What Is an Endowment Fund?

By James Parker
/
October 25, 2021

Dividing an estate can be difficult to consider, particularly if the estate planner wants to support a charity. No matter how meticulously it is planned, the planner can only give the assets that they have to a particular cause. However, there is a way to leave a legacy that lasts far longer than a one-time distribution.

At its most basic, an endowment fund is a managed, charitable account that is set up to provide support for one or several of the donor’s chosen charities or causes. This can come after the donor’s death or during their lifetime.

Once created, an endowment fund’s initial investment is not touched. Instead, the fund is carefully invested and a portion of the profits are systematically siphoned off to be distributed to charities or causes. The initial investment can also be withdrawn after a set period determined in the establishment of the trust. 

When establishing an endowment fund, the planner will need to create policies regarding what type of investing the manager of the fund is allowed to make, what the profits of the fund may be used for, and when - if ever - the initial investment is allowed to be withdrawn.

In addition to being beneficial to a cause or charity, the donation to the endowment fund can also be used as a tax deduction which may help the estate planner preserve more of their assets to be distributed following their passing. 

If you or your organization are looking to create an endowment fund, you will need the help of an experienced Trust & Estates attorney. An experienced Trust & Estates attorney can preserve your fund while minimizing the number of losses you may suffer from taxation and fees that may otherwise have been applied. The best place to find a Trust & Estates attorney is Attorney at Law.

At AAL, our nationwide network of attorneys and law firms allows us to match you with a Trust & Estates attorney in your area. Our partners have the resources, legal expertise, and experience to handle estates of any size.

In addition to a distinguished record, our partners excel in client care. AAL understands the difficulty of planning an estate. That’s why our partners take time to explain any questions you may have about the process while keeping you informed about any developments. 

Don’t wait. Contact AAL today for a free, no-obligation consultation and secure your future.

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