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Originally Posted by CorsiHockeyLeague
Wtf are you talking about? He already paid taxes on the money before putting it in the foundation. As soon as it's in the foundation it is gone. It can only be spent for charitable purposes. It's not like he can use foundation funds to buy scotch.
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Not necessarily true depending on how it's set up; these types of things are often set up in part to avoid gift and estate taxes. Here's a description of the trusts that the Walton family has set up:
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The type of Jackie O. trust used by the Waltons doesn’t generate a break on income taxes. Instead, the big potential saving is on gift and estate taxes. When a donor sets one up, the IRS assesses how much gift or estate tax is due, based on how much of the trust’s assets will end up benefiting charity and how much will go to heirs. Most donors structure the trusts so that the heirs’ estimated leftover is zero or close to it.
The IRS makes its estimate using a complicated formula tied to the level of U.S. Treasury bond yields during the time when the trust is set up.
If the trust’s investments outperform that benchmark rate, then the extra earnings pass to the designated heirs free of any estate tax. The rate has been hovering near all-time lows since 2009. For trusts set up this month, it’s 1.4 percent.
With a big enough spread between the actual performance and the IRS rate, a Jackie O. trust can theoretically save so much tax that it leaves a family richer than if it hadn’t given a dime to charity.
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http://www.bloomberg.com/news/articl...-fortune-taxes
Those trusts were returning 14% a year at the time of that article's writing and were accumulating assets much faster than they were required to donate them so they actually grew in value. And once their term ends, whatever is left can be dispersed tax free. So while they are primarily charitable, in today's low interest rate environment they can also be a method of avoiding taxes.