Giving and Receiving Benefits Through a Donor-Advised Fund

On Behalf of | Oct 27, 2021 | charitable giving, estate and tax planning, Estate Planning, estate planning documents

Thanks to the Tax Cuts and Jobs Act enacted in 2017, use of donor-advised funds is soaring,“ Bob Carlson writes in Forbes. In fact, according to the National Philanthropic Trust, grant making from donor-advised funds has almost doubled over the past five years.

Donor-advised funds are hardly new, having been available for decades. Beginning with the CARES Act of 2020 and continuing with the Tax Cuts and Jobs Act, there are many opportunities for increased tax advantages through charitable giving.

Many of our Geyer Law clients are able to take advantage of donor-advised funds, which are now offered through:

  • charities
  • brokerage firms
  • mutual fund companies

Tax savings through charitable giving in 2021:

  • Up to 100% of adjusted gross Income can be deducted for cash contributions to charity.
  • For those taxpayers who do not itemize, they are allowed to deduct up to $600 in cash contributions to charity.
  • For contributions to charity through Donor-Advised funds, deductions up to 60% AGI are allowed for cash contributions and up to 30% AGI or contributions of appreciated assets.
  • Individuals over age 70 ½ can donate up to $100,000 of IRA assets directly to charity (each year!) through a Qualified Charitable Distribution

Benefit now, make the specific choices later:
Remember, contributions to donor-advised funds are tax deductible in the year in which the contribution is made. The specific choices of which charities will benefit do not, however, need to be made in the same year as the contribution. In the meantime, assets donated do not need to be sold, and may be held inside the fund and continue to be managed by the donor’s own wealth advisor. Donors can take their time deciding on which charities will benefit and in what amounts.

Since charitable planning is inextricably related to our clients’ overall estate planning, donor-advised funds are one of the many important tactics we include in our discussions at Geyer Law

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– by Cara Chittenden, Associate Attorney at Rebecca W. Geyer & Associates