How Can I Use Estate Planning to Give Back to the Community?
Taking care of family is usually the primary objective when planning the disposition of assets. However, an estate plan can also include charitable elements as a way to give back to the community. Charitable gifts through one's estate can also yield income or estate tax benefits. It is important for anyone considering these strategies to meet with his or her legal and accounting advisors to ensure that the plan meets his or her overall objectives and that it is a good fit based on the estate's size.
One of the most popular structures is the donor-advised fund [DAF]. DAF's are charitable giving vehicles set up during a donor's lifetime or on death under the tax umbrella of a public charity, which acts as the sponsor. A DAF offers the opportunity to create a simple, low-cost, flexible vehicle for charitable giving as an alternative to direct giving or creating a private foundation. Community foundations pioneered DAF's, and a number of commercial sponsors, educational institutions and independant charities offer them.
DAF's are the fastest growing charitable giving vehicle, with more than 100,000 established holding more than $17.5 billion in assets. Because a DAF is under the auspices of a public charity, donors receive the maximum tax deduction available, while avoiding excise taxes and other restrictions imposed on private foundations.
