What is the process? Is there certain paperwork that has to be done? I want it to be a Scholarship fund for my family. We would basically award those students in our family that are about to go to college.

You meet with someone from the school to start the process. Depending on the school, this would be an administrator, someone from the judiciary or a Financial Aid Officer to begin with. Setting up a fund is a legal as well as financial matter.

You may endow funds, say for your children to go to school and stipulate that they would be the first to receive "scholarship." You would then have to set up criteria (even if it was "as the school deems") for future recipients.

You must set up a fund that lives on past the enrollment of your family members. You can’t set up a "scholarship" fund that lasts only as long as it takes the last family member to graduate and then discontinue the fund.

The fund has to be endowed, have substance and be funded into perpetuity, generally speaking.