I recently set up a Donor Advised Fund (DAF) with Deseret Trust Company. I’ve planned on doing this for over a year now and it’s been a process figuring things out. After spending a decent amount of time on the phone with Deseret Trust Company and also with Vanguard, I’ve finally funded my DAF with the correct form. Here’s what you need to know.
Letter of Instruction for Gifts of Securities
Funding a DAF isn’t that hard if you are using cash or a check. When it comes to donating securities, there’s a few difficulties to overcome. Every brokerage will have a different form, but it should be named something similar to “Letter of Instruction for Gifts of Securities.”
After a few phone calls with Deseret Trust Company and Vanguard to make sure I had the right form and everything filled out correctly. Relatively few people have ever heard of a DAF, even those that work at brokerages that offer them. I got routed to someone trying to help me open a DAF at Vanguard a few times. I finally got through to someone who got me the right form.
At TDAmeritrade, this form is called “Transfer Out – Depository Trust and Clearing (DTC) Transfer Form” and it’s only one page. It’s simpler, with 4 sections that need filled out.
Filling out the form
Vanguard is a very popular brokerage firm, so I imagine it may be the form most would fill out. It’s six pages with7 sections, but only 4 of them need filled out.
It starts simply enough by filling out your information as the account owner in Section 1.
In Section 2 name the securities you want to gift, with it’s ticker symbol and the amount of shares.
Skip down to Section 3 will use Option A and this is where the information for Deseret Trust Company is filled out. The name of the “charity,” Merrill Lynch is the brokerage firm and then the DTC number and account number. DTC in this case stands for Depository Trust Company, it’s a sort of clearing house that processes trades and offers safekeeping of funds.
Ignore section 4-6 and the last step requires you to get a Medallion Signature Guarantee. You’ll likely have to go to a bank or a credit union to get this, and it should be free if you are a customer there. Both owners must be there to sign if the account is owned jointly. Finding a time during the day was pretty tough to arrange my wife and I’s schedule around work. We ended up going to Wells Fargo on a Saturday, but had to call about 5 or 6 locations to find someone able to do this.
With that fancy medallion signature all that’s left to do is mail it off. Email or call Deseret Trust Company so they know to expect your contribution. You also need to let them know the purchase date of appreciated stocks so they can figure out the cost basis.
Final Thoughts
Hopefully this guide was useful to you and you can reap the benefits of a DAF. Here are some things to remember:
- Deseret Trust Company requires an initial deposit of $5,000, but your balance can fall below that amount without any issues.
- Once you contribute to a DAF, there is no going back. The money is not recoverable
- If you don’t use a DAF, they can be closed down after several years.
- The main reason many people use a DAF is to “bundle” charitable contributions into a single tax year. The DAF enables me to itemize in a one year and not come close the next, getting the best of the tax code.
- Donating appreciated securities avoids short and long term capital gains.
Comment or contact me if you have any further questions and I’ll try to assist.
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