CHARITABLE GIVING

Published on: January 18, 2017

The Risks of Making Charitable Gifts Through Trusts

Charitable giving is a common feature of many estate plans. In many cases this takes the form of a simple gift in a person’s last will and testament, but charitable giving can also involve complex trust arrangements designed to benefit both the charity and the donor or their family.

Trustee, Charities Spar Over Terms of 1967 Trust

Of course, the more complicated the gift, the more chances there are for a dispute to arise. For example, upon the death of a California man in 1967, his will established a trust for the benefit of his grandson. A corporate trustee was named to oversee the trust with instructions to pay the grandson $100 per month for the rest of his life. The trustee was also permitted to make additional payments to the grandson if he was “without sufficient funds to defray expenses incurred by illness, accident, or other dire need.” After the grandson’s death, the trustee is supposed to divide the remaining trust assets between a number of specified charities.

Published on: August 1, 2016

Estate Planning, Charitable Pledges, and Community Property

by Scott C. Soady

Many people pledge money to charity as part of their estate planning. In California, charitable pledges are generally not enforceable in court unless the donor receives some consideration, thereby creating a binding contract. For example, if a college offers to name a building after you in exchange for your gift, that would be consideration for your pledge. If you pledge money contingent on other people making similar donations, that would constitute mutual consideration among all of the donors.

If you do make a binding pledge as part of your estate plan, however, make sure you consider the wishes of your spouse. Under California law, any community property held by a married couple is owned one-half by each spouse. This means you may not make a gift of your spouse’s share of such property without his or her consent.

Ex-Husband Cannot Pay for Pledges With Ex-Wife’s Share of Community Property

Published on: June 27, 2016

Estate Planning, Charitable Pledges, and Community Property

by Scott C. Soady

Many people pledge money to charity as part of their estate planning. In California, charitable pledges are generally not enforceable in court unless the donor receives some consideration, thereby creating a binding contract. For example, if a college offers to name a building after you in exchange for your gift, that would be consideration for your pledge. If you pledge money contingent on other people making similar donations, that would constitute mutual consideration among all of the donors.

If you do make a binding pledge as part of your estate plan, however, make sure you consider the wishes of your spouse. Under California law, any community property held by a married couple is owned one-half by each spouse. This means you may not make a gift of your spouse’s share of such property without his or her consent.

Ex-Husband Cannot Pay for Pledges With Ex-Wife’s Share of Community Property

Published on: January 23, 2016

Using a Trust to Provide for Your Family and Charity

by Scott C. Soady

Estate planning and tax planning often go hand in hand. There are many estate planning devices which allow you to (legally) obtain tax benefits. One example is a charitable remainder trust, which is a special type of estate planning trust that can provide an immediate tax benefit for you while guaranteeing future income for your family and, ultimately, a favorite charity.

The Basics of a Charitable Remainder Trust

In any trust you transfer assets to a trustee. Most estate planning trusts are revocable, meaning you can amend or even revoke the trust outright at any point during your lifetime. But some estate planning trusts must be irrevocable—that is, you must surrender all control over the assets to the trustee—in order to receive certain tax benefits. A charitable remainder trust is such an irrevocable trust.

Published on: April 10, 2015

“Undue Influence” Can Undo Your Estate Planning Intentions

by Scott C. Soady

Your deathbed is not the right place to make a will or begin the estate planning process. Individuals who are hospitalized or dying are often subject to the undue influence of others. California courts may invalidate a will or other estate planning document if there is substantial evidence of such undue influence.

In Re Estate of Slocum

Here is a recent example of undue influence from a California Court of Appeal decision. This case is discussed for informational purposes only and should not be treated as legal advice.

Published on: September 4, 2014

Leaving a Legacy or Financial Abuse of the Elderly?

by Scott C. Soady

Many people use their estate plan to “leave a legacy.” A common example of this is making a gift to a charitable organization as part of a last will and testament. A person might, for instance, leave a gift to a university with instructions to establish a scholarship in his or her name. Some wealthier individuals might go so far as to establish a charitable foundation as part of their estate plan.

