For those with the means and the desire, setting up a foundation or a scholarship in California can be a wonderful way to give back to the community. If you are considering using part of your assets to fund either a foundation or a scholarship, there are a few questions and issues to consider first. In particular, these giving methods could impact your estate planning.
First, figure out your goal or reason for giving. You may want to support a particular cause or fund the education of a deserving student. Your goal will determine which method (foundation, scholarship, or something else) will be most effective, as well as easiest to set up and administer. For example, many foundations are 501(c)(3) nonprofit corporations that follow a set of IRS rules to maintain their nonprofit status. Others are charitable organizations or public charities. Some scholarships are set up through colleges and universities. Others are administered by community organizations.
To set up and run a foundation, you will need to do some business and tax planning. If you already have an estate planning attorney, talk to him or her about which professionals you need. Often you will need an accountant, an attorney, and executives to run the foundation. You also need to do some planning so that the foundation can continue to exist if you pass away. Consider whether to make contributions to the foundation now to realize tax benefits, or whether to wait and give some money or property to the foundation in your will or through a trust. Again, consult your estate planning attorney about these questions.
To start a scholarship, you need to figure out how much money to give and which conditions to place on receiving it. Many universities already have planned giving programs in place. Their staff can explain any requirements for setting up a scholarship at a particular institution. You will want to consider how long the money you contribute will last. You also will want to know about the tax implications of contributing the money – for example, whether you get a beneficial tax break if you give it now.
When you give money to certain charitable organizations, you can receive income tax deductions on your yearly tax return. In addition, estates may be able to realize tax benefits if part of the estate’s assets go to qualified charities. Many people planning their estates want to take advantage of these tax benefits and make substantial gifts to charities, including 501(c)(3) nonprofit organizations. To maximize tax savings, you should speak to an estate planning attorney about the timing and amount of your giving. An attorney can help you set up any necessary estate planning structures such as a will or trusts to give your assets as you choose.
Planning your estate? Angela Klenk, Esq. and the team at Beach Cities Estate Law couple personalized attention to your estate plan with big law firm experience for a winning combination to give you peace of mind. To schedule a case evaluation, visit Beach Cities Estate Law online or call Angela’s office at (424) 400-2125.