Many people who are creating their estate plans believe that they’ve given their children every advantage in life to become successful, financially independent adults. Instead of leaving them a substantial amount of money or other assets when they die, they prefer to leave the bulk of their wealth to various worthwhile charities. They may even want to set up a scholarship fund to help students at their alma mater pay their educational expenses.
There are various types of charitable planning vehicles available for people who want to leave a legacy of philanthropic giving. These include donor-advised funds and charitable trusts — specifically charitable remainder trusts (CRTs) and charitable lead trusts (CLTs). These allow people to manage their charitable giving while they’re still alive and provide direction for it after they’re gone. They carry some tax advantages as well.
Another charitable planning vehicle is a private family foundation. Many people choose to establish such a foundation as a way to involve their children and other family members in their philanthropic goals and teach about the importance of giving back. A private family foundation can also strengthen family ties across a clan that is spread out geographically or perhaps is not particularly close. It can give them a shared purpose, and they can be proud to have their name associated with.
A private family foundation can be set up as either a trust or a corporation. The donor (the person who establishes it) and their family are the trustees or board of directors, depending on how the foundation operates.
Setting up a private family foundation is not a simple task. You’ll need to consult with financial and tax professionals in addition to your attorney.
If you’re looking for a way to continue to make a difference in the world long after you’re gone, you should discuss these and other charitable-giving options with your estate planning attorney. They can help you determine how best to achieve your goals.