Then there are more unusual efforts at leaving a legacy that, unfortunately, often lead to expensive and unnecessary litigation. A recent case from Illinois presents one example. The case involved the estate of the late Virginia Rogers. In 2000, Rogers was a widow with no children or other immediate family. In a purported effort to continue her family name, Rogers signed a contract with her neighbor, George Dohrmann, whereby she would leave more than $5 million worth of property from her estate to him; in exchange, Dohrmann agreed to legally change the names of his two children to include the middle name “Rogers.”

Dohrmann apparently held up his end of the bargain. Rogers, however, did not amend her estate planning documents to reflect the terms of this supposed agreement. Instead, Rogers’ will left her estate to various friends, distant relatives and charities. In 2004, Rogers transferred ownership of her apartment-which Dohrmann claimed was part of the $5 million promised to him under the contract-to her living trust. By 2008 Rogers, who suffered from dementia, was judged legally incompetent to continue managing her own affairs.

Published on: August 3, 2014

Making Charitable Bequests In Your Will or Trust

by Scott C. Soady

Many people wish to “leave a legacy” by making a charitable contribution through their estate plan. The Internal Revenue Service, which collects data from large estates required to file a federal estate tax return, reported more than $1.6 billion in charitable bequests from California residents alone in 2012. Charitable bequests are popular precisely because they are deductible from the value of an estate for federal estate tax purposes. (California does not impose an estate tax at the state level.)

What Is a “Charitable Organization”?

There are many ways to provide for a charity in your will or trust. First, you should understand what is meant by “charity.” The IRS is responsible for recognizing charitable organizations. Broadly defined, a charitable organization is one that operates not-for-profit-that is, there are no shareholders who receive dividends-and fulfills one or more “exempt purposes” as defined by law. These exempt purposes include:

Published on: July 31, 2013

How Will Estate Planning Affect My Family Business?

by Scott C. Soady

A family business can impose unique estate planning challenges. Assets like cash and stocks can be easily divided among multiple heirs. But a business is an ongoing concern, and not all family members may be part of the company. Ultimately, a business owner’s estate planning must weigh the needs of the company against the interests of other family members.

Let’s say you and your spouse own a restaurant. Your respective estate plans state that in the event of one spouse’s death, the other spouse will continue to operate the business as sole owner. But what happens after you both die?

To further complicate things, let’s say you and your spouse have three children. One child currently works in the business, handling day-to-day operations. Another child helps out occasionally but is not a full-time employee. The third child lives out-of-state and has nothing to do with the business.

Published on: July 9, 2013

Providing for Charity in Your Estate Planning

by Scott C. Soady

ESPN recently conducted an investigation of over 100 charities founded by professional athletes and found that nearly three-quarters of them failed to meet nonprofit industry standards. In some cases these “charities” failed to distribute any funds for their stated charitable purpose. Indeed, many athlete charities were barely funded and ran no programs whatsoever.

There’s no point to starting a charity if you don’t (or can’t) provide the means for its organization. If you’re looking to include charitable giving as part of your estate planning, there are many options to consider. You could start your own charity, either during your lifetime or as part of your estate, but as the ESPN report demonstrated, creating a functional charitable organization involves more than making a vague promise of future funding. It almost always makes more sense to work with an established, reputable charitable organization that shares your goals and values.

Specific Bequests

Published on: October 1, 2012

Donating Your Car to Charity in California

by Scott C. Soady

You can donate your old car to raise money for your favorite charity and also qualify for an income tax deduction. Throughout California, local and national charities accept car donations. In some instances,

even if your car does not run, you can still claim the fair market value, which might be more money than you could afford to donate in cash. It also may be one part of a larger charitable component of your estate plan.

By donating a car to charity, it provides you with a way to help others instead of disposing of the vehicle in a junk yard. However, donors must follow some basic steps for the process to go through.