PITFALL IN DONATIONS FROM ESTATES OR TRUSTS
- Wednesday, June 05 2019 @ 07:43 pm UTC
- Contributed by: erik
- Views: 1,297
This is an article on the pitfalls we encountered in donations to a local Shelter/Humane Society PITFALLS WITH DONATIONS AND BEQUEATHS TO CHARITIES
NO GOOD DEED GOES UNPUNISHED By Erik Hoffer
Let’s say up front that I am not a lawyer and that I truly despise the profession and their lack of morality and common sense. I have dealt with them throughout my career, and besides non-trial lawyers, I have not found one that I would trust.
Our rescue has recently had an incident that will serve as a warning to anyone desiring to donate funds as part of an estate, trust or a will, to an animal sanctuary, humane society or a rescue. A bequeath of funds from an estate to a 501C3 such as ours is a common event, but it has pitfalls and these need to be explored. Donations such as these need written, specific instructions, done in such a manner that the donor has control of the funds even though he is gone. To make certain that the donors wishes are fulfilled, any legal writing that is ambiguous or unclear in any manner needs to be avoided at all cost. Simply put, unless the document has a specific use for the funds and a destination for the funds you donate, the donor, who is now gone, may not get his wishes for the use of those funds. I guess once your gone, you might say, that ‘Oh Well’ the 501C3 got the money anyway… but therein lies the problem.
The example here has many moving parts and these need clarification in order to understand the situation. Funds donated for a specific purpose need to be used for that purpose. Funds that are unassigned can be used to the benefit of the 501C3 but not generally for what you may have desired them to be used for. Unallocated funds are truly at the discretion of the recipient. An example may be that you donated $1000 to a shelter. No specific use was mentioned. The shelter, a 501C3 has a board of directors, who have decided to use the money for a new TV for the break room instead, let’s say for a piece of medical equipment that you knew they needed and wanted the money put towards. If you were there (and alive) you might have said, “wait a minute” that’s not what I want, but you are deceased and cannot speak for yourself, therefore the TV it is! Specificity is the key to getting the results you desire. Lack thereof insures the funds reach the intended recipient but nothing more.
This case concerning my rescue started with a donor giving funds to a 501C3, for the benefit of animals. He did so because my rescue was originally involved with helping him get his GSD. The dog came from an affiliated shelter. The donors wife of 30+ years was in charge of making sure the money was distributed to that shelter. She asked that I become involved because her deceased husband trusted me and was sure I would see to it that the funds went to their intended purpose. She asked me to write a plan, based solely on what her husband desired. I did write up a plan which was accepted by the shelter. They were elated to receive the funds and assured both the donor’s wife and myself that these funds would go to the purposed detailed in the document I presented and they accepted. The funds were part of her husbands estate. There were 4 beneficiaries to these funds and each got the same amount. Their attorney in NY wrote up the documentation for the donor but failed to put any restrictions on it or even give his wife permission to dedicate a use for these funds. In three of the cases the non-profit, a National organization, unrelated to animals, had one clear mission and the funds were used for that mission. They were all 501C3 corporations. The fourth beneficiary was the shelter… and suddenly things went south.
The funds were transferred by check delivered by the donor’s wife and myself. The shelter had already accepted and embraced the use of the funds in accordance with the documentation I drafted for his wife to the shelter. Once the money was put into the shelter, we were informed that ‘all bets are off’. The shelter board of directors, another lawyer, told them that they need not do what was asked because the original document was not specific as to the use of the funds and that the wife was not given any rights (by the original attorney) to ask for any specific use of the funds. Because he was able to convince the board members that morality was a stupid concept, he told them they should use the funds as they saw fit and to disregard the wife’s request, even though they were already accepted and agreed to by the managing director. Because he as an attorney was able to convince the board that there was no legal redress for the funds, he could allocate them the way he saw fit, which was not at all what the donor wanted.
The bottom line here is that if you do donate, which is a great thing, to any 501C3 organization, you must consider that after you are gone the only way to insure your wishes are being addressed is by a binding and highly detailed document. You should write the document out and not have someone, especially an attorney, do it for you. They may not understand your desires and interpret the data the way they think in direct contradiction from the way you think. Remember attorney’s are people (hard to accept that theory) but they only have knowledge of the areas that they have studied or experienced personally. They may not have a clue what you are talking about or desire and write the documentation in such an ambiguous way as to sound like what you wanted but in reality is far too vague to be defended. You should always have a family member or advocate be mentioned to administer the funds and to insure they are being used correctly. Bottom line is that you may not get what you want and will have no way to have a ‘do-over’ if you don’t!
