Donor advised funds and family trusts

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a32Jun1966
Posts: 11
Joined: Wed Jun 23, 2021 6:12 pm

Donor advised funds and family trusts

Post by a32Jun1966 »

My family's finances are organized around a family trust. I am interested in setting up a donor advised fund for my charitable giving. I learned today though that an account cannot be set up under a family trust.

Was the source at the broker correct?
Anyone been in the same position (i.e. family trust) but went another route for a charitable giving fund?

Thanks for the advice.
bsteiner
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Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Donor advised funds and family trusts

Post by bsteiner »

Is charity a discretionary beneficiary? If not, the trustees can’t distribute to charity.
Last edited by bsteiner on Tue Oct 19, 2021 8:59 pm, edited 1 time in total.
Topic Author
a32Jun1966
Posts: 11
Joined: Wed Jun 23, 2021 6:12 pm

Re: Donor advised funds and family trusts

Post by a32Jun1966 »

bsteiner wrote: Tue Oct 19, 2021 8:21 pm Is charity a discretionary beneficiary? If not, the trustees can’t distribute to charity?
Are you asking me or telling me?
interwebopinion
Posts: 273
Joined: Thu Aug 13, 2020 6:21 pm

Re: Donor advised funds and family trusts

Post by interwebopinion »

a32Jun1966 wrote: Tue Oct 19, 2021 7:51 pm My family's finances are organized around a family trust. I am interested in setting up a donor advised fund for my charitable giving. I learned today though that an account cannot be set up under a family trust.

Was the source at the broker correct?
Anyone been in the same position (i.e. family trust) but went another route for a charitable giving fund?

Thanks for the advice.
When you give money to a DAF, the money becomes that of the DAF. It's no longer yours. They track how much that money is worth and report it to you, but you only have the right to 'advise' the fund on how to donate it. As such, since the money is not yours, it can't be placed into your family trust.

One or more of your trustees can be named as advisors for your DAF account of course.
bsteiner
Posts: 9208
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Donor advised funds and family trusts

Post by bsteiner »

a32Jun1966 wrote: Tue Oct 19, 2021 8:25 pm
bsteiner wrote: Tue Oct 19, 2021 8:21 pm Is charity a discretionary beneficiary? If not, the trustees can’t distribute to charity?
Are you asking me or telling me?
My error. I edited it to change the second question mark to a period.

There’s been some discussion in the last few years about making charity a permissible beneficiary of trusts to allow income tax deductions for distributions to charity where the beneficiaries don’t itemize. But trusts with that provision aren’t yet very common.
Topic Author
a32Jun1966
Posts: 11
Joined: Wed Jun 23, 2021 6:12 pm

Re: Donor advised funds and family trusts

Post by a32Jun1966 »

interwebopinion wrote: Tue Oct 19, 2021 8:32 pm
a32Jun1966 wrote: Tue Oct 19, 2021 7:51 pm My family's finances are organized around a family trust. I am interested in setting up a donor advised fund for my charitable giving. I learned today though that an account cannot be set up under a family trust.

Was the source at the broker correct?
Anyone been in the same position (i.e. family trust) but went another route for a charitable giving fund?

Thanks for the advice.
When you give money to a DAF, the money becomes that of the DAF. It's no longer yours. They track how much that money is worth and report it to you, but you only have the right to 'advise' the fund on how to donate it. As such, since the money is not yours, it can't be placed into your family trust.

One or more of your trustees can be named as advisors for your DAF account of course.
Ok. Got it. But is there a issue here if I wanted to transfer stock from my family trust account over into a DAF? Don't stock transfers need to be from like to like accounts?
Topic Author
a32Jun1966
Posts: 11
Joined: Wed Jun 23, 2021 6:12 pm

Re: Donor advised funds and family trusts

Post by a32Jun1966 »

bsteiner wrote: Tue Oct 19, 2021 9:03 pm
a32Jun1966 wrote: Tue Oct 19, 2021 8:25 pm
bsteiner wrote: Tue Oct 19, 2021 8:21 pm Is charity a discretionary beneficiary? If not, the trustees can’t distribute to charity?
Are you asking me or telling me?
My error. I edited it to change the second question mark to a period.

There’s been some discussion in the last few years about making charity a permissible beneficiary of trusts to allow income tax deductions for distributions to charity where the beneficiaries don’t itemize. But trusts with that provision aren’t yet very common.
Makes sense. Thanks for the reply.
interwebopinion
Posts: 273
Joined: Thu Aug 13, 2020 6:21 pm

Re: Donor advised funds and family trusts

Post by interwebopinion »

a32Jun1966 wrote: Tue Oct 19, 2021 9:58 pm
Ok. Got it. But is there a issue here if I wanted to transfer stock from my family trust account over into a DAF? Don't stock transfers need to be from like to like accounts?
You'll have to check with your lawyer on your trust, but usually the garden variety trusts are written to give trustees wide latitude on how and in what form the assets are disbursed.
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