Creating a Lasting Legacy: How Donor-Advised Funds Can Support Charities After Death
For many donors, the desire to continue making an impact doesn’t end with their lifetime. Ensuring that their favorite charities remain financially secure and can continue their mission is a powerful way to create a lasting legacy. While it’s easy to make annual donations, long-term planning is essential to provide ongoing support for charitable causes after death. At Stablish Foundation, we help donors achieve this goal through the establishment of a Donor-Advised Fund (DAF).
A DAF is a flexible vehicle that allows donors to contribute to their chosen charities, even after their death. In fact, most DAFs are designed to continue indefinitely, providing a permanent legacy of giving. There’s no limit to the assets that can be used to fund a DAF. Donors can include real estate, life insurance policies, retirement assets, collectibles, or even crops and livestock, depending on their financial situation.
Why Consider a DAF After Death?
Some donors may feel uncertain about their financial situation during their lifetime and prefer to defer charitable gifts until after their death. For these donors, establishing a DAF in their estate plan provides a simple way to continue supporting their favorite causes. Involving estate planning advisors is crucial to determine the appropriate amounts and methods of transferring assets to the DAF.
Here are some common reasons donors choose to contribute to a DAF after their death:
- Reducing Estate Taxes: For donors with large estates subject to federal or state estate taxes, a charitable distribution can significantly reduce or eliminate these tax burdens.
- Mitigating Income Taxes for Beneficiaries: Donors with significant qualified assets (e.g., IRAs or 401(k)s) may face income tax implications for their beneficiaries. Directing these funds to a DAF can help reduce or eliminate the tax burden.
- Continuing a Lifelong Commitment: Donors who have supported a charity throughout their life may want to ensure their contributions continue after their death.
- No Immediate Heirs: Donors without children or immediate heirs may wish to support their community or the world through charitable giving instead.
- Supporting Causes Close to the Heart: Donors who have lost loved ones to specific diseases may want to fund research for a cure through their DAF.
- Helping Others with Education: Donors who have struggled to finance their own education may wish to assist future generations in easing their financial burdens.
The reasons for creating a legacy through charitable giving are deeply personal and varied. At Stablish Foundation, we work closely with donors and their professional advisors to ensure their legacy reflects their passions and values, while also making a lasting difference.
A Legacy in Action: Real-Life Impact
One of our donors created a DAF specifically to help a new nonprofit get off the ground after her passing. Without this fund, the nonprofit would never have been created, and its beneficiaries would have been left without crucial services. This is just one example of how a well-planned DAF can make a meaningful impact long after the donor’s lifetime.
How to Set Up a Legacy Through a DAF
Donors can establish a legacy through a DAF in several ways:
- In a Last Will and Testament: The donor can allocate assets to a DAF through their will, ensuring that their charitable giving goals are fulfilled after death.
- Through a Revocable Trust: This method provides flexibility, allowing donors to adjust their giving plans as their financial situation changes.
- Direct Gift While Living: Some donors prefer to create a DAF while they are alive, allowing them to see the impact of their charitable giving firsthand.
In every case, Stablish Foundation collaborates with the donor’s professional advisors to determine the best approach and timing to create a lasting legacy of giving.
Building Your Legacy
A legacy of charitable giving can reflect a donor’s life, values, and passion for making the world a better place. Through careful planning and thoughtful use of a Donor-Advised Fund, donors can continue supporting the causes they care about for generations to come. At Stablish Foundation, we’re here to assist donors in every step of this journey, ensuring their legacy lives on through meaningful, lasting impact.
Let us help you create YOUR LEGACY.