Colorado Probate Blog - Wade Ash Woods Hill & Farley, P.C.

What’s So Bad About Donor-Advised Funds?

Last Friday, the New York Times published a very negative article about donor-advised funds (DAFs), calling them a “Philanthropic Loophole” in its headline and quoting a tax professor at the University of Southern California as calling DAFs “a fraud on the American taxpayer.” What, exactly, is a DAF, and are DAFs really so bad?

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Beneficiary Designations May be Dangerous to Your Estate Plan

Traditionally, the central document in an estate plan was a will or revocable trust. For many people, that continues to be true, but it is now possible to pass almost any kind of property outside the terms of your will. For example, this can be done by adding the beneficiary as a joint owner on a bank account, by naming the beneficiary as a “pay on death” (POD) or “transfer on death” (TOD) payee on a stock or securities account, or by signing a “beneficiary deed” that names a beneficiary to become the owner of real estate when you die. Colorado recently added automobiles to the list of assets that can pass by a TOD beneficiary designation. These arrangements, which I refer to generically as “beneficiary designations” can be useful, but they can also seriously disrupt a careful estate plan if they are done without care and appropriate advice.

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Considering Charitable Giving

Josie M. Faix, Esq.

Co-creator of the long-running television show The Simpsons, Sam Simon, was diagnosed with terminal colorectal cancer in 2012. Mr. Simon has used his grim news as a catalyst to increase his own charitable giving, and to encourage others to do so. He started the Sam Simpson Foundation in 2002 to benefit and protect stray-dogs from being euthanized. Since then he has given to countless organizations that care for animals, people, and the environment. Realizing he has a short time left, he has spoken publicly about his desire to give his estate to charity and the good his fortune will do for the causes he cares about. To read an interview with Sam Simon about his charitable works, visit Sam Simon.

You don’t have to be dying or extremely wealthy to give more thought to your own charitable intent. There are tax-wise ways to give to your favorite causes and programs, including use of appreciated stock, retirement accounts, donor advised funds and private foundations. Give us a call to discuss charitable giving generally, and its coordination with your estate plan.

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