It is important to consult with an estate planning attorney when you get serious about preparing your assets for distribution to your loved ones after you pass away for a number of reasons. Perhaps the best one is the fact that there are many different ways to transfer assets and the best strategy is going to vary depending on the anatomy of your estate and the specific nature of your wishes. A good estate planning attorney is going to examine your assets, gain an understanding of exactly what you want to accomplish with your estate, and provide the framework for achieving your goals.
One of the nice things about some of the estate planning vehicles that exist is the fact that they can satisfy dual objectives, and one of these is the donor advised fund. With these funds you can satisfy your desire to give something back to charitable causes while simultaneously gaining tax efficiency, and this is why these funds are so widely utilized today.
Once you place assets into the fund you relinquish ownership, so right off the bat you are entitled to a charitable deduction. If you were to place appreciated securities into the donor advised fund, this contribution would not be subject to capital gains tax, so you can support charitable causes with funds that would’ve otherwise gone to the IRS. In addition to these tax advantages, the contribution into the fund is going to reduce the overall value of your estate, and in turn this will reduce your estate tax exposure.
As the donor you can advise the fund with regard to which charities will receive grants from the fund and how much they will receive. Your contribution could wind up assisting multiple different charities, but only one tax substantiation letter will be necessary. Donor advised funds are very efficient vehicles of charitable giving, and they are something to consider when you are planning your estate.