by Ken Nopar, VP – Senior Philanthropic Advisor, AEF
A high percentage of AEF donors select their children, other relatives, or friends to be the successor donor-advisors on their donor advised fund (DAF) account after their deaths, though some elect to terminate the accounts at death and grant out the remainder to various charities. The succession and disposition plans can always be changed without charge once the account has been established. The smoothest transitions to the successor advisors always happen when they speak with those who created and funded the DAF far in advance of the transition.
It is always surprising, therefore, to hear the reactions when AEF notifies someone that he or she has become the successor advisor on a donor advised fund account established by their parents, relative, or friend. Unfortunately, a majority of these successor advisors have no idea that they were named the successor advisors and would be responsible for making grants to charities from an account that they did not even know existed.
Some of the questions we hear are:
- “What is a donor advised fund account?”
- ” How much did you say is in the account?”
- ” Can I just keep and use that money for myself?”
- ” My parents left that much money for charity and only left me _________?”
What should be an uplifting conversation in which we tell someone that they are able to give money from an already-funded account to their favorite causes and charities, can become one that unnecessarily creates confusion and consternation.
Since DAF accounts often continue for many years, it is important that donors remember to update AEF with their own and their successor advisors’ current contact information when there are changes. This can easily be done by submitting the change form.
Some donors contact AEF when they do not recall who is listed as the successor advisors to their accounts or if they have a disposition plan. Should you wish to verify the information listed on your account, you may contact the Donor Experience Team. Please include your Fund ID number or Fund Name and your current contact information.
Since so many want their accounts to continue, it is wise in most instances for those who have created the DAF to discuss the account with the successor advisors in order to prepare them and allow for a positive experience later. Some of the many benefits include:
- Successor advisors are more likely to continue to support some or all of the charities the DAF creators funded.
- It is an opportunity for donors to discuss with their children why charitable giving is important to them and why they support specific causes and charities.
- This can enable donors to pass down charitable values to their children and grandchildren, and if desired, they can even include them in giving decisions now so they can be prepared to continue to give later.
- It can become a way for families to remain united after the deaths of their parents, as the children can continue to donate together to honor the memories of their parents.
- Some families may continue to make some grants together after their parents’ deaths, but because children may live in different areas or have different beliefs, they respectfully may make separate grants or create separate DAF accounts from which they can each give. Planning ahead to discuss various options is helpful.
- When told ahead of time that a certain amount has been set aside for charitable giving, heirs are much more understanding and pleased to know this in advance. This is especially true when assets from IRAs are donated to DAF accounts at death since significant taxes would have been incurred if the heirs would have been the IRA beneficiaries instead of the DAF.
- Many families have been well-served by their advisors, and hope that their children will continue to work with them so these charitable assets can continue to grow and support the philanthropic efforts of the family. Including the advisors in these conversations can help increase the likelihood of this happening.
For donors who are looking for help to develop a charitable mission or plan, engage their family, understand how to evaluate charities, or how to give with impact, much excellent content is available in the Library for Donors. Included are such columns like Charitable Planning Questions Families Can Discuss and Working with the Next Generation.
Having this conversation with successor advisors in advance will lead to many positive developments later when the account is transitioned to them. Instead of asking “What is a DAF?,” successor advisors will step into their new role as donor-advisors and will seamlessly be able to make grants to deserving charities.