Donor Advised Funds
We've already established that the remainder proceeds of
a Charitable Remainder Trust are left to a charity or charities
of the donors choosing. An alternative to naming a typical
charity, school or educational institution is to set up your
own charitable entity. This can easily be accomplished using
Donor Advised Funds.
The process is very easy and can be completed with an easy
to understand four page form. There is no need for an attorney
to draft legal documents nor the requirement to file any tax
returns for the Donor Advised Funds account. You can name
the account just about anything you like, for example:
- The John and Mary Smith Private Foundation
- The John and Marry Smith Charitable Fund for the Arts
- The John and Mary Smith Scholarship Foundation
- The David Smith Memorial Foundation and so on.
You can name your children and or grandchildren as your Donor
Advisors. They would control the assets received from the
CRT proceeds into the Donor Advised Funds account. They would
be responsible for deciding when, who and what amounts are
to be distributed from the account. They can make donations
on behalf of the Donor Advised Funds account or if they choose,
Another alternative is to set up the account to pay out on
a systematic basis. For example: You decide to fund an annual
scholarship at your alma mater. You can pre designate in the
Donor Advised Funds application that a set percentage, say
5% of the annual value be distributed to fund a scholarship
in your name. The account can then go on in perpetuity leaving
an ongoing legacy in your name.
Take a look at Donor Advised Funds when the expected remainder
amount from the Charitable Trust will be under Two Million
Dollars. Also for those looking to set up a pre determined
ongoing distribution to fund a legacy as outlined in the example
above. Donor Advised Funds may be appropriate for those donors
that do not have anyone they would like to name to manage
the assets once they pass away. The donor can still establish
a legacy and pre determine specific guidelines to be carried
out on their behalf.
For more information on Donor Advised Funds visit one of
our other charitable web sites located at www.DonorAdvisedFunds.com.
We have also put together a hypothetical case study that
illustrates a Donor Advised Funds account in use. Click
here to view the study as an adobe .pdf file.
For assets above Two Million where the donor has a desire
to establish an operating foundation a more appropriate alternative
may be to list a Private
Foundation as the recipient of the Charitable Trust proceeds.
Harding Financial Services, LLC
The information contained on this site is for educational
purposes only, it is not intended to be professional tax or
legal advise; consult a tax advisor about your specific situation.