Kids Not Ready for Their Inheritance? Consider a Private Foundation
The benefits of starting your own foundation extend far beyond tax savings: It can help preserve your family’s wealth and unity.


For families of means, there are plenty of reasons to consider establishing a private foundation: tax savings, control over assets and the ability to give back using a broad range of philanthropic capabilities, such as program-related investments and grants to individuals. But for many of our clients, the most important benefits of a foundation are those that help them ensure that the next generation will be responsible stewards of their values and wealth.
The Ideal Training Ground
A private foundation is like “an estate plan in action,” because the skills needed to run an effective foundation are identical to those required for the next generation to manage their inheritance. By learning how the foundation maintains its investments, conducts due diligence before making a grant and measures its impact, heirs learn essential business skills. And by participating in group decision making, advocating for their positions and resolving disagreements with other members, young people acquire the social skills that are key to leadership.
Beyond the acquisition of financial and business skills, many families of wealth are concerned that their success will kill their children’s ambition — especially if their wealth passes to their children before they have had a chance to develop sufficient maturity. For these families, a foundation is a perfect fit, because it enables the next generation to participate in wealth and understand both its power and responsibility — all without taking control of it. By having a say in the foundation's governance and work, children witness the impact of their decisions and learn the value of money in ways no lecture can ever hope to match.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Foundation for a Legacy of Giving
When a family decides to establish a private foundation, the process naturally sparks discussions about what the family wants to accomplish with their charitable funds. These conversations can be a springboard for exploring the family’s priorities, offering a rare opportunity to uncover what matters most to individuals and what core values the family shares. Ultimately, the family can distill this conversation's fruits into an external mission statement for the foundation. However, this process might also give rise to an internal mission for the family itself.
Whereas the external mission details what the family wants to accomplish for others, an internal mission focuses on the family’s goals for itself. Many Foundation Source clients use an internal mission statement to articulate their intentions to strengthen family bonds, forge a distinctive identity and optimize time spent together.
Connection to Each Other and Future Generations
In this day and age, it’s common for families to spread out all over the globe. Education, job opportunities and marriages exert their gravitational forces, pulling family members away from one another. For many families, the foundation becomes the glue that holds the family together, even when they live in different ZIP codes and time zones. Having a common cause and a formal vehicle for advancing it provides a “non-Thanksgiving” reason to meet regularly.
Finally, because private foundations can be established to exist in perpetuity, they can link the founders to generations of the family they will likely never meet. The foundation conveys the founders’ cherished values, hopes and dreams from one generation to the next. And, as the foundation’s assets grow in a tax-advantaged environment, it can become a philanthropic heirloom of substantial worth, empowering each generation to embrace the family’s legacy and add to it themselves.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Hannah Shaw Grove is the chief marketing officer of Foundation Source, founder of "Private Wealth" magazine and author of 11 data-based books and hundreds of reports and articles on topics relating to the creation, management, disposition and transfer of wealth. Hannah has previously been the chief marketing officer at Apex Clearing, iCapital Network and Merrill Lynch Investment Managers and is a cum laude graduate of Harvard University. She holds the FINRA Series 6, 7, 24, 26 and 63 licenses.
-
Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Travel Trends You Can Expect This Summer
The Kiplinger Letter Domestic trips will trump foreign travel amid economic uncertainties, though some costs are down.
-
Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term Care
Many people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?
Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last Long
According to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond Investors
High-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
-
I'm an Insurance Pro: How Not to Get Dumped by Your Insurance Agent
Your insurance agent or broker might show you the door if you do any of these five things. Being a good customer is about more than paying your bill on time.
-
Two Estate Planning Issues You Should Never Overlook
This estate planning attorney explains why proper asset titling and beneficiary designations make a big difference when it's time to transfer your wealth.