My Review

Call it golf and gala glut: the growing list of charitable parties, balls and exits designed to raise funds for religious charities to education to medical research. If your calendar is filled with noble causes searching for your name and your wallet, you might consider channeling your time and money in a private family foundation.

If you believe the private family foundations owned by the Gates, Ford and Rockefeller in the world, you may be surprised by the estate planning of the industry rule of thumb: a foundation must have a minimum of approximately $ 25000 — endowments, annual dues or two - available to make donations. This can be prohibitive for estates under $ 2 million, but you do not need more than $ 29 billion Bill and Melinda Gates Foundation have put into their foundation.

You can also set up a booth Foundation, which is set up to receive contributions for life or a major bequest, or through a stream foundation, which converts appreciated assets in cash and distributes the proceeds to public charity, but not to create an endowment fund. A flow through foundation can provide tax benefits if you have highly appreciated assets, the sale of which is expected to result in significant capital gains taxes.

Individuals may deduct cash contributions to a private foundation up to 30 percent of the donor’s adjusted gross income (AGI) and valued the property up to 20 percent of AGI. All contributions will be set out in a fully deductible for income tax purposes.

Your foundation can be a basis for non-operating, meaning it provides grants to help finance the efforts of other organizations or individuals. The alternative is an operating foundation, which manages a business or an institution, like a museum or a research laboratory. Your foundation’s purpose can be as broad as world hunger or as specific as modest scholarships to a liberal arts college.

Of course, private family foundations must operate in accordance with the tax laws, including the distribution of at least 5 percent of assets each year and 1-2 percent by paying a tax on investment income. However, as part of a retirement and estate planning, a private family foundation reduces the amount of taxable assets in your estate. You can donate to your foundation without affecting the annual gift tax or exclusion from gift tax credit.

For many wealthy individuals, a major attraction of the foundation is private and family as much control as compared to a flat gift to a public charity or charitable trust less flexible. While the confidence of instruments, once finalised, it may be difficult to change, a private non-profit incorporated as can adjust its goals and mission in time.

With a private family foundation, you can for future generations in your family participate directly in the issues and activities that matter most to you. Family members can receive the same treatment as trustees, directors or employees of the foundation, provided they are used legitimately in these roles and their work justifies their wages.

A private family foundation can provide greater control of your charitable donations, income and profits taxes and a way to share your values with future generations. Creation of a foundation requires careful consideration and planning. Please consult your legal, tax and investment advisors for more information.