When you’re inventorying your assets as you plan your estate you may find yourself in a position to take care of the needs of all of your loved ones while still being able to satisfy your philanthropic urges. People like Bill Gates and other billionaires will generally create private family foundations as vehicles of giving, but the creation of such a foundation is extremely expensive and then they must also be staffed on an ongoing basis. As a result it doesn’t make sense for most people to create a private foundation, but the alternative that many people turn to is the donor advised fund.
One of the reasons why people take pause before giving to charity is because it simply takes a lot of time and effort to identify all the different charities that you’re interested in supporting, make the donations, and keep track of it all. There is a great deal of record-keeping involved, and some charities are not set up to accept securities that you may want to donate.
Donor advised funds provide a bridge over these obstacles because you need only make a single contribution into the fund. You can then make recommendations with regard to how the fund bestows grants to any number of different charities. Though the assets become property of the fund once you make the donation your wishes as the donor are generally going to be carried out.
In addition to providing an efficient way for philanthropists to support a number of charitable organizations donor advised funds provide some tax benefits as well. The initial contribution into the fund qualifies for a charitable deduction, and of course when you make that contribution you are removing these assets from your estate and reducing your estate tax liability in the process. And finally, capital gains taxes not levied against appreciated assets that you place into the fund.
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- Beneficiary Designations and Other Non-Probate Transfers - August 15, 2020
- Leaving Assets Can Be Tricky – Part 3 - August 13, 2020
