Deferred Earnings
In some situations, your heirs may net only 18% to 20% of the
value of these types of assets after all taxes are paid. But you can take
an estate tax charitable deduction if you designate your private foundation as
the beneficiary or the recipient of these assets -- and the foundation will
escape income tax on the assets. As a result your private foundation
will have 100 cents on the dollar to use for charitable purposes.
Teaching your children sound financial values. You
can provide that your children run your private foundation after your death or
after you relinquish control. Because the funds in your foundation cannot
be diverted to non-charitable uses, your children will learn the importance of
giving and the different purposes charities in the community serve. A
private foundation can last in perpetuity as long as it has funds. If you
want people to remember your family for its generosity and philanthropy, a
private foundation named after you may accomplish that goal.
Social capital for you and your heirs. As you and
your family go about overseeing the assets in your private foundation very
positive social interactions occur. If you choose to you can request your
family volunteer to sit on a "board" for your foundation and meet
annually to discuss investments and distributions to selected charities.
These periodic get-togethers can serve as enjoyable focal points keeping family
members and siblings in closer touch until and long after your passing.
Additionally consider the positive social implications for your family as past
or potential annual donors to dozens of area charitable organizations seeking
their contributions.
Just What is a Private Foundation
Generally, a private foundation is any tax-exempt entity that
the Internal Revenue Code does not define as a public charity. Among the
many requirement governing foundations are these:
- The foundation must annually distribute to a public charity
at least 5% of its net investment assets
- The foundation is limited in its investments and ownership
in a family business or other unrelated business
- The governing instrument must specifically bar
self-dealing--including leasing, lending, selling or other
transactions--between the foundation and you, your family, foundation
managers and other disqualified persons.
Perhaps the leading method to establish your own private family
foundation, certainly the least complex and least expensive, is through Donor
Advised Funds and Pooled Income Funds and their pre-approved IRS prototype
documents that can be customized to fit the needs of the vast majority of
situations.
For additional information on Private Family Foundations, Donor
Advised Funds and Pooled Income Funds, Contact
Us and we will be happy to mail you additional information.