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You Can’t Take It With You

By January 11, 2012October 24th, 2018Estate Planning Blog, Robert Lamm

Robert Lamm

When you die, you can’t take it with you, but perhaps you can do some good with the assets that you leave behind.  This was the topic at the 46th Annual Heckerling Institute Conference presentation called “What Every Estate Planner Needs to Know about Tax-Exempt Organizations and Charitable Gift Planning.”

Tax –Exempt Organizations and Charitable Gift Planning is a complex area of estate planning.  Many times, the client wants to form a Private Foundation as a way to create a family legacy.  Other times, it may be advisable to seek a less complex alternative.

Here are the pros and cons of forming a Private Foundation.   The pros: (1) control by the family, and (2) an immediate income tax deduction.   The con:  complex tax rules governing the administration of the charity.

One alternative to the Private Foundation is the Donor Advised Fund.   With the Donor Advised Fund, the pros are: (1) the immediate income tax deduction,  and (2) administrative simplicity.  The con: lack of control.  With a Donor Advised Fund, you cannot call the shots and instead only make suggestions to the fund as to how it will distribute your contributions.

Which is better?  It depends.  If you are planning on making a large gift, and you place a premium on control and leaving a family legacy, the Private Foundation is the better choice.  If you could care less about control, don’t want to be left with high administrative costs, and just want to benefit a charity and retain some input, a Donor Advised Fund is worth a look.