Testamentary DAFs
A very simple way to implement the charitable portion of an estate plan is through the use of Donor Advised Funds (DAFs). There are several simple and effective strategies, including:
- Pre-planning a DAF to make several charitable gifts after death
- Planning a DAF for a child and/or grandchild to continue the family’s philanthropic endeavors
- Gifting a fund to a friend, caregiver, etc.
The beauty of a testamentary DAF is its simplicity. In the estate plan, the gift is simply to the DAF sponsor, such as the Catholic Community Foundation. The remainder of planning is done between the donor and the provider. This single charitable beneficiary strategy is efficient – when changes are made, there is no need to change the estate documents.
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Gifted DAFs
One or many donors can contribute to a Gifted Donor Advised Fund in honor of a recipient. The donors receive a full charitable tax deduction for the year the donation is made. The recipient of the fund (the advisor) chooses how to charitably “spend” the donated money later to eligible non-profits of their choice with no timing restrictions.
What are the benefits of a gifted Donor Advised Fund? For the donors/gift-givers – they get to commemorate and honor the recipient and receive a the full tax benefit of their gifts. For the recipient/fund advisor – they become the advisor of the fund and recommend grants to valid charities and organizations, making a real impact in the community.
For example, you may consider a gifted DAF as a gift for your pastor’s anniversary of ordination, a retirement, a wedding or wedding anniversary, or a milestone birthday.