Randy Eschels photo
Garett Eschels photo

 

Randy Eschels, CLU, ChFC, CFP®

 

Garett Eschels

 

 

Eschels Financial Group, Inc.

555 S Old Woodward Avenue, Suite 612

Birmingham, MI 48009

 

Phone:  248-644-1144

             800-969-9990

Fax:      248-644-7820

 

randy@eschelsfinancial.net

garett@eschelsfinancial.net

www.efg-ida.com

May/June 2022

Giving to Charity with a Donor-Advised Fund

Giving to Charity with a Donor-Advised Fund

A donor-advised fund (DAF) is a charitable investment account established to manage charitable contributions from many different donors. When you contribute to a DAF, you generally can choose the charities you want to support and the time frame for distributing the assets. You’re entitled to an immediate tax deduction for the full amount of your contribution in the year you donate the assets, even if the charity won’t receive them right away. You don’t have to be wealthy to contribute to a DAF. Some funds have relatively low contribution thresholds.

Making Contributions
You can contribute many kinds of assets to a DAF, including cash; stocks, bonds, and mutual funds; retirement account assets; cryptocurrency; life insurance; and other assets. You won’t pay capital gains on any appreciated assets you donate to the fund, and you’ll typically be entitled to a tax deduction based on the asset’s current value. Wealthy donors may be able to reduce the size of their estate for estate tax purposes by contributing to a DAF, because assets contributed to the fund aren’t subject to estate tax.


Getting Started
There are several types of sponsoring organizations for DAF: community and faith-based organizations; public foundations, including national and international charities and university and hospital foundations; and national DAF organizations. Your first step should be to identify the type of fund that aligns with your giving strategy.


Although you can specify the organizations that you want to support, keep in mind that the fund makes the final decision on where your donations ultimately go.


A Word About Life Insurance
Gifting a life insurance policy that you no longer need to a DAF is one option to consider. The fund administrator then becomes the sole owner and beneficiary of the policy. A qualified appraiser will determine an accurate value for the deduction.


When Will it End?
You can make a bequest in your will to the DAF sponsor or make the sponsor a beneficiary of assets. Many sponsoring organizations also enable you to create a succession plan for your DAF—allowing you to pass the remaining funds in your account on to your heirs or to your favorite charities.


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Securities offered through Concourse Financial Group Securities, Inc. (CFGS), Member FINRA/SIPC. Advisory services offered through Concourse Financial Group Advisors, a DBA for CFGS, a Registered Investment Advisor. Eschels Financial Group, Inc. is independent of CFGS.
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