Legal Question in Wills and Trusts in California

The proper way to handle this is to form a non-profit corporation and obtain tax-exempt status from the IRS and the California Franchise Tax Board. I formed a scholarship fund for a client a few years ago. The entire process typically takes at least 4-6 months and there are numerous steps to complete.

Given the dollars you are discussing, it is probably not worth while to form such a nonprofit. If you are comfortable in doing this without the personal choice, give them the money and let then pick the proper candidate. If you want to select the student personally, this will likely be treated as a a gift to the recipient, and not a gift to the charitable organization (the school), and you will not be allowed a charitable deduction for your generosity. If you don't care about the charitable deduction, simply contact the school and work with them to establish the procedure you want.