Easy, No Cost Ways to Plan Ahead For Charitable Legacies

Amy Jordan |

Many of you or your clients have established donor-advised funds to organize giving to favorite charities. What you or your clients might not know, though, is how useful a donor-advised fund can be as an estate planning tool to capture charitable bequests. 

For example, a will or trust could leave a specific bequest or remainder interest gift to a donor-advised fund, and the terms of the fund itself could lay out the disposition of that bequest. Many donor-advised funds, for instance, are structured to convert to an endowment fund upon a client’s death. The donor-advised fund agreement might name a client’s children to serve as successor advisors to the fund after the client’s lifetime. Whatever the terms of the donor-advised fund, the client’s bequest to the fund is a charitable gift and therefore eligible for the estate tax deduction in the client’s estate. With the estate tax exemption sunset on the horizon, a greater portion of clients will likely need to include estate tax savings provisions in their wills and trusts. Charitable bequests are a useful tool!  

To sum it up, when incorporating a client’s donor-advised fund into an overall estate plan, remember these three tips: 

–An existing donor-advised fund can be the recipient of a charitable bequest, and the terms of the donor-advised fund can lay out what happens next (e.g., successor advisors’ step in, the fund converts to an endowment, or the fund supports specific causes).

–If your or your client are not currently using a donor-advised fund to support favorite charities, a fund at Hudson Community Foundation can be set-up to receive a future bequest. The fund is governed by a fund agreement, but the fund itself will not hold any assets until the client passes away and the bequest is activated.

–A client can adjust the terms of the donor-advised fund any time before the client’s death. This gives the donor maximum flexibility to adjust charitable beneficiaries without the need to amend a will or trust. 

Please contact our team for assistance with the proper language for designating a donor-advised fund at Hudson Community Foundation as a bequest recipient. Our team also will work with you on the terms of the donor-advised fund agreement to achieve the client’s goals. We look forward to working with you and your clients! 

We welcome conversations to help donors give to their favorite causes. Hudson Community Foundation enables simple, smart, and meaningful family philanthropy. Although HCF is a public charity, it does not promote one charitable cause. Rather, HCF is committed to expanding the capacity of family philanthropy - no matter where you live.

 Read more about Donors Guide to Donor Advised Funds.

With a fund at Hudson Community Foundation (HCF), advisors can manage the charitable assets on their preferred platform at any amountAssets stay under your management. You can provide your clients with the consistent investment advice they expect. We are your partner in charitable giving!

The team at HCF is a resource as you serve your philanthropic clients. We understand the charitable side and are happy to serve as a secondary source as you manage the primary relationship with your clients. This email is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.