Starting A Family Foundation
You do not have to be a billionaire to start a family foundation. In fact, it may make sense as part of your estate planning and wealth management. However, it is important to reach out to a skilled legal professional before making any decisions regarding your future estate plan.
What is a Family Foundation?
A family foundation is a specific type of legal entity that is formed with a charitable intent, meaning that the purpose of it is to fund and support charitable organizations, whether that is something focused on children, the environment, the elderly, or any other charitable cause. While family foundations can receive outside contributions, they tend to make the most sense for families who can afford to and plan to fund it themselves.
Family foundations are run by a trustee or an executive director who manages the assets and distributes the assets of the foundation. One of the benefits of a family foundation is that the trustees and/or executive director can be members of the family. Finally, private family foundations are required by law to distribute at least five percent of their assets each year to charitable beneficiaries.
Benefits of Family Foundations
Of course, one of the main benefits of a family foundation is a philanthropic one and allow families to contribute meaningfully to causes that are important to them. Family foundations can also provide jobs for family members and allow them to participate in philanthropic causes.
Since family foundations have a charitable status, they are able to take advantage of many tax benefits. One tax benefit is that any assets that increase in value while part of the foundation are not subject to capital gains tax on those assets. Family foundations are also attractive tax-wise because contributions to the family foundation will qualify for immediate tax deduction. Further, any money that goes to the foundation is less money left in your estate and therefore can help to reduce or eliminate any estate tax liability.
Who Family Foundations Are Right For
Family foundations are right for people and families who want to give a great deal of assets philanthropically, but also want to maintain control over those assets. They may be especially appealing for families that are already planning to give a lot of money to charity. While you do not need to be a billionaire to start one, family foundations tend to make sense for families that are able to fund them with some amount of wealth. Family foundations can be a great legacy and encourage younger family members to get involved in charitable causes as well.
Reach Out to Us for Help
If you think that starting a family foundation may be a useful part of your estate or wealth management plan, it is important that you work with knowledgeable attorneys who can help you make the right estate planning decisions for your situation. Our experienced estate planning attorneys at Millhorn Elder Law Planning Group, located in The Villages in Florida, can help you set up the best estate plan for your needs.