Q&A: Should I Jointly Hold My Donor Advised Fund?

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A Donor Advised Fund, according to the IRS, 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 the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.” Creating a Donor Advised Fund and then giving your appreciated stock to it has several additional benefits over other methods of giving.

Normally the process of transferring appreciated stock is tedious and time consuming. You have to contact the charity and ask if they have a stock liquidation account. You need to get the charity’s account number and Depository Trust Company (DTC) number. You need to send instructions to your custodian and then value the stock transferred by using an average of the market high and low on the day of transfer. Using a donor advised fund is much easier but requires some initial effort to set up the account.

One of the first decisions when setting up a Donor Advised Fund is who you want the account holders to be. Is there any benefit to holding the account jointly with your spouse versus single by yourself?

Fortunately, for tax purposes, it does not matter whether one spouse or both are account holders on the donor advised fund.

It is the individual who donates to the fund who receives the tax deduction, not the account holder. In fact, the donor does not even need to be one of the account holders to donate to the donor-advised fund.

That being said, it is the account holder who issues grants, deciding which charity receives the funds in the end.

If you do have joint account holders, then each has authority to deal with Schwab Charitable as fully and completely as if they were the sole account holder. They are allowed to issue grants and make any changes to the account in any way except to remove other account holders. In all that they do, they are allowed to act individually and without notice to any other account holders.

So when does joint account holders make sense?

If you jointly decide and execute your charitable giving, then it makes sense to have both partners listed as account holders on the Donor Advised Fund.

However, if you have separate charitable intentions and budgets, you can easily set up two different donor advised funds, one for each spouse to use and direct.

In this way, there is no right answer for who is listed as an account holder on the donor advised fund. Your family can choose how many and which people to include. Just be aware that each is legally permitted to act independent of the others.

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Chief Operating Officer, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 700 financial articles. Her most popular post is "The Complete Guide to Your Washing Machine" while one of her favorites is "Funding a 3-Year-Old’s Roth IRA."