Donor-Advised Funds 2024

In this episode of Protecting and Preserving Wealth, we dive into donor-advised funds (DAFs) with Bruce and Jason Hosler from Hosler Wealth Management. With the end of 2024 approaching, DAFs are a timely and powerful tool for those who are charitably inclined, particularly those looking to manage tax liabilities while contributing to causes they care about.

Bruce explains that a donor-advised fund allows individuals to donate highly appreciated assets—like stocks, real estate, or even collectibles—without triggering capital gains taxes. For example, if you've held Apple stock for years and it’s gained significantly in value, rather than selling it and paying hefty taxes, you can donate that stock to a DAF. You receive a tax deduction based on the fair market value of the stock and can direct how those funds are distributed to charities over time, rather than in one lump sum. This flexibility is a major advantage for those who want to spread their giving across multiple years or charities.

Jason elaborates on the ability to involve family members in charitable giving through DAFs. Not only can children participate in distributing funds, but they can also continue to manage the fund after the donor has passed away, allowing the family’s philanthropic legacy to live on.

One major tax benefit highlighted is the ability to use a large donation to a DAF to offset income from Roth conversions. By contributing appreciated assets to a DAF, donors can take a significant deduction in the same year they perform a Roth conversion, helping to balance out the tax impact of converting pre-tax retirement funds into a Roth account.

We also on recent proposed regulations that could have restricted financial advisors from managing DAFs. Fortunately, due to industry pushback, it appears these regulations will be reconsidered, allowing advisors to continue assisting clients with their DAFs as part of a comprehensive financial plan.

This episode is essential listening for anyone looking to enhance their charitable giving while maximizing tax benefits, especially as the end of the year approaches. The team at Hosler Wealth Management emphasizes that donor-advised funds are not just about tax savings, but also about creating a long-lasting charitable legacy, involving family in the process, and supporting causes that matter.

Disclaimer: Generally, a donor-advised fund is a separately identified fund or account that is maintained and
operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it; however, the donor, or donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though the money may not be dispersed to a charity until much later.

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

Or call them in their Prescott office at [phone] or their Scottsdale office at [phone].

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