He looks like
me – but will
his values
look like mine?DonorsTrust can help him carry
out my charitable intent.
As my son grows, will he share my
commitment to liberty? I hope so,
but I’ve set up a donor-advised
account at DonorsTrust to be sure.
With DonorsTrust, I have the confi-
dence that once I am no longer able
to direct my charitable giving, my con-
tributions won’t go to organizations
that run counter to my principles.
To protect your own legacy, call us or
visit donorstrust.org/values.DT Philanthropic Services
703-535-3563 • http://www.donorstrust.orgIn recent years, one charitable vehicle has
zoomed to the forefront of charitable planning
- the donor-advised fund (DAF).
Financial advisors and estate attorneys rightly
point their clients toward donor-advised funds
as an effective charitable vehicle to incorporate
in their planning. This is not only for income
tax and estate planning purposes, but because
of the flexibility DAF accounts provide to their
clients’ overall philanthropic plans.
DAF accounts are easy to set up and are great
vehicles for managing and simplifying your
annual charitable giving. In addition to offer-
ing the most attractive tax deduction rules,
DAF accounts can provide greater simplicity as
compared to private foundations and support-
ing organizations. They also often prove a more
flexible charitable beneficiary for clients estab-
lishing charitable remainder trusts and charita-
ble lead trusts when compared to directly nam-
ing individual charities or retaining a power to
change charitable beneficiaries. In sum, a DAF
account can help clients minimize complexity,
monetary costs, and/or time commitments.
Here are some examples of how a DAF account
can serve as the hub of your philanthropy.
DAFs and Charitable Remainder Trusts
A charitable remainder trust (CRT) is most
often used to diversify appreciated assets in an
income-tax effective manner, allow for man-
agement of the assets in a tax-exempt vehicle,
provide an income stream to you or another
individual or individuals for a term of years or
lifetime, generate a current income tax deduc-
tion, and provide for a future distribution to
charity. A DAF account is an optimal beneficiary
of a charitable remainder trust (CRT).
DAFs and Charitable Lead Trusts
A charitable lead trust (CLT) is the inverse of
a CRT. A CLT pays an income stream to char-
ity for a term of years and, once the term ends,
any amount still in the trust is distributed to
non-charitable beneficiaries. A CLT is a very
effective estate planning vehicle that may allow
you to pass assets to the next generation free
from estate and gift tax. While it may be pos-
sible to vary charitable beneficiaries of a CLT
using trust agreement provisions, it may be sim-
pler to vary the ultimate charitable beneficiary
by naming a DAF account as the CLT charitable
beneficiary.
DAFs and Your Estate Planning Documents
Estate planning documents, including those
related to retirement accounts, life insurance,
and trust documents, may name a charity or
charities as beneficiaries. Consider how much
easier it would be to manage the charitable
aspects of your estate plan if you open a DAF
account, and estate planning documents name
a DAF account as the charitable beneficiary.
Now, whenever you want to change the ultimate
charitable beneficiaries of your estate plan, you
merely need to provide new advice to the DAF
account sponsoring organization.
DAFs and Your Private Foundation
If you have a private foundation, a DAF can
still play a central role in your year-end and all
around charitable plan. Different limitations
apply to the amount you can deduct in the cur-
rent tax year depending upon whether you con-
tributed to a public or a private charity. If you
have maxed out current-year deductible contri-
butions to your private foundation, by contrib-
uting to a DAF account you can increase your
current-year deduction. Further, if your private
foundation has become more of a burden than
it is worth, consider terminating your private
foundation by rolling all of the foundation’s
assets to your DAF account.
A donor-advised fund account is a terrific and
versatile charitable vehicle that can serve as the
central hub of their charitable giving.
This article is provided for informational pur-
poses only and should not be construed as
legal or tax advice.For a full-length version of this article with additional detail, visit:
http://www.donorstrust.org/charitablehubUse a
Donor-Advised
Fund as Your
Charitable Hub
By Jeffrey C. Zysik,
CFO, DonorsTrustAdvertisement