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Estate Planning and Charitable Donations

Long-Term Care Planning and Timing a Move into Assisted Living
Funded with cash or other assets, donor-advised funds give charitably minded investors control of when and where their funds are distributed.

Many Americans are feeling charitable these days, and with good reasons. It’s a hard time for many, and if you are financially able, making donations is a way to make a difference for others during uncertain times.  Estate planning and charitable donations often go hand in hand, according to Beck, Lenox & Stolzer Estate Planning and Elder Law, LLC, LLC, discusses with their clientele. There are many options when making donations, and the recent article “Choosing Charity: How Donor-Advised Funds Benefit Your Contributions” from Fort Worth Magazine explains your choices.

Donor Advised Funds (DAFs) can be opened for varying amounts, pre-selected by the sponsoring organizations. Smaller community foundations would welcome a DAF for $5,000, for instance. DAFs can be funded with cash or other assets, but once the donation is made, the asset no longer belongs to you. However, you may be able to decide when donations are distributed, and which charities receive funding. There are no required distribution dates which means the funds could go unused for a long time, however, you still receive the tax write-off right away.

You may also determine the investments within the fund, level of risk and overall investment strategy.

Another good reason to use DAFs- the sponsoring organization becomes the donor of record. If being an anonymous donor is important to you, this will meet that goal.

There are also DAFs that involve active involvement from an advisor, if that is of value to you.

Why is now a great time to use a Donor-Advised Fund?

Some investors have highly appreciated assets that could lead to a significant tax liability if they were sold right now. DAF offers an alternative—rather than sell the assets and pay taxes, putting them into a DAF can achieve the following:

  • You receive a tax deduction,
  • There are no capital gains taxes, and
  • You choose the charity that fully benefits from the funds.

The pandemic has left many people facing uncertainty. Therefore, now may not be the right time to be overly generous. However, if you are charitably-minded and in a financial position to benefit from a DAF, it is a win-win situation for all concerned. Discuss your estate planning and charitable donations with an experienced estate planning attorney like the ones at Beck, Lenox & Stolzer.

Reference: Fort Worth Magazine (Feb. 3, 2021) “Choosing Charity: How Donor-Advised Funds Benefit Your Contributions”


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