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Beneficiary Designations? Better Ask About the Donor-Advised Fund.

Due to the recent  uncertainty about whether the government would limit income tax charitable deduction as part of its effort to raise tax revenues, many high-net worth donors have made very significant additions to their donor-advised funds.

These donor-advised funds, particularly the ones at Fidelity, Schwab and Vanguard are now some of the largest charities in the world by capitalization.

The net result is that many of your best donors now have significant assets held in donor-advised funds.

When they pass on, they can either name a successor to make grants to charities from their donor-advised fund, or they can name one or more charities to receive the balance left in the account.

With such large sums in donor-advised funds, you are missing the boat if you are not asking your donors with donor-advised funds to name your charity as at least one of the final beneficiaries of the fund. It is money that they have already allocated to charity, so the sell is completely about your mission and the long-term good they can do for your charity.

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1 comment

This is absolutely brilliant! I wonder if it will hold up legally though because I was under the impression that contributors to donor advised funds can only “recommend” where the gift should go. How would this hold up as a testamentary gift?

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