Donor Advised Fund - Family Trust or my name?

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Copernicus
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Donor Advised Fund - Family Trust or my name?

Post by Copernicus » Sat Dec 23, 2017 2:41 pm

I have a family trust, with both spouses as co-trustees, and the kids as inheritors. Should I open a new a donor advised fund for 2017 deduction with the Trust name or two spouses' names or with a 'cause' name like 'education'? Also, should kids be the
beneficiaries as with my IRA, or the family trust?

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FIREchief
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Re: Donor Advised Fund - Family Trust or my name?

Post by FIREchief » Sat Dec 23, 2017 2:49 pm

You will never have an "ownership" interest in the DAF, so it really doesn't matter what you name it. Many people would name it something such as "The Copernicus Family Charitable Fund." You can name your adult children (and others) as fund advisors at any time. IIRC, you can name a final charitable beneficiary if all DAF advisors have passed away or otherwise "abandoned" the DAF. I believe that ours names one of the world relief organizations as the ultimate recipient of any residual funds.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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dm200
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Re: Donor Advised Fund - Family Trust or my name?

Post by dm200 » Sat Dec 23, 2017 2:56 pm

Yes - there are no "beneficiaries" of the DAF - as with other types of owned accounts. The money is no longer yours - either individually or in a trust.

inbox788
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Re: Donor Advised Fund - Family Trust or my name?

Post by inbox788 » Sat Dec 23, 2017 3:11 pm

FIREchief wrote:
Sat Dec 23, 2017 2:49 pm
You can name your adult children (and others) as fund advisors at any time. IIRC, you can name a final charitable beneficiary if all DAF advisors have passed away or otherwise "abandoned" the DAF. I believe that ours names one of the world relief organizations as the ultimate recipient of any residual funds.
Where did you do this? At the DAF or in your trust/will? Fidelity has a Successors area where you can add individuals or charitable organizations, but it's not clear whether it's simply divided among those listed (there is a percentage column which is 100% for one successor) or whether you can list a sequence of successors (which is what I'd really like).

And how are they to determine if someone "abandoned" the DAF? A relative is facing an inheritance issue where potential heirs who are not been in contact or locatable are holding up distributions, which looks like it's going to require notifications and a waiting period. I figure it's a matter of civil laws and policies at the DAF that determine the waiting time, but might be longer than anyone thinks. Then again, you won't really be around to care all that much. Anyway, the take away is that as we're preparing for the future, the titling, and clarity of beneficiaries is extremely important, and care taken now may avoid a lot of nuisance and cost down the road.

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dm200
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Re: Donor Advised Fund - Family Trust or my name?

Post by dm200 » Sat Dec 23, 2017 3:51 pm

inbox788 wrote:
Sat Dec 23, 2017 3:11 pm
FIREchief wrote:
Sat Dec 23, 2017 2:49 pm
You can name your adult children (and others) as fund advisors at any time. IIRC, you can name a final charitable beneficiary if all DAF advisors have passed away or otherwise "abandoned" the DAF. I believe that ours names one of the world relief organizations as the ultimate recipient of any residual funds.
Where did you do this? At the DAF or in your trust/will? Fidelity has a Successors area where you can add individuals or charitable organizations, but it's not clear whether it's simply divided among those listed (there is a percentage column which is 100% for one successor) or whether you can list a sequence of successors (which is what I'd really like).

And how are they to determine if someone "abandoned" the DAF? A relative is facing an inheritance issue where potential heirs who are not been in contact or locatable are holding up distributions, which looks like it's going to require notifications and a waiting period. I figure it's a matter of civil laws and policies at the DAF that determine the waiting time, but might be longer than anyone thinks. Then again, you won't really be around to care all that much. Anyway, the take away is that as we're preparing for the future, the titling, and clarity of beneficiaries is extremely important, and care taken now may avoid a lot of nuisance and cost down the road.
For our Fidelity DAF, I handle all the grant requests, although both my wife and I are the authorized persons. We named it the "DM and DW Charitable Trust". We also named our adult son as the successor. We assume that in the event of our demise, our son will be authorized. Then, he can do whatever he wishes - BUT we hope that, during a long transition period, he (and perhaps his future DW) will continue requesting "grants" consistent with our intent and the investment mix to support long term funding of the grants.

