Private Foundations in Estate Planning: Overcoming IRS Scrutiny, Structuring Tax-Efficient Charitable Legacies

Minimizing Tax in Diversified Estates, Maximizing Charitable Impact, Navigating IRS Private Foundation Rules

Note: CPE credit is not offered on this program

Recording of a 90-minute CLE video webinar with Q&A


Conducted on Tuesday, January 12, 2021

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will provide estate planning counsel with a thorough and practical guide to establishing private foundations as a component of an integrated estate plan. The panel will describe the federal income tax treatment of private foundations, detail operational requirements for maintaining a private foundation, compliance measures that minimize the risk of IRS scrutiny, and discuss both inter vivos and post-mortem strategies for using a private foundation.

Description

Estate planners and advisers are increasingly turning to private foundations as a legacy tool for charitably minded clients. Long considered as reserved for wealthy donors, the increased control over distributions and enhanced income and transfer tax advantages have fueled the rise in private foundations as an estate-planning vehicle.

Setting up a private foundation involves creating a separate exempt organization and contributing assets to the foundation. Once established, contributions to the foundation remove the assets' value from the donor's gross estate and qualify for a current-year charitable deduction.

For some assets, particularly IRAs and other retirement accounts and those that generate income for a decedent, the tax impact is significantly reduced compared to assets passed through a will or trust.

Operating a private foundation does not lack burden or risk: the entity must file an annual Form 990-PF return. Additionally, there are rules against, among other things, self-dealing with related persons and taxable expenditures. Structured correctly, however, a private foundation may pay compensation--even, under certain circumstances, to family members of the donor--so long as the compensation is reasonable and necessary.

Listen as our experienced panel provides a thorough and practical guide to the operations, benefits, and potential risks of using private foundations as estate planning tools. The panel will offer techniques in avoiding and managing IRS audits relating to private foundations.

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Outline

  1. Income and transfer tax benefits and treatment of contributed property
  2. Ideal assets to contribute and not contribute to a private foundation
  3. Establishing a private foundation
  4. Reporting requirements, operational risks, and opportunities

Benefits

The panel will review these and other key issues:

  • Which asset transfers provide the most income and transfer tax benefits when gifted to a private foundation?
  • What are the tax treatment differences between private foundations and donor-advised funds?
  • Scenarios for post-mortem planning using private foundations to lessen the impact of income in respect of a decedent
  • What are the operational challenges for a private foundation?
  • Compliance measures that minimize the risk of increased IRS scrutiny and potential audit of a private foundation

Faculty

Doyle, Jere
Jeremiah W. (Jere) Doyle, IV

Senior Vice President
Bank of New York Mellon

Mr. Doyle provides clients with integrated wealth management advice on how to hold, manage and transfer their...  |  Read More

Hale, Casey
Casey S. Hale

Member
Brown & Streza

Mr. Hale is a member of the Firm’s charitable sector practice group. He advises ministries, churches, and...  |  Read More

Kwak, Jinna
Jinna Kwak

Attorney
Adler & Colvin

Ms. Kwak has an in-depth understanding of private foundations and their nuances.  Before joining Adler &...  |  Read More

Rittenberg, Leon
Leon H. Rittenberg, III

Partner
Baldwin Haspel Burke & Mayer

Mr. Rittenberg's practice focuses on serving the needs of small and mid-sized businesses and their owners,...  |  Read More

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