Almost 30 years ago my brother passed away while in High School and a scholarship fund was started in his name

each year since, we've used the interest to pay out a $1000 award to a student and the rest has stayed in the fund which has a tax ID# so we've never had to report any income. If we were to dissolve the fund (splitting it between all the grandchildren as they all graduate high school) and stop the scholarship, what might be the tax liability for me--the account is in my name as well as in the Scholarship's name.

Adrian,

If you have a nonprofit tax id, you may have a situation. Since non-profits are set up to go on forever, there are some tricky things about dissolving them you might not know. Here is some information from the website below. It says the proceeds from shutting down a non-profit (after paying all taxes,wages and debts) must be distributed to another non-profit.
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17. HOW ARE THE PROCEEDS FROM A DISSOLUTION DISTRIBUTED?

After a corporation has been dissolved and its assets liquidated, the distribution is made to the extent of corporate assets as follows:

1. all federal and state taxes are paid,

2. all employee wages and benefits are paid,

3. all secured liabilities are paid,

4. all unsecured liabilities are paid,

5. the remaining funds, if any, are distributed to another tax empt entity.

Since members in a non-profit corporation do not share in the profits of the corporation, upon dissolution the assets of the non-profit corporation must be turned over to another tax-exempt entity. Such assets can be turned over to the United States Government if no other state or local tax exempt entity wants them.
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I would suggest talking to a lawyer.

http://www.lawyeratlarge.com/Common/Prev...

The only way I can think of to get around giving the money to another nonprofit would be to set up someone as an employee and call all the extra money wages, but that wouldn't be awfully ethical.

Did your family set this fund up? If so, see an attorney/cpa. Find one who is both.