When you are planning your estate of course your family members are going to be your first priority, but when you have reached your twilight years you may well take a long look at the totality of your legacy. As the end of your life beckons you may recognize how fortunate you have been and feel as though you would like to make a statement of gratitude by giving something back to those who are in need. For this reason many people include a charitable giving component when they are devising an estate plan, and one of the vehicles that is commonly utilized is the donor advised fund.

It can be a daunting task to research all the charitable causes that you may want to support, contact them, and then make direct contributions to each of them. You then have to follow-up and shuffle all the administrative tasks associated with these multiple donations. In addition, many people have securities that they would like to donate to charity. A lot of charities are not set up in a manner that allows them to accept contributions of securities, and this can create obstacles as well.

Donor advised funds allow you to avoid all of the above pitfalls. When you make a single contribution into the fund you can then give advice with regard to the recipients of the grants that will be bestowed out of the fund. You can also take advantage of the opportunity to have the fund manage your contributions with growth in mind so that you can create an ongoing legacy of giving in your name. It should be emphasized that the fund owns the assets that you contribute, but your recommendations are generally going to be honored with regard to how they are distributed to charitable causes.

You also gain tax advantages by creation of the fund as a reward for your generosity. You are entitled to a charitable deduction for your contributions into the fund for the year during which the contributions were made. Plus, the donation of appreciated securities is not subject to capital gains tax, enabling you to support worthy causes with funds that otherwise would have gone into the coffers of the IRS.

Tags: Estate Planning, Inheritance Planning, Legacy Planning