How can you leave money to a foundation in your will?
To settle his or her estate in favour of a foundation, the philanthropist has three options. Which one he or she chooses depends on well thought-out asset and estate planning.
Depending on the value of their estate, their motives, and the amount of time they can devote to planning, philanthropists can consider the following three options:
I. Establishing a foundation during the founder’s lifetime
The first option is to create an independent charitable foundation, which will receive part or all of the founder’s estate after their death.
Under Swiss law, a body with a charitable purpose may take the form of a foundation, association or non-profit organisation. A foundation is generally established when the founder wishes to allocate resources to a charitable purpose over the long term and for public benefit.
II. Establishing a foundation after the death of the founder
An ‘endowment’ foundation is a foundation established following the death of its founder. It is created based on instructions left in the philanthropist’s will or contract of succession, which will have been established during their lifetime to implement their plans after their death. After the death of the founder, the provisions in their will or contract of succession replace the notarial deed created when they were alive.
This type of foundation is expressly provided for under Swiss inheritance law, and the establishment of such a foundation is the responsibility of the heirs of the deceased, or the executor appointed by the deceased, in accordance with the wishes expressed in their will, particularly with regard to the portion of their estate left to the foundation.
As the foundation is created with money left by the deceased, the portion of their estate bequeathed to it must comply with the Swiss laws on compulsory inheritance. This means that, if the deceased has rightful heirs, the bequest cannot exceed the available disposable part of the estate.
Philanthropists who do not intend to create their own foundation can choose to leave part of their estate to one or more existing charitable foundations, to benefit specific projects that address issues close to their heart.
Such bequests, if made as part of a will or contract of succession, must also comply with the Swiss laws on compulsory inheritance.
Of the options described above, the one a philanthropist chooses will depend on their own careful and considered estate and inheritance planning process. As part of this process, the philanthropist should consider:
The value of the portion of their estate that they wish to leave to the foundation (a considerable sum is required to create a foundation)
The nature of the assets to be donated (for example, family assets warrant the creation of their own specific foundation)
Their motives and objectives
When the founder or testator wishes their bequest to be made to the foundation
The role that the founder wishes to play during their own lifetime, or entrust to their heirs or executor
The extent to which the founder or their estate will be involved in establishing or administering the foundation (if they do not want to be involved, donating to an existing foundation may be a better option)
Meticulous estate planning, including careful consideration of all the options and their particularities, is therefore essential in order to decide which one best fulfils the aims and desires of the philanthropist.