Foundations - Have you considered if one could support your estate plan?

When you are developing your estate plan, its important to determine where your assets will go - beneficiaries, tax, or charity. A good estate plan calculates what proportion of your wealth will go to each category. If you want to build charitable giving into your estate plan, one option to consider is a foundation.

One individual came to me who had supported various charities and missionaries throughout his life. He knew that these causes would no longer be receiving ongoing support after his passing so we discussed using a foundation. A foundation would receive assets from the individual's estate; invest it, and then continue supporting the charities and missionaries with the income earned. He was excited about the ability for the foundation to continue funding the charities near and dear to his heart beyond his passing.

Have you considered whether the foundation structure could work for you?

Advantages of a foundation:

• Estate receives donation tax credits for the market value of the assets contributed into it in order to reduce estate taxes;
• Foundation can turn a one time donation into recurring support for charities far beyond someone’s death; and
• Foundations can retain funds until an appropriate charitable cause is identified.

Disadvantages of a foundation:

• Can be complex and costly to set up and administer;
• Have restrictions on activities; and
• Requires a functioning board to meet regularly and ensure the foundation bylaws are followed.

We have extensive experience in setting up foundations. If you have further questions about your specific situation, please contact us. Each estate is different and requires a personalized plan.

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