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Instead of giving all that tax money to Uncle Sam after you die and letting Congress decide how to spend it, you can set up your own charitable foundation, donate your assets to it and keep some control over how the money is spent! (The IRS does have a few restrictions on how the money is used.)
You can set up the foundation while you are living, or it can be established after you die. To qualify, a small percentage of the trust assets must be distributed to charity each year. But you can name whomever you wish to run the foundation, including your children, and the foundation can pay them a reasonable salary. You can be very specific about which charities you want to support, or you can leave that up to the trustees of the foundation to decide (within the IRS guidelines, of course).
The tax benefits of setting up your own
foundation can be substantial. You can save estate, capital gains and
ordinary income taxes:
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The assets you give to the
foundation will be removed from your taxable
estate. So, for example, if you give your entire
estate to the foundation (or the entire amount over
the estate tax exemption), your estate will pay no
estate taxes! •
There will be no capital
gains tax when the assets are sold by the
foundation, so it's great for appreciated
assets. •
And, if you donate publicly
traded securities to a private foundation, you can
get a charitable income tax deduction for their
full fair market value - up to 30% of your adjusted
gross income. (The deduction is less than the 50%
limit for standard charitable contributions because
this is a private charitable foundation.) |
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