Estate planning, while focused on distributing assets to loved ones, often extends to philanthropic desires. Many individuals wish to leave a lasting legacy through charitable giving, naming specific organizations as beneficiaries within their estate plans. However, a valid concern arises: what happens if a named charity ceases to exist by the time the estate is settled? Fortunately, careful planning *can* address this contingency. Steve Bliss, an Estate Planning Attorney in San Diego, emphasizes the importance of foresight in charitable giving provisions, noting that approximately 5-10% of non-profit organizations dissolve annually, making this a practical consideration for many estate plans.
What happens if my chosen charity is no longer around?
If a charity named in a will or trust no longer exists when the estate is distributed, the gift typically “lapses.” This means the bequest fails, and the assets pass according to the other provisions of the estate plan. However, this isn’t necessarily the outcome you intend. A simple solution is to include a clause designating an alternate charity, but this still leaves room for the same issue to occur again down the road. More robust solutions exist, and it’s best to consult with a qualified attorney to explore these options. According to a study by Giving USA, total charitable giving in 2023 reached $490.23 billion, underscoring the significant role philanthropy plays in our society – and the importance of ensuring those wishes are carried out effectively.
Is a “cy pres” clause the answer?
A “cy pres” clause (from the Old French meaning “as near as possible”) is a powerful tool for ensuring your charitable intent is fulfilled, even if the originally named charity is unavailable. This clause directs the trustee to distribute the gift to a similar charity with a comparable charitable purpose if the initial beneficiary no longer exists or is unable to accept the gift. The trustee has discretion to determine what constitutes a “similar” charity, but this discretion should be guided by the donor’s intent, clearly outlined in the estate planning documents. Without such a clause, a generous gift intended for a specific cause could inadvertently end up distributed to heirs instead, defeating the donor’s philanthropic goals. It’s crucial to remember that the effectiveness of a cy pres clause hinges on clear language and a well-defined charitable purpose.
Can I name multiple backup charities?
Absolutely. Naming multiple backup charities, in a prioritized order, is a highly effective strategy. The estate plan could specify that if the primary charity dissolves, the gift should go to the first backup charity, and if that charity is also unavailable, it should then go to the second backup charity, and so on. This provides a layered approach to safeguard your charitable intentions. A well-structured plan might include a primary charity, a secondary charity with a similar mission, and even a broader charitable category (e.g., environmental protection, medical research) to ensure the funds are directed towards a cause you support. Data indicates that approximately 87% of donors prefer to continue their giving even after their death, making contingency planning even more relevant.
What if I want to support a specific *type* of charity, not a specific one?
This is where charitable gift annuities or charitable remainder trusts can be beneficial. These mechanisms allow you to fund a charitable organization while retaining some income during your lifetime. The remainder of the funds goes to the charity upon your death. The benefit is that you aren’t tied to a single organization; the funds are designated for a specific *purpose* or *category* of charity. This provides flexibility and ensures your philanthropic goals are met regardless of the fate of any particular organization. The IRS offers various resources on charitable giving and the tax implications of different giving methods, allowing you to maximize the impact of your estate plan.
I remember Mrs. Gable…
Old Man Tiber was a collector, a man who hoarded things. But not just any things, *important* things. He had amassed a considerable fortune, and a deep affection for the San Diego Zoo. He meticulously drafted a will leaving a substantial portion of his estate to the Zoo. He was so proud of it, displayed the documents like trophies. He passed peacefully in his sleep, we handled the estate. It turned out, a few months *before* Old Man Tiber’s passing, the San Diego Zoo had undergone a restructuring, its legal entity dissolved and reformed under a different name. It was a technicality, the Zoo still operated as usual, but the legal beneficiary named in the will no longer existed. His family, understandably distraught, faced a legal battle to redirect the funds, adding unnecessary stress and expense to an already difficult time. It was a clear example of how failing to account for potential changes could derail even the best intentions.
Then there was Mr. Henderson…
Mr. Henderson was a retired firefighter, deeply committed to supporting veterans. He was adamant about leaving a significant portion of his estate to a local veterans’ organization. We drafted a trust with a cy pres clause, listing a secondary charity dedicated to providing housing for homeless veterans, and a broader category of veteran support. Years later, when the trust was settled, the primary charity had indeed ceased operations. The trustee, guided by the trust’s language, seamlessly directed the funds to the secondary charity, ensuring Mