DAFs can be the charitable beneficiary of charitable trusts, offering donors and their families further opportunities for charitable giving. Whether you’ve established a charitable remainder trust (CRT) or charitable lead trust (CLT), a DAF can enhance it. 

Here’s how setting up a DAF at American Endowment Foundation (AEF) can help you expand philanthropy and empower your legacy. 

Naming AEF as a Beneficiary in a Charitable Remainder Trust 

Donors can create an opportunity for continuing family involvement by naming AEF as the charitable beneficiary on a CRT. Here’s how it works: 

  • A donor contributes assets to a CRT, receiving tax benefits and a lifetime income stream. 
  • At the termination of the trust, the remainder interest is transferred to a DAF at AEF. 
  • A donor and their family can stay involved with these meaningful assets after the CRT terminates. The family can recommend distributions from DAFs to charities over time, and their trusted financial advisor can remain involved in managing those investment assets. 

Benefits of Having a DAF Sponsor as a Beneficiary in a CRT 

  1. The family can stay involved. 
  2. There is less pressure associated with deciding the ultimate charitable recipients. 
  3. The donor can use the DAF as the vehicle for their lifetime charitable giving. 
  4. When the CRT terminates, the DAF can become the charitable overflow for the CRT. 
  5. If a donor wants to accelerate a CRT to give more to charity now or in the near future, he/she can collapse the CRT into a DAF. 

Naming AEF as Charitable Income Beneficiary on a Charitable Lead Trust 

Here’s how a DAF fits into a CLT: 

  • A donor contributes assets to a CLT for a specified period (either a term of years or someone’s lifespan). 
  • Distributions are made annually from the CLT to the DAF. 
  • The donor and their family periodically recommend distributions to charities from the DAF. 
  • After specified period, the CLT remainder goes to the donor’s heirs (or other designated beneficiaries). 
  • The donor’s trusted financial advisor can remain involved in managing the investment assets of both the CLT and the DAF. 

Benefits of Having a DAF Sponsor as a Charitable Beneficiary in a CLT 

  1. Families can stay involved and work together. 
  2. Several generations come together to work toward a common purpose. 
  3. It may become the “link” that connects families who are geographically dispersed. 

If you’d like to learn more about establishing a DAF to complement a CRT or CLT for charitable giving, AEF is here to help. Contact us to begin cementing your legacy.