Solutions for Your Clients
As a professional advisor, you can help your clients realize their charitable objectives by listening for giving opportunities, explaining options, and suggesting solutions.
Your greatest opportunities to help your clients maximize the personal benefits of giving occur when they are making major business, personal, and financial decisions, such as:
- Estate planning
- Writing or revising a will
- Sale of a business
- Sale of commercial real estate
- Retirement planning
- Experiencing a financial windfall such as an inheritance, merger or large bonus.
The following scenarios suggest a handful of ways in which the Maine Community Foundation works with advisors to develop a plan for a client.
The Situation: Your client has always been generous in her charitable giving, but she has grown more anxious about ensuring that her resources last long enough to maintain her standard of living as she ages.
The Solution: A gift annuity or charitable remainder trust that generates lifetime income.
Benefit to the Client: She earns an immediate tax deduction and the assurance of a predictable income stream (possibly even more than her assets are currently producing).
Benefit to the Community: Her fund will continue to distribute grants after her death.
The Situation: Your client does not have children and has more than enough in his estate to appropriately remember special loved ones.
The Solution: A fund at the Maine Community Foundation will preserve your client’s memory and allow for a charitable deduction, reducing estate taxes.
Benefit to the Client: He can create a lasting legacy in his community, saving taxes at the same time.
Benefit to the Community: Causes your client cares about will benefit from grants through the foundation.
The Situation: Your client is considering creating a private foundation, but is not interested in the financial or administrative aspects of running her own foundation.
The Solution: She can create a donor-advised fund or a supporting organization (if the initial amount is at least $2 million) at the Maine Community Foundation and have benefits similar to a private foundation without all the costs or hassles.
Benefit to the Client: She can spend most of her time deciding where to direct grant dollars, not how to report them. She can also save time and money by avoiding the fees involved in setting up a private foundation while enjoying the highest rates allowed for charitable deductions of gifts.
Benefit to the Community: Lower fees and expenses allow more dollars to go out as direct grants to causes that your client cares about.
The Situation: Your client earns a whopping year-end bonus or commission, sells a business, receives an inheritance, or otherwise comes into a windfall. He likes the idea of making a long-term donation to organizations or institutions in his community, but he has no time to figure out which charities to share his good fortune with before the end of the tax year.
The Solution: A donor-advised fund with the Maine Community Foundation.
Benefit to the Client: He earns an immediate tax deduction, gains access to the foundation’s professional grantmaking staff for suggestions, and the option to stay involved for years to come with the projects that his fund supports.
Benefit to the Community: Projects and activities involved in work related to his interests receive needed grant funds from the community foundation.
The Situation: Your client’s personal net worth is tied up in a closely held company, but she wants to find a way to support programs and activities in her community.
The Solution: Donate a portion of her company’s stock to the foundation to establish a donor-advised fund. The company, or current stockholders, may buy back the stock over time, providing cash for the donor-advised fund.
Benefit to the Client: She earns an income tax deduction for the fair market value of the appreciated stock, while control of the company stays with known parties.
Benefit to the Community: Organizations working in the areas she cares about receive grants through the Maine Community Foundation.
The Situation: Your client has gotten "stuck" in estate planning, and you suspect that it's because thinking about the end of life is hard for him, as it is for many people.
The Solution: Give him something rewarding to think about, like sustaining a valued institution or helping others. Ask us to work with you or your client directly to identify his specific interests and get him excited about the possibilities.
Benefit to Client: Focusing on something future-oriented, such as a legacy to the community, creates a sense of personal satisfaction that may be enough to create a sense of closure in the estate planning process and give him something positive to talk about with friends and family.
Benefit to the Community: Long after his death, organizations or institutions in his community will receive needed grant dollars from the Maine Community Foundation.
The Situation: Your client wants to provide for a life partner, yet without the benefit of the federal marital deduction available to married people, the couple's estate may be significantly reduced by gift and/or estate taxes.
The Solution: A charitable gift annuity (CGA) at the Maine Community Foundation or a charitable remainder trust (CRT) with the community foundation as the charitable beneficiary.
Benefit to the Client: A CGA or CRT can provide lifetime income to the donor and his or her partner, allowing for reduced capital gains, gift, and estate taxes, with the remainder at the second death creating a charitable fund for the community.
Benefit to the Community: Needed funds will be available to benefit local organizations and institutions.
The Situation: Your client has more than enough assets to provide amply for her children, who are financially successful in their own right. She doesn’t want to "spoil" her children or grandchildren, but instead wants to share her values around giving.
The Solution: A fund at the Maine Community Foundation in the name of the family for a purpose that is meaningful to the family. If the adult children or grandchildren are interested, a family donor-advised fund could bring them together to recommend grants.
Benefit to the Client: She knows that her gift will sustain the family name forever, and has the potential to pass on philanthropic values to successive generations.
Benefit to the Community: Organizations in the community working in areas that relate to the donor’s intent receive grant funds from the community foundation.
The Situation: Your clients have worked hard all their lives and are happy that they will be able to leave a sound financial legacy to their children. But they also want to help educate the next generation and set an example for their family and community.
The Solution: A scholarship fund at the Maine Community Foundation.
Benefit to the Client: They know their gift will change young lives by helping students pursue higher education and may inspire others to follow their example.
Benefit to the Community: Students from less advantaged backgrounds receive needed financial assistance to pursue postsecondary education.
We invite your suggestions of additional approaches.
Read more about the need to create a trust or focus on planned giving: The option of doing something charitably significant with an estate is a change from previous generations, reports The New York Times.
