CHARITABLE FAMILY FOUNDATIONS©
The NAFEP, PREMIER VII Family Foundation Trust
& PREMIER VIII Private Foundation
A Family Legacy of Charitable Acts..Continued (2)
Common Features of the Two Foundations.
Since both Foundations are treated as tax exempt charities for Federal Tax purposes, gifts to them are deductible without being subject to gift taxes. This is true for all donors, whether family members or not. The foundations may be funded with family or other privately donated assets, or they may engage in public fund raising like a public charity can. Gifts of appreciated assets will avoid all capital gains taxes for both the donor and the foundation. All gifts to a foundation will be removed from the donor's taxable estate and will escape probate. All gifts will be immune to lawsuits against the donor (foundation creator) or lawsuits against any other party to the foundation. Tax deductions may be too large to use immediately, because tax laws limit the amount that may be deducted in any one year. But there is a five year carryover for the excess. Gifts may be virtually anything, including cash, real or personal property or business interests (with some limitations on business interests). Once there are assets in the Foundation they may be invested in almost any prudent investment. In the case of the Premier VII Family Foundation, investment income is entirely tax exempt, whereas the Premier VIII Private Foundation is taxed either at a 1% or a 2% rate.
Tax Laws define charitable activities broadly enough that they can include virtually anything which benefits humankind (or even animals) when performed in a non-self serving manner. This can range from supporting the founder's church, to educational or research pursuits, environmental causes, social or religious work, support of the arts, science, athletics and much more. (Politicians and political causes generally do not qualify.)
Both supporting organizations (Premier VII) and private foundations (Premier VIII) may hire and pay reasonable salaries and expenses to family members, either in their role as Board members or to pay them to perform foundation charitable activities. Either of the foundations can be an excellent means of creating tax sheltered, life time income for family heirs.
Creation of a Premier VII or VIII Foundation requires using a NAFEP attorney to prepare an extensive IRS filing. (This filing will be available to the public.) The IRS responds with a written authorization after a full review.
However, a decision to create a family foundation should not be taken lightly. Foundations require a serious commitment of time, expertise and attention. Ask a NAFEP Associate to provide full details before proceeding
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