Estate Planning & Scholarships

Anyone have experience setting up a scholarship fund as part of their estate plan?

Did you do it through a gift to a specific university, a community foundation, something else? What are the management fees the endowment charges?

I’m trying to set up a scholarship. I don’t necessarily want it to be tied to a specific university, or to a specific geographic region, but more for an area of study like STEM. I’d also of course like to keep the administrative and investment management fees low.

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Unless your gonna seed the fund with over $5M it’s not going to be very stable in terms of ultimate survival over the long haul. Less than that and it’ll be a long time before it will produce significant beneits for your intended recipients. The admin costs for these things can get out of hand quickly and eat away at earnings. Selection of initial and follow-on trustors is of foremost importance.

With the right economy of scale and structure it can be successful, but the startup is critical. You need a very good trust attorney with experience doing that sort of thing.

How about a Donor Advised Fund like Fidelity Charitable? My wife and I have donated to one of these and we get to direct the donations where we please. We even have a successor trustee named for when we are no longer alive.

The successor trustee is what I don’t really have … no kids. For you is that a trusted family member or some third party org?

It’s my daughter but it could be anyone. This DAF is where I threw some Bitcoin capital gains so I would not be ravaged by short terms gains tax. Most clever tax move ever, if I’m allowed to brag. Go read about these accounts at Fidelity Charitable

You might want o consider an institution. Some have vehicles like perpetual education funds that act as an informal loan source with voluntary payback plans.

That won’t do what OP wants. A DAF can only give money to approved charities. It can’t award scholarships because scholarship recipients aren’t charities.

To OP: H200h is on the right track here. Unless you are giving an awful lot of money, it probably won’t be worth the expense to set this up. Giving to a particular school or organization that already does this can avoid most of the admin costs, but would be limited to the particular school or org. If you go that route, talk to the school or org and they will be more than happy to tell you how they’d prefer it to be structured.

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If you’re donating BTC you’ve had less than a year, you’re missing out. Long-term capital gains is where the big tax savings is.

An option to consider is to establish a fund at a national STEM nonprofit, for example

where you could specify what the money is spent on (like undergraduate research projects, Arctic research, etc.). Students from all over the country could apply. It would take some effort on your part to find some nonprofits that manage these types of funds well.

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@lisa5678 Interesting lead. Thank you!

There are so many scholarships… It’s impossible for students to even track and apply for them. I’d use a DAF to simply contribute to an existing scholarship fund which matches the desired giving objective. Why create one more? Why not give existing ones more scale?

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I’m ok with that. I’m looking around for that also and am slowly getting some more leads. Would like to have honored my dad’s memory by name, but that’s secondary I guess.

In addition to a successor trustee with a Fidelity DAF, you can also designate the charities that you want the fund distributed to after your death (up to 6 if I remember correctly). That distribution can take place over time or immediately.