Wrapping Things Up

By Deborah L. Jacobs

"Running a private foundation is similar to operating a small business in many ways, including the process of shutting the foundation down," says David Scott Sloan, a Boston-based lawyer who heads the National Private Wealth Services group at Holland & Knight in Boston. The following checklist can help you guide clients through the necessary stages — and in the most logical order:

  • Check the document that created the foundation to be sure you are complying with all the provisions that affect dissolution.
  • Select the 501(c)(3) IRS qualified public charity that will receive the assets, and verify that it has been in existence for at least five years.
  • Satisfy any contractual commitments, such as pledges, that the foundation has made.
  • Calculate the legal and accounting costs of dissolution, and pay these fees before you distribute the endowment to charity.
  • Make sure your last transfer is to charity. This includes the required 5% payout for the year of dissolution.
  • Indicate, on the next tax return, that this is the foundation's final return.
  • Take all the necessary steps required by state law to dissolve the foundation. (The division of public charities at the attorney general's office can be a valuable resource.)

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