The transfer of a huge amount of wealth is expected to occur in the next 40 to 50 years.
What was then known as the Indiana Grantmakers Alliance reported in 2013 there was $1.74 billion in wealth in Jackson County and that $1.8 billion was expected to be transferred to the next generation of county residents over the next 50 years. That’s right — $1.8 billion in Jackson County.
Some of that wealth transfer will come as people sell family businesses and property. Such sales can produce taxable income on capital gains, but potential donors — and existing donors — can find some relief from those capital gains taxes through gifts to the Community Foundation of Jackson County.
There’s a timeframe for action — essentially by the end of the tax year in which the sale takes place. And a sale extending with payments over multiple years could allow gifts to counter those multiple payments each year they take place.
A conversation with your tax folks can help you determine your options. If your best option includes making charitable donations to help ease your tax burden, the foundation can talk with you about some options.
Gifts from such sales could be used, for instance, to create a donor-advised fund, which would still allow the donor to have some say in how those funds are granted out by the foundation. Your gifts could also be used to create a community fund, from which the foundation’s grant committee would recommend grants to benefit programs and charities throughout the community.
Such gifts could be endowed, where the original gift would be retained in perpetuity and make grants from its earnings, or they could be nonpermanent and spent out over the years until depleted or replenished.
The foundation can point to donor-advised fund and designated funds, for instance, that were created through the sales of local businesses.
For an example, Janet and Gary Myers created the Janet L. and Gary F. Myers Charitable Fund in 2015 after the sale of their stock in Kocolene Development Corp., a business that had been under family control since 1938, first as the Keiser Oil Co. before being renamed Kocolene Oil in 1943. The company became a 100-percent employee stock ownership plan or ESOP business in 2014. It was recognized as Indiana’s ESOP of the Year in 2016.
“The timing was such that it really worked out well for us to set up this fund,” Gary Myers said. “We have a lot of confidence in the foundation that it is going to properly manage the gift we donated. Secondly, the foundation helps us be sure that the entities we’re going to make contributions to are eligible to receive grants under IRS regulations.”
He also appreciates the knowledge the foundation staff offers concerning an awareness of community needs.
“I feel comfortable that we can sit down with Dan or Sue or others to see what community needs are out there that we might be able to help with and benefit those organizations,” he said of foundation President & CEO Dan Davis and Vice President Sue Smith.
The family recommends grants from their donor-advised fund to various charitable and nonprofit organizations, including those that provided funds to Peace Lutheran Church, the Jackson County Community Theatre in Brownstown, Jackson County United Way, Reins to Recovery at Reddington and Southern Indiana Center for the Arts in Seymour.
If you’re considering the sale of a business, property, stocks or other assets, keep the foundation in mind. We may be able to help you avoid part of your capital gains tax liability and give you the opportunity to make a difference in the current state and future of your church, favorite charities and the community in general. If you’ve already sold such assets, the same holds true. Give us a call.
Dan Davis is President & CEO of the Community Foundation of Jackson County, 107 Community Drive, Seymour, IN 47274. For information about donating to the Foundation, call 812-523-4483 or send an email to [email protected]. Send comments to [email protected].