For private business owners, donating stock to a nonprofit organization or Donor Advised Fund can be a powerful strategy to achieve both charitable and business succession goals.

Katie Vogel, director of donor services at the Omaha Community Foundation, emphasized the significance of this approach, especially in the context of recent legal and tax developments. “Not only can these gifts help implement a business succession plan that calls for transferring the business to the next generation if that is your client’s goal, but donating stock can also help your client achieve charitable giving goals and benefit them when it comes to estate taxes,” Vogel said.

With the estate tax exemption sunset looming at the end of 2025, this strategy has been gaining attention. “More accountants, wealth management professionals, and estate planning advisors are encouraging their clients to explore donating closely held stock,” Vogel said. “Without intervening legislation, many people with closely held stock may need to rethink both the timing and methods used to transfer business interests as they wrestle with the reality of a potentially hefty tax burden.”

The valuation of closely held business interests is another crucial aspect to consider, especially in light of the U.S. Supreme Court’s 2024 ruling in Connelly v. United States. “The Connelly decision affected the way business interests are valued for estate tax purposes,” Vogel said. “This could result in higher taxable estates for business owners, making charitable stock gifts an even more appealing option.”

Vogel also urged business owners and their financial advisors to work closely with a charitable giving expert considering these legal and tax changes. “Careful planning can help avoid potential pitfalls,” she said.

Community foundations are particularly well situated to help business owners and their financial advisors navigate these changes. Community foundations are experts in handling complex gifts like closely held stock, ensuring a smooth transfer and proper valuation for tax purposes. Community foundations across Nebraska also have a deep knowledge of local nonprofits and community needs, so they can help build a giving plan that supports the organizations and causes most important to the donor.