Donor-advised funds are charitable investment accounts that individuals or families can use exclusively for the support of charities they care about. These funds can be opened with a minimum gift of $5,000 and have significantly lower administrative burden and costs than trusts.
At Geyer Law, we often refer to donor advised funds as now-and-later giving. The way it works is that you donate assets or cash to the fund, but don’t decide how much is going to one or more charities until later on. The charitable tax deduction applies now, but the distribution decisions can come later.
Of course, as estate planning advisors, we offer no tax advice, instead working in cooperation with our clients’ tax advisors, but we are aware that the One Big Beautiful Bill Act (OBBBA) has affected the value of charitable tax deductions. Despite that change, as planning tools, Donor Advised Funds continue to offer unique estate planning options that many of our clients can use.
“The IRS’s new deductibility limits may reduce the marginal tax benefit of giving for some of your clients, but nothing has changed about the donor-advised fund’s broader planning advantages for all your charitable clients,” the Cambridge Community Foundation Smart Giving series for professional advisors emphasizes.
“By making lifetime gifts now—to donor-advised funds or other charitable vehicles—clients can reduce their taxable estate, gain immediate tax benefits, and preserve flexibility in their philanthropy,” the National Philanthropic Trust observes.
Tax planning aside, building charitable giving into your estate plan is a way to leave a meaningful legacy. At Geyer & Associates, we find that many of our clients are interested in benefiting causes meaningful to them. Some donors want a tax deduction now, but want to preserve the right to defer the decision as to which charities will benefit.
Perhaps most important is the fact that Donor-Advised Funds “grow your connections with family members”, as DAFGiving360 explains. “These donors say it is important to leave a lasting impact on charitable causes close to their hearts and set children or grandchildren up to continue their giving beyond their lifetime.”
– by Rebecca W. Geyer
