International gifting also requires extra administration. While private foundations are free to engage in giving to charities abroad, some donor-advised funds prohibit it. Others don't.
The Advisor's Role In Conversions
If the client decides to abandon his foundation, the advisor's job is to quarterback the transaction, says Roe, the Pittsburgh planner. Dissolving the foundation and moving the money has to comport with a lot of arcane IRS and state rules. The donor-advised fund might have Web site information explaining the process, or even an entire foundation-conversion service like Schwab Charitable does. But still, the advisor ought to oversee the transition. Left unmonitored, a well-intentioned but blundering client could make costly mistakes.
One of the first things Roe does is help the client locate competent legal counsel. It's guidance more folks could use. At Fidelity, "we frequently see people realize a little late in the game that they should have had an attorney advising them," Libbey says. Look for a lawyer experienced in terminating private foundations similar in size and complexity to the client's, and in the same state.
Look, too, for someone helpful at the donor-advised fund. Ask for assistance from a staff member with experience processing conversions from foundations, Roe suggests. Having the right person on the other end smoothes the transaction and eliminates headaches, he says.
Somewhere along the way, make sure the family's wills get checked for potential updating. Venverloh says, "If Grandpa left his entire estate to the foundation, that would be important to know before you kill it off."
When it's time to migrate the assets, don't transfer all the money to the donor-advised fund at first. Keep enough in the foundation to cover its final expenses, such as legal and accounting fees. "After all the final expenses are paid," Roe says, "distribute whatever remains in the foundation to the donor-advised fund."