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
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Estate Planning
- event Date
Tuesday, January 12, 2021
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course 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.
Mr. Hale is a member of the Firm’s charitable sector practice group. He advises ministries, churches, and charities on their general tax and corporate legal issues; guides private and family foundations through complex Internal Revenue Service and state regulations; and serves as general counsel to numerous nonprofit corporations. His representation includes counsel regarding property tax, employment, intellectual property, international grantmaking and operations, structuring subsidiaries and joint ventures.He routinely advises charity executives and boards of directors on executive compensation/intermediate sanctions and corporate governance matters.
Mr. Doyle provides clients with integrated wealth management advice on how to hold, manage and transfer their wealth in a tax efficient manner. He is the editor and co-author of Preparing Fiduciary Income Tax Returns, a contributing author of Preparing Estate Tax Returns and Understanding and Using Trusts and a contributing author of Drafting Irrevocable Trusts in Massachusetts. He is a lecturer in law in the Graduate Tax Program at Boston University School of Law.
Mr. Rittenberg's practice focuses on serving the needs of small and mid-sized businesses and their owners, including taxation, finance, estate planning, probate, real estate, mergers and acquisitions and related matters. He is a Board Certified Tax Specialist and Board Certified Estate Planning & Administration Specialist, as certified by the Louisiana Board of Legal Specialization. He frequently lectures in areas such as taxation, estate planning and maritime transactions.
Ms. Kwak has an in-depth understanding of private foundations and their nuances. Before joining Adler & Colvin, she practiced as a corporate associate at Simpson Thacher & Bartlett, LLP, with a focus on M&A, capital markets, and fund transactions.
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.
- Income and transfer tax benefits and treatment of contributed property
- Ideal assets to contribute and not contribute to a private foundation
- Establishing a private foundation
- Reporting requirements, operational risks, and opportunities
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
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