Donor-advised funds offer an excellent means to handle your annual giving. However, a donor-advised account is also a helpful, secure way to handle your charitable legacy after your death. At DonorsTrust, we offer a special type of donor-advised account called a Bequest Account that is established upon death that serves to protect and preserve your legacy in line with your donor intent.
We’ve talked before about how a donor-advised account can be helpful in your planned and bequest giving, including the various reasons to use a fund to manage your legacy. Now we’ll go through some of the mechanics of how a bequest account actually works.
Getting the Legacy Right
Bequest accounts operate exactly like a regular donor-advised account. The fundamental difference, of course, is that the person establishing the account is no longer able to make active recommendations on how to grant funds.
So how is the money spent? At DonorsTrust, we ask all account holders – both those establishing bequest accounts but also those who will use their accounts in life – to create a donor intent statement. For bequest-only accounts, these are particularly important for our understanding of the donor’s charitable intent.
These donor intent statements can be fairly brief, though in the case of bequest accounts it is helpful for them to be a bit more detailed. They often include specific organizations to (and not to) support.
Donors also have the ability to designate someone else to be the advisor on the account in their absence. The advisor must still heed the donor intent statement, and the establishing donor can designate how wide a latitude that successor advisor has in the types of grants they may recommend.
Avoiding Mission Drift
Another way DonorsTrust protects the intent of all account holders after their death is to limit the term of the fund to no more than 25 years after the funder passes away. We’ve all heard the stories of big foundations such as Ford, Pew, and Rockefeller drifting from the free-market principles of the namesake donor.
Those without a few billion in their endowments are not immune from that same drift over the subsequent generations. This required “sunsetting” of the fund limits or eliminates the possibility of people who never knew you having the ability to direct your giving. It also means your dollars will be put into action instead of languishing.
Using a mission-driven fund such as DonorsTrust in the first place also offers an extra layer of protection. Our guiding principles prevent your charitable resources from ever going to organizations that work to expand the size and scope of government or take significant money from government.
Easy Set-Up
Establishing a bequest account is simple. Since the account is not funded until after your death, there is no required initial contribution. Simply complete the Bequest Account Application and designate DonorsTrust as a beneficiary in your will or other testamentary documents.
A donor-advised bequest account makes it easy to make subsequent changes to your list of designated charities, your donor intent statement, and even your successor advisors. All changes can be made by simply contacting the fund administrator.
If you are going through legacy planning, take a look at our 8 Steps to Securing Your Donor Intent. It walks through a process for thinking strategically about how to protect your charitable intent.
