How to Create a Foundation in Your Will

What are your options?

The One Big Beautiful Bill Act, signed in July 2025, left the private foundation excise tax at 1.39%; a proposed increase was dropped from the final law (Davis Wright Tremaine).

How does a named fund work?

You leave a gift to a public charity, such as a community foundation, a donor-advised fund sponsor or a charity that runs cause funds, to set up a fund in your name or a loved one's. Your will sets its purpose, its lifespan and its advisors:

• Purpose. The causes it supports, in the proportions you choose.
• Lifespan. Spend everything within 10 or 25 years, or give about 5% a year indefinitely.
• Advisors. Children or grandchildren who recommend grants.
• Mission. A letter of wishes, in your own words, that guides future grants.

The sponsor holds legal control and checks that every grant goes to a qualified charity. That control protects the fund's tax status, but it also means advisors recommend rather than decide. A 2026 lawsuit over a roughly $21 million fund shows what can happen when a sponsor and a successor advisor disagree (Foley & Lardner). Read the sponsor's policies before you choose one.

Can a donor-advised fund keep giving after you die?

Yes. Most sponsors let you name successor advisors or charitable beneficiaries. Some offer endowed programs that keep granting on a schedule:

• Fidelity Charitable's Endowed Giving Program requires $100,000 and makes annual grants to up to 10 charities for at least five years, possibly in perpetuity (Fidelity Charitable).
• Vanguard Charitable allows up to two successors and offers an endowed plan that pays out more than 5% a year (Vanguard Charitable).

Donor-advised funds have no federal minimum payout as of 2026 (Congressional Research Service).

When does a private foundation make sense?

A private foundation gives the most control: its own board, its own staff and its own name in perpetuity. That control has costs. The foundation must generally distribute 5% of its investment assets each year, pay a 1.39% tax on net investment income, file Form 990-PF and follow self-dealing rules that limit transactions with family members.

It's usually worth it only when the endowment is large enough to justify professional management and when family members want to run it. For most estates, a named fund delivers the legacy without the overhead.

What about a charitable remainder trust?

A charitable remainder trust created by your will pays your beneficiaries a fixed percentage each year, between 5% and 50% of its value, for their lives or a term of up to 20 years. When it ends, what remains goes to the charities you chose. The remainder must be worth at least 10% of the trust's starting value, and that charitable share is deductible for estate tax (26 U.S.C. §664, §2055(e)).

It suits people who want to provide income to a spouse or sibling first. It needs an attorney to draft and a trustee to run it.

How do you write a named fund into your will?

Sample wording to discuss with your attorney:

I give twenty percent (20%) of my residuary estate to a public charity that sponsors donor-advised or named charitable funds, selected by my Executor, to establish a fund to be known as "The Ellis Family Fund." The fund shall be used only for charitable purposes, divided as follows: fifty percent (50%) for cancer research and fifty percent (50%) for education. I request that the fund distribute all of its assets within about twenty-five years after my death, and that the sponsor invite my children to serve as advisors to the fund.

Our free builder writes this for you and prepares a letter of wishes. See also our comparison of foundation options.