This originally comes from a discussion about funding a Donor Advised Fund (DAF) in a tax-efficient way. But this would not be limited to DAF funding. This is a generic triggered expense feature.

The idea here is to create a taxable account that has a linked cash-flow priority (to fund it), expense item (to draw it down), and possibly a tax deduction (if the drawdown generates a tax deduction).

This expense item could define a 1. balance threshold (when to trigger), 2. drawdown amount at threshold, and 3. whether or not the drawdown generates a tax deduction.

This would satisfy the DAF funding scenario, and also many other scenarios.

Some more advanced options could include tax-efficiency thresholds, e.g. only trigger the 30k donation, if the drawdown will generate a tax bill reduction of >15% of the donation amount.

Taking the US as an example, let’s say our other itemized deductions vary wildly year to year based on other changes in finances. Consequently, the itemized deduction for donation may not have the intended tax lowering effect. Or we may have plenty of other itemizations, but maybe we’ve modeled our income to be temporarily lower, in which case we may have little to no taxable income, or the tax rate is so low that we’d rather wait for a higher income year.