Gill
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Re: Donor Advised Fund - Family Trust or my name?

Post by Gill » Sat Dec 23, 2017 3:58 pm

dm200 wrote:
Sat Dec 23, 2017 3:51 pm
We named it the "DM and DW Charitable Trust".
Are you sure it has "trust" in the name? I thought Fidelity wouldn't let you use "trust" or "foundation" and a few other names in the name of your fund.
Gill

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FIREchief
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Re: Donor Advised Fund - Family Trust or my name?

Post by FIREchief » Sat Dec 23, 2017 4:34 pm

inbox788 wrote:
Sat Dec 23, 2017 3:11 pm
FIREchief wrote:
Sat Dec 23, 2017 2:49 pm
You can name your adult children (and others) as fund advisors at any time. IIRC, you can name a final charitable beneficiary if all DAF advisors have passed away or otherwise "abandoned" the DAF. I believe that ours names one of the world relief organizations as the ultimate recipient of any residual funds.
Where did you do this? At the DAF or in your trust/will? Fidelity has a Successors area where you can add individuals or charitable organizations, but it's not clear whether it's simply divided among those listed (there is a percentage column which is 100% for one successor) or whether you can list a sequence of successors (which is what I'd really like).
I should probably clarify. At Fidelity the DAF names both primary and secondary account holders. I believe that all of them are free to recommend grants to various charities. They can also add additional secondary account holders as they wish. In my situation, myself, DW and our adult children are all named account holders. I have no concerns about any of us "blowing" DAF assets on charities that are not aligned with our family values and beliefs. If/when any of us pass away or become incapacitated, the remainder can carry on with management of our DAF. I've told our kids that they can freely donate to, and grant from, our family DAF. This means they can benefit from a DAF without having to set up their own. Unlike many aspects of finance, I think a shared DAF is a great thing for a family to utilize.
And how are they to determine if someone "abandoned" the DAF? A relative is facing an inheritance issue where potential heirs who are not been in contact or locatable are holding up distributions, which looks like it's going to require notifications and a waiting period. I figure it's a matter of civil laws and policies at the DAF that determine the waiting time, but might be longer than anyone thinks. Anyway, the take away is that as we're preparing for the future, the titling, and clarity of beneficiaries is extremely important, and care taken now may avoid a lot of nuisance and cost down the road.
This gets into what Fidelity calls successors. I really don't recall what would constitute "abandonment," but I seem to recall when setting up the DAF that after a certain period of inactivity (i.e no grants or contributions), the DAF would disperse. I thought it would be to successsors, but it may be to a general charitable fund. Maybe somebody who has done this more recently can fill us in. Certainly, in the event that the last surviving advisor passes (with death certificate provided), the DAF will split up the DAF and either lump sum donate (to charity) or set up new sub-DAFS to percentage individual successors. I personally like just leaving our DAF in the hands of our children (and perhaps later their children), rather than having it break up via successors.
Then again, you won't really be around to care all that much.
I certainly won't be "around," at least in the traditional sense. It doesn't mean I won't still care! :sharebeer
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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dm200
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Re: Donor Advised Fund - Family Trust or my name?

Post by dm200 » Sat Dec 23, 2017 5:22 pm

Gill wrote:
Sat Dec 23, 2017 3:58 pm
dm200 wrote:
Sat Dec 23, 2017 3:51 pm
We named it the "DM and DW Charitable Trust".
Are you sure it has "trust" in the name? I thought Fidelity wouldn't let you use "trust" or "foundation" and a few other names in the name of your fund.
Gill
OK - sorry about that. I was not correct/precise. I just looked it up.

DM200 Family Charitable Fund

where DM200 is my actual first and last name

Copernicus
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Re: Donor Advised Fund - Family Trust or my name?

Post by Copernicus » Sat Dec 23, 2017 9:19 pm

This link explains what a 'successor' is.
https://www.nptrust.org/donor-advised-f ... nd-account

If individuals, not charities, are named as successors - When the original person setting up a DAF dies, the successors inherit the account, can either continue making donations or withdraw the money for themselves? - Is this correct?

If this is correct, wouldn't someone set up DAF to get a tax break, not donate anything to charities, and allow the successors to get hold of those assets for personal use (at the step-up cost basis)? If yes, then people would use this approach instead of forming a family trust, where there is no tax break for putting assets into a trust??
........something is not making sense to me.

Gill
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Re: Donor Advised Fund - Family Trust or my name?

Post by Gill » Sat Dec 23, 2017 9:30 pm

Copernicus wrote:
Sat Dec 23, 2017 9:19 pm
This link explains what a 'successor' is.
https://www.nptrust.org/donor-advised-f ... nd-account

If individuals, not charities, are named as successors - When the original person setting up a DAF dies, the successors inherit the account, can either continue making donations or withdraw the money for themselves? - Is this correct?

If this is correct, wouldn't someone set up DAF to get a tax break, not donate anything to charities, and allow the successors to get hold of those assets for personal use (at the step-up cost basis)? If yes, then people would use this approach instead of forming a family trust, where there is no tax break for putting assets into a trust??
........something is not making sense to me.
No, the funds must always remain for charities. Individuals can take over as advisors but they would receive no personal benefit.
Gill

daveydoo
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Re: Donor Advised Fund - Family Trust or my name?

Post by daveydoo » Sat Dec 23, 2017 9:37 pm

FIREchief wrote:
Sat Dec 23, 2017 2:49 pm
...name it something such as "The Copernicus Family Charitable Fund."
We left out the "Family" -- made it look like we had inherited the money, imo. (Fido DAF automatically inserts the word "Family.") Spouse and I have different last names and it's just "Smith/Jones Fund," I think. Except with the right names.

First year we've had it and the donating is just so easy -- it's a pleasure!
"I mean, it's one banana, Michael...what could it cost? Ten dollars?"

Pigeye Brewster
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Re: Donor Advised Fund - Family Trust or my name?

Post by Pigeye Brewster » Sat Dec 23, 2017 11:49 pm

Gill wrote:
Sat Dec 23, 2017 9:30 pm
Copernicus wrote:
Sat Dec 23, 2017 9:19 pm
This link explains what a 'successor' is.
https://www.nptrust.org/donor-advised-f ... nd-account

If individuals, not charities, are named as successors - When the original person setting up a DAF dies, the successors inherit the account, can either continue making donations or withdraw the money for themselves? - Is this correct?

If this is correct, wouldn't someone set up DAF to get a tax break, not donate anything to charities, and allow the successors to get hold of those assets for personal use (at the step-up cost basis)? If yes, then people would use this approach instead of forming a family trust, where there is no tax break for putting assets into a trust??
........something is not making sense to me.
No, the funds must always remain for charities. Individuals can take over as advisors but they would receive no personal benefit.
Gill
To elaborate on what Gill posted, please keep in mind that a DAF is itself a 501(c)(3) organization and a contribution to a DAF is an irrevocable gift. That's why you get a current tax deduction. It also means it's no longer your money in any shape or form, nor can you get any further benefit from the funds. You are allowed to "advise" on the investment of the funds and on how the funds are distributed to other 501(c)(3) charities.

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dm200
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Re: Donor Advised Fund - Family Trust or my name?

Post by dm200 » Sun Dec 24, 2017 10:42 am

To elaborate on what Gill posted, please keep in mind that a DAF is itself a 501(c)(3) organization and a contribution to a DAF is an irrevocable gift. That's why you get a current tax deduction. It also means it's no longer your money in any shape or form, nor can you get any further benefit from the funds. You are allowed to "advise" on the investment of the funds and on how the funds are distributed to other 501(c)(3) charities.
Right. The only "benefits" you are allowed to receive are "incidental" ones for donors to certain charities or causes. I have never asked for or received such "incidental" benefits. I suppose that might be some kind of donor or memorial listing. Perhaps it might be an invitation to a very modest reception or similar event.

As long as the "pledge" is not an actual contractual legal obligation, the recipient organization can know that you are a generous supporter of a fundraising campaign.

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