Donor Advised Funds

We've already established that the remainder proceeds of a Charitable Remainder Trust are left to a charity or charities of the donors choosing. An alternative to naming a typical charity, school or educational institution is to set up your own charitable entity. This can easily be accomplished using Donor Advised Funds.

The process is very easy and can be completed with an easy to understand four page form. There is no need for an attorney to draft legal documents nor the requirement to file any tax returns for the Donor Advised Funds account. You can name the account just about anything you like, for example:

  • The John and Mary Smith Private Foundation

  • The John and Marry Smith Charitable Fund for the Arts

  • The John and Mary Smith Scholarship Foundation

  • The David Smith Memorial Foundation and so on.

You can name your children and or grandchildren as your Donor Advisors. They would control the assets received from the CRT proceeds into the Donor Advised Funds account. They would be responsible for deciding when, who and what amounts are to be distributed from the account. They can make donations on behalf of the Donor Advised Funds account or if they choose, anonymously.

Another alternative is to set up the account to pay out on a systematic basis. For example: You decide to fund an annual scholarship at your alma mater. You can pre designate in the Donor Advised Funds application that a set percentage, say 5% of the annual value be distributed to fund a scholarship in your name. The account can then go on in perpetuity leaving an ongoing legacy in your name.

Take a look at Donor Advised Funds when the expected remainder amount from the Charitable Trust will be under Two Million Dollars. Also for those looking to set up a pre determined ongoing distribution to fund a legacy as outlined in the example above. Donor Advised Funds may be appropriate for those donors that do not have anyone they would like to name to manage the assets once they pass away. The donor can still establish a legacy and pre determine specific guidelines to be carried out on their behalf.

For more information on Donor Advised Funds visit one of our other charitable web sites located at

We have also put together a hypothetical case study that illustrates a Donor Advised Funds account in use. Click here to view the study as an adobe .pdf file.

For assets above Two Million where the donor has a desire to establish an operating foundation a more appropriate alternative may be to list a Private Foundation as the recipient of the Charitable Trust proceeds.

Harding Financial Services, LLC
The information contained on this site is for educational purposes only, it is not intended to be professional tax or legal advise; consult a tax advisor about your specific situation.


Annuity Trust (CRAT)

"It is every man's obligation to put back into the world at least the equivalent of what he takes out of it."
- Albert Einstein