Erik Hoffer
NO GOOD DEED GOES UNPUNISHED By Erik Hoffer
Let’s say up front that I am not a lawyer and that I truly despise the profession and their lack of morality and common sense. I have dealt with them throughout my career, and besides non-trial lawyers, I have not found one that I would trust.
Our rescue has recently had an incident that will serve as a warning to anyone desiring to donate funds as part of an estate, trust or a will, to an animal sanctuary, humane society or a rescue. A bequeath of funds from an estate to a 501C3 such as ours is a common event, but it has pitfalls and these need to be explored. Donations such as these need written, specific instructions, done in such a manner that the donor has control of the funds even though he is gone. To make certain that the donors wishes are fulfilled, any legal writing that is ambiguous or unclear in any manner needs to be avoided at all cost. Simply put, unless the document has a specific use for the funds and a destination for the funds you donate, the donor, who is now gone, may not get his wishes for the use of those funds. I guess once your gone, you might say, that ‘Oh Well’ the 501C3 got the money anyway… but therein lies the problem.
The example here has many moving parts and these need clarification in order to understand the situation. Funds donated for a specific purpose need to be used for that purpose. Funds that are unassigned can be used to the benefit of the 501C3 but not generally for what you may have desired them to be used for. Unallocated funds are truly at the discretion of the recipient. An example may be that you donated $1000 to a shelter. No specific use was mentioned. The shelter, a 501C3 has a board of directors, who have decided to use the money for a new TV for the break room instead, let’s say for a piece of medical equipment that you knew they needed and wanted the money put towards. If you were there (and alive) you might have said, “wait a minute” that’s not what I want, but you are deceased and cannot speak for yourself, therefore the TV it is! Specificity is the key to getting the results you desire. Lack thereof insures the funds reach the intended recipient but nothing more.
This case concerning my rescue started with a donor giving funds to a 501C3, for the benefit of animals. He did so because my rescue was originally involved with helping him get his GSD. The dog came from an affiliated shelter. The donors wife of 30+ years was in charge of making sure the money was distributed to that shelter. She asked that I become involved because her deceased husband trusted me and was sure I would see to it that the funds went to their intended purpose. She asked me to write a plan, based solely on what her husband desired. I did write up a plan which was accepted by the shelter. They were elated to receive the funds and assured both the donor’s wife and myself that these funds would go to the purposed detailed in the document I presented and they accepted. The funds were part of her husbands estate. There were 4 beneficiaries to these funds and each got the same amount. Their attorney in NY wrote up the documentation for the donor but failed to put any restrictions on it or even give his wife permission to dedicate a use for these funds. In three of the cases the non-profit, a National organization, unrelated to animals, had one clear mission and the funds were used for that mission. They were all 501C3 corporations. The fourth beneficiary was the shelter… and suddenly things went south.
The funds were transferred by check delivered by the donor’s wife and myself. The shelter had already accepted and embraced the use of the funds in accordance with the documentation I drafted for his wife to the shelter. Once the money was put into the shelter, we were informed that ‘all bets are off’. The shelter board of directors, another lawyer, told them that they need not do what was asked because the original document was not specific as to the use of the funds and that the wife was not given any rights (by the original attorney) to ask for any specific use of the funds. Because he was able to convince the board members that morality was a stupid concept, he told them they should use the funds as they saw fit and to disregard the wife’s request, even though they were already accepted and agreed to by the managing director. Because he as an attorney was able to convince the board that there was no legal redress for the funds, he could allocate them the way he saw fit, which was not at all what the donor wanted.
The bottom line here is that if you do donate, which is a great thing, to any 501C3 organization, you must consider that after you are gone the only way to insure your wishes are being addressed is by a binding and highly detailed document. You should write the document out and not have someone, especially an attorney, do it for you. They may not understand your desires and interpret the data the way they think in direct contradiction from the way you think. Remember attorney’s are people (hard to accept that theory) but they only have knowledge of the areas that they have studied or experienced personally. They may not have a clue what you are talking about or desire and write the documentation in such an ambiguous way as to sound like what you wanted but in reality is far too vague to be defended. You should always have a family member or advocate be mentioned to administer the funds and to insure they are being used correctly. Bottom line is that you may not get what you want and will have no way to have a ‘do-over’ if you don’t!
Erik Hoffer