Philanthropy has become increasingly popular, with nearly half a trillion dollars being donated by wealthy patrons annually, WealthManagement.com writes.
And the Tax Cuts and Jobs Act can help advisors breach the topic of charitable planning with clients, which can increase engagement and improve their experience, the publication writes.
How the Tax Overhaul Changes Charitable Giving Options
First, the standard deduction almost doubled between 2017 and 2018, from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for those filing jointly, WelathManagement.com writes.
This increase, paired with state and local tax limits, means fewer people will itemize deductions, according to the publication. However, this is unlikely to impact higher-income individuals who will still benefit from itemizing charitable deductions, according to WealthManagement.com.
Furthermore, the amount of adjusted gross income that can be deducted for charitable contributions increased from 50% to 60%, the publication writes. Additionally, the Pease limit, which capped the amount of itemized deductions for upper-income taxpayers, was repealed, WelathManagement.com writes.
Discussing philanthropy with clients should not only be about tax breaks, however, and there are best practices to consider, according to the publication. Firstly, understanding a client's specific values, goals and priorities will allow advisors to engage them in a more meaningful way, WelathManagement.com writes.
Additionally, advisors can encourage family meetings, since including the next generation in philanthropic decisions can help engage them and improve their financial literacy, according to the publication.
It isn’t only high-net-worth individuals who can plan for charitable donations, so advisors should discuss strategic philanthropy with all their clients, WealthManagement.com writes. While this hasn’t always been viewed as a core offering of wealth advisors, changes to the law are impacting investors — and planned charitable giving can help various clients, according to the publication.
