Heads Up Gift Planners: Keep an Eye on Year-end Legislation

Posted by rshafis on Nov 30, 2021 04:22:40 PM

As we approach the end of 2021, there are some things that every charitable gift planner should be watching out for as December 31 gets closer.

There are a variety of proposals concerning taxation currently before Congress. It is always possible that one of these bills, or some combination of them, will be passed before December 31, affecting how many individuals will think about their charitable giving.  Although it is currently up for debate which proposals could pass, or even if any will pass in 2021. However, since new laws have passed in December’s past, you should be aware of what is out there and what could potentially affect your donors.

Earlier in the year, the president sent to Congress a series of proposals that would raise revenue for a number of new government expenditures.  It proposed a series of tax increases, including increases on the corporate minimum tax, a surcharge on corporate stock buybacks, as well as tax increases and surtaxes on multi-millionaires and billionaires.

One element that is of special interest to gift planners is taxing capital gains at death, and eliminating the step-up in basis, which allows many families to sell appreciated assets with little or no taxable gain.  Among the ideas buried in this proposal is the possibility of taxation of capital gain upon gifting a capital asset to a split-interest trust. This could affect many charitable trusts.

Although there are many exclusions so that this would apply to only the wealthiest taxpayers, CGP and ACGA have issued a joint statement about the proposal, attempting to enlighten members of Congress as to the potential effect on charitable giving.

Later in 2021, the House of Representatives created their own proposal to increase taxes, including reducing the gift and state tax exclusion amount from its current amount in excess of $11 million to $5 million, indexed for inflation. 

So as a charitable gift planner, what should you do?  The simple answer is to be aware of new stories that relate to what Congress is doing.

Watch carefully for any hint that a bill has passed that will affect tax rates, capital gains, estate or gift taxes, and be ready to communicate any relevant provisions to your donors. Even though there are no provisions that expressly address charitable giving in the proposals mentioned above, an increase in tax rates or a decrease in estate and gift tax exclusion will certainly affect how people think in terms of their giving. This is also especially true concerning capital gains assets, which currently receive very preferential tax treatment. If some of these proposals pass Congress, there could be some serious impediments to gifting capital gain assets.

Be sure to register for CGP's final Advocacy Update of the year on Thursday, Dec. 16 at 1:00 pm ET. 

Robert Shafis
CGP Board Secretary
Director, Planned Giving Services
Veritus Group

Topics: Advocacy & Legislation Updates