certainly helps them reduce taxes; but it also builds their loyalty to you and adds meaning to your work.

About Mark Robbins
Mark Robbins is a CPA and vice president of the Legacy Fund. Contact him at or 317.843.2479.

About Legacy Fund and CICF
Legacy Fund, affiliated with the Central Indiana Community Foundation (CICF), serves Hamilton County by administering charitable funds, foundations and organizational endowments for individuals, families and not-for-profit entities. CICF’s goal is to inspire philanthropy as it helps people enhance their family and charitable legacies in tax-smart ways. It has three main priorities: consult with donors, family foundations and professional advisors on charitable giving; award grants; and provide leadership to address community needs.