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Donor-advised funds and high-net worth individuals

On Behalf of | Jan 13, 2015 | Estate Planning

Donor-advised funds and high-net worth individuals

For those individuals and families with high levels of assets and property, giving back via charitable donations, or the establishment of certain types of trusts and/or charitable foundations, is an everyday occurrence. It is also often a “given” in estate planning. And recently, donor-advised funds, or DAFs, have taken precedence over private foundations as the desired vehicle for charitable giving at that elevated level.

Speaking generally, DAF accounts are considerably simpler than foundations, to set up, to administrate, and to manage. In fact, DAFs are not unlike savings accounts in some ways. However, many DAFS may accept assets in forms that other charities or financial instruments may not, such as:

  • land
  • insurance
  • privately held stock
  • publicly traded stock

Other advantages of a DAF include the centralization of charitable donations into one fund rather than many separate donations to different organizations. Also, in terms of streamlining of donations, different organizations may be paid from one DAF, without the recipient being stymied by the form of donation or how to convert it (e.g. real estate) into a more liquid form.

The owner of the DAF may choose the timing of the donation and the timing of the related tax benefit; for example, assets may be added to the DAF fund at the end of one calendar year but the donation made in a subsequent (tax) year later on. This is also beneficial to the owner of the DAF in terms of handling assets that represent long-term capital gains: these may be added to the account for later disbursement to charity.

DAF donors also gain the advantages of being able to help the cause of their choice regularly over a period of time, and to see the effects of those donations during the donor’s lifetime, unlike, for example, a charitable trust that only takes effect after the donor’s death. A DAF may also be established with control given to an advisor rather that the person establishing it, should that be the wish of that donor.

Before homing in on your favorite charitable cause, a wise first step might be to consult a family law attorney with extensive experience in high net worth client issues. And please keep in mind that the content of this blog is intended not as legal advice, but only for information and/or discussion purposes. Should you have questions or concerns about topics discussed above, you may wish to consult a knowledgeable family law attorney. 

As Orange County’s premier family law specialists, the attorneys at Dinnebier & Demmerle can provide answers to your questions and concerns, clarify and establish your legal rights, and represent you in court. If you would like more information about high net worth estate planning, donor-advised funds or any other aspect of California family law, please call to set up a consultation. We’re ready to move forward when you are. Just contact us in Tustin at 714-598-3714.