Setting Up Your Charitable Foundation

A private family foundation is a wonderful way to teach and expose your family to charitable giving. At an early age, members of your family can participate in the operations of the foundation and suggest worthy charities or charitable causes. The foundation can carry out the family legacy throughout the generations.

Once you decide that you want to establish a family foundation, you will need to decide how to structure it. A foundation can be set up as a trust or a non-profit corporation. Although there are fundamental differences between a trust and a corporation, both structures can be set up quickly and for similar costs. The corporate structure will involve some filing fees with the Secretary of State, but nothing extraordinary.

The governance of the private family foundation differs depending on whether it is a corporation or a trust. Under the trust approach, the trustee or trustees will make decisions subject to instructions in the trust agreement. The corporation will be run by its officers and a board of directors. The corporate structure may provide more flexibility in future changes to the charitable goals of the family foundation. If the foundation is being established by one person who wants to maintain a set charitable mission even after he/she is gone, the trust may be a better approach.

Regardless of how the family foundation is structured, it is an excellent opportunity to pass along the family legacy.

Every Time I See an Ad for LegalZoom I Cringe

You have seen Robert Shapiro, the criminal attorney known for his representation of O.J. Simpson, on these ads for Legalzoom.com.  He is plugging his website-based product as an easy, inexpensive way to, among other things, form a legal entity, get a divorce or prepare a will.  While I have never tried the service, I have read their disclaimer.  You know, the fine print where you are told that LegalZoom is not a law firm and they are not your attorney, and they are not permitted to practice law or give you legal advice.  The disclaimer discusses that they do not review your information for legal sufficiency or draw legal conclusions.  It adds that its product “is not guaranteed to be correct, complete or up-to-date. Because the law changes rapidly, is different from jurisdiction to jurisdiction…”  Still feeling confident?  It continues “LegalZoom is not responsible for any loss, injury, claim, liability, or damage related to your use of this site…, whether from errors or omissions in the content of our site…, from the site being down or from any other use of the site. In short, your use of the site is at your own risk.”  So, in the words of LegalZoom, use their site at your own risk.

 It is conceivable that, despite not using an attorney, you may end up with a valid legal document that meets your needs.  It is just as conceivable that you end up with an insufficient document without even knowing it.

 As an estate planning attorney, I have never taken the “one document fits all” approach.  Also as an Ohio attorney, I would never try to prepare a will for a resident of another state.  I have wondered how the people at LegalZoom could know whether a will was executed properly under the laws of the State of Ohio?  How could they advise people on the importance of understanding what assets are non-probate assets and the importance of beneficiary designations?  How could they advise a young couple with children on the advantages of a contingent trust?  How could they know whether a will was prepared for a person by another and that person lacked capacity or was unduly influenced?  There are several other questions that one could ask and the answer would always be the same.  Read the disclaimer.

 I recently handled an estate where the decedent tried to create his own will, apparently using a form off of the Internet.  He signed it and had it notarized.  Guess what?  It was not a valid will.  He died intestate.  If you ask any estate planning/probate attorney whether they have encountered a matter where problems arose from a person preparing their own legal documents, the answer will almost certainly be yes.  These are the types of cases that end up making attorneys a lot more money cleaning up the mess after the person is gone.  Seriously, if there were a problem with a will you created on the Internet, how would you ever know?

 Finally, take a look at these comments regarding LegalZoom users.

What's a Contingent Trust?

A contingent trust is a written agreement directing how a person's estate should be managed and distributed in the event of a certain occurrence. In most cases, a contingent trust is used to address the possibility that your spouse does not survive you and you have young children. You may shudder to think how your young children might use their inheritance. There are plenty of examples of a child inheriting property and quickly expending it on fast cars and a fast lifestyle. Also, if your child is a minor, it is likely that his inheritance would require a guardianship. This means that the Court would decide who to appoint as guardian and the whole matter would be public record. The guardianship would terminate at the age of majority (18 years) and the money released to the child. The contingent trust is used to not only select a trustee of your choosing, but to instruct when your children should receive their inheritance. Frequently, the trust provides for distributions at different ages. For example, you may decide to distribute 25% of the trust at age 30, 25% at age 35, and the remainder at age 40. The trustee would have discretion to distribute or expend money on your child's behalf.