Not all assets are created equal when it comes to giving to charities. The same can be said for donating with your estate. But there is one way to do it that works well. It’s one of the best donor-advised funds strategies for your estate.
According to Vanguard Charitable, a donor-advised fund (DAF) is a charitable giving account designed exclusively to invest, grow, and give assets to charities for meaningful and lasting impact.Â
Most people don’t want to give up their money, and yet they are charitably inclined. So what can they do?
Give with Your Estate
You can make a charity partial beneficiary of your estate. The challenge is that not all inherited assets are equal. What if you’re splitting your estate between heirs and charities?
A savvy giver might give their kids and grandkids Roth IRAs because they are inherited tax-free, or taxable accounts because they get a step-up in basis. For the opposite reason, the same savvy givers might give their IRA rollover, or a part of it, to your favorite charity.
The estate gets a deduction, maybe saving taxes on their estate. And heirs inherit the most beneficial assets.
But what if you want to teach your heirs to be charitable?
Giving IRAs to Donor Advised Funds
You can designate a donor-advised fund as the beneficiary of your IRA rollovers. Your estate gets a deduction for the amount donated. If you wish, your heirs can even be the successor owners of your donor-advised fund so that they can choose the charities the funds go to.Â
Not all inherited assets are equal. If you are charitably inclined, making a donor-advised fund beneficiary of your IRA rollover can be a great strategy for giving and saving on taxes. It can also teach your heirs about giving.