Donor Advised Funds & Your Estate Plan

When you’re inventorying your assets and taking stock of your inheritance plan you may find that you are in a position to support some of your favorite charities. There are a number of ways to go about doing this, and the billionaires among us generally start private family foundations, and of course the Bill and Melinda Gates Foundation is a prime example of this. These foundations are very costly to create and maintain, so this route is simply not practical for most people, even those with the means to engage in philanthropic efforts.

A very popular vehicle of charitable giving that you may want to consider when you’re creating your estate plan if you do want to give something back would be a donor advised fund. With these funds you contribute assets, and at that point they become the property of the fund. However, you as the donor may advise the fund with regard to how grants from the fund are bestowed.

So if you have ten different charities that you want to contribute to you could simply advise the fund accordingly and your contribution could be split among these various worthy causes. You can imagine how much time and effort it would take to identify the charities, make the contributions, and then follow up with all the paperwork and record-keeping involved. Donor advised funds streamline the process, and this is a large part of the appeal that they provide.

Should you decide to satisfy your philanthropic urges through the creation of a donor advised fund you will receive tax benefits as a reward. The original contribution to the fund is going to move those assets out of your estate, reducing your estate tax exposure. This donation is also going to result in a charitable deduction for the year during which the contribution was made. In addition, the donation of appreciated securities into the donor advised fund is not subject to capital gains taxation, allowing you to give money to worthy causes that would’ve otherwise been swallowed up by the taxman.

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Alan Augulis, Estate Planning Attorney

Mr. Augulis founded his Warren, New Jersey law firm so that he could focus his practice in the areas of advanced estate planning and tax law. Mr. Augulis has invested considerable time and energy helping to educate others on the topic of estate planning and has become a sought-after speaker in the tax and estate planning arena because of his informative and entertaining seminars.

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