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Jun 1, 2011 12:00 PM
Unintended Consequences
Whose intentions count when a family foundation may no longer be needed?
What if a donor sets up a family foundation specifically because the donor wanted to avoid paying federal taxes? And what if that donor died in 2010, owing no estate or generation skipping transfer (GST) taxes? What happens to the family foundation and all of its grant recipients? Here's a hypothetical example (based upon a real life situation) of how Congress, through the 2010 Tax Act, may have created a result it never anticipated.
Taylor and Barbara Jones lived through the Great Depression. They started out with nothing but always worked hard and lived very frugally. Over the years, they made several investments in real estate that ultimately paid off handsomely. As a result, they accumulated significant wealth. They weren't known for their charitable acts and had a strong aversion to paying taxes. Taylor was particularly vocal about his extremely negative view of what he called the “death tax.” As a result, in the late 1990s, the couple devised an estate plan that allowed them, based upon available exemptions at that time, to pass all that could be passed to their grandchildren free of estate and GST taxes. Their wills stipulated that the remainder of their estate should pass to the Jones Charitable Foundation (the Foundation).
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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Topics of Interest
| Estate Tax | Donor Advised Funds |
| GSTs | Family Offices |
| Private Foundations | Life Insurance |
| 2010 Tax Act News | Industry Trends Surveys |
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