Planning For Impact:  Charitable Giving Strategies for the Great Wealth Transfer

Hudson Community Foundation looks forward to working with you and tax and estate planning advisors to help navigate the unprecedented wealth transfer of an estimated $84 trillion from baby boomers and the silent generation to their descendants over the next two decades. 

This historic shift presents a unique opportunity for discussing charitable giving plans as a strategic and impactful component of estate and financial planning. When nearing retirement and start planning charitable legacies, pay particularly close attention to IRAs and other retirement plans as key components of a philanthropy plan.  

You’re likely aware that retirees can use Qualified Charitable Distributions (QCDs) from traditional IRAs to both fulfill philanthropic goals and manage tax burdens. Age (73) when required minimum distributions (RMDs) are mandatory, the RMDs can trigger significant taxable income. QCDs offer some potential relief by allowing IRA owners aged 70½ or older to transfer up to $108,000 per year (2025 limit) directly to qualified charities, including certain funds at Hudson Community Foundation, thereby satisfying RMD requirements while keeping the distribution out of the donor’s adjusted gross income. This approach not only reduces income taxes but can also help moderate Medicare premiums and the taxable portion of Social Security benefits, and is available to all eligible taxpayers, regardless of whether they itemize deductions.

But the benefits don’t stop there! Beyond immediate tax benefits, QCDs can play a strategic role in long-term estate planning. Here’s why:

• Traditional IRAs can leave heirs with a substantial tax bill because inherited IRAs must generally be depleted within ten years and are taxed as ordinary income. 
• By directing RMDs to charity through QCDs, high-net worth clients can gradually reduce the value of their IRAs, thereby reducing their future potential estate tax burden.
• QCDs are not subject to the income percentage limits that typically apply to charitable deductions, making them a flexible tool for those looking to balance philanthropic intent with smart estate management.
• A potential bright spot on the horizon is proposed legislation that would extend eligibility recipients of QCDs to donor-advised funds. This would make it even easier for your clients to integrate their financial and estate plans with the charitable strategies already in place through Hudson Community Foundation.

By incorporating QCDs into an estate and financial plan, it can help retiree donors maximize the impact of their giving while minimizing tax exposure for themselves and their heirs.

Hudson Community Foundation has solutions for you to create your own charitable giving fund with a QCD.  Take the lump sum payment in the year of the QCD and decide later where to give to selected charities or create your own Scholarship Fund. You can then be Giving While Your Living!

The team at the HCF looks forward to working with you and your clients to establish (or update) bequests to fulfill your clients’ charitable legacies. Give us a call! 

Read more about Donors Guide to Donor Advised Funds.

With a fund at Hudson Community Foundation (HCF), advisors can manage the charitable assets on their preferred platform at any amount. Assets stay under their management. You can provide your clients with the consistent investment advice they expect. We are your partner in charitable giving!

The team at HCF is a resource as you serve your philanthropic clients. We understand the charitable side and are happy to serve as a secondary source as you manage the primary relationship with your clients. This blog is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.