Better than bequests: Using a Donor Advised Gift Account  

Many people want to leave a legacy after they have passed away by providing for their favourite charities through a bequest from their estate or setting up a charitable foundation to fund causes close to their heart.

However, waiting until you’ve passed away to gift these funds means you miss out on the most satisfying part of giving – watching your dollars make an impact while you are living.

Setting up a Gift Trust Gift Account while you are alive lets you receive a number of benefits. It also ensures a clear vision is put in place for your charitable dollars so that it can begin to make an impact during your lifetime, and beyond.

 

Why consider a Gift Account over a bequest or formation of a charitable foundation?

  

  • You can involve others. Funding of a Gift Account through your lifetime also allows you to give family members or others an opportunity to serve as donor advisers alongside you while you are living. Giving others a role in shaping how your Gift Account funds are used can create a legacy of charitable engagement. These nominated advisers can succeed you and continue to have the same rights to make grant recommendations and investment decisions as you would have during your life. 

    By previewing how the Gift Account and advisers operate, a donor may test whether it makes sense to contribute additional funds during your lifetime or from your estate.
     
  • You can access your donation tax credit. Funding of a Gift Account during your life enables you to access a donation tax credit. A donation tax credit cannot be claimed after death.  
     
  • It is not contestable. A significant New Zealand bequest has recently been contested, setting a future precedent for bequests. Giving into a gift account while alive means the funds are not contestable by family members.
     
  • It avoids probate. Assets placed in a Gift Account during your life avoids probate. These funds do not have to be administered by the executor of your estate (and therefore doesn’t incur their legal fees) and are not subject to claims by any creditors.
     
  • There is no interruption. Upon your death, the Gift Account may be used for charitable giving without interruption as it is a separate entity. Your successor adviser(s) can continue to make gifts, even if your estate is going through a complex settlement process.

 

 

Types of lasting gifts to consider

While living, you can establish a named fund for your charitable giving.  A minimum of $5,000 is required to open a Gift Trust Gift Account and can be added to at any time. All donations made while you are alive are also able to access a donation tax credit.

If you have worked with The Gift Trust while alive, you can also put in place a clear plan as to how these funds are to be managed or distributed after you are gone. You can also write a mission statement to outline your giving values and wishes to guide those administering your funds (including The Gift Trust) after your death.

You might also choose to bequeath funds, or further bequeath additional funds, from your estate to this Gift Account on your death. We have seen numerous cases on the Charities Register where generous donors have left significant funds to form a charitable foundation on their death, but over time, these foundations have become dormant. The set up fees and annual management fees continue to be charged and this ultimately erodes the capital base without ever appearing to achieve the donors wishes or support the intended charities.

By including a gift to a Gift Account in an estate plan, a donor will be assured the funds he or she contributes are dedicated to charitable purposes. Funds are managed by The Gift Trust to administer, invest and distribute these funds in line with your intent and at an agreed management fee.

A gift left in a bequest can take various forms depending on your preference and situation. The main types of bequests are:

 

  • Residuary bequest. Where the balance left in your estate after all other expenses, debts and other bequests have been settled is transferred to your Gift Account. It may also be a percentage of your estate.
     
  • A specific bequest. A particular monetary amount or a specific item, such as the proceeds of a life insurance policy, shares, homes, art works and more to be placed in your Gift Account.
     
  • Whole estate. A bequest of your entire estate, usually for those without dependants, to achieve something special.

 

Wording your will

Where you have already set up a Gift Account, there is no need to include information in your will about your Gift Account.  The Gift Trust’s initial account application form will ask you to complete your succession plan which will be executed on your death – these can also be amended at any time at no cost. You can either:

a. List successor donor advisers to take over your Gift Account.

b. Set up payments from your Gift Account to nominated charities on your death.

c. Transfer your gift account funds to the Gift Trust's general fund for distribution by our trustees (this will happen by default if no successor plan is put in place).

d. Consider a mix of the above options.

If you have an existing will and you wish to amend it to include a bequest to The Gift Trust, please contact your legal adviser. They will help you change your will through a codicil (a document that amends a previously executed will). This usually has a nominal cost.

Here are a variety of wording options

  • Bequest in a will where a Gift Account is established prior to death. I give to The Gift Trust, a registered charity, [the sum of Dollars, ($)] OR [Percent, (%) of my estate], to be added to and held as a part of the Gift Account [Account Name] (Account Number).
     
  • Bequest in a will where a Gift Account is not established prior to death. I give to The Gift Trust, a registered charity, [the sum of Dollars, ($)] OR [Percent, (%) of my estate], to be held as a donor advised fund known as the [Name of the Fund]. I direct [named of successor advisers] (donor adviser(s)) to have the same recommendation privileges which I would have had as an account holder during my lifetime.

 

Interested in leaving a bequest?

If you want to leave funds for charity through The Gift Trust, we would welcome the opportunity to talk with you to ensure we fulfil your wishes and make the most impact in the areas you care about.

Contact us on (04) 391 4438 or by using the contact form below to discuss your options and the best ways to word your will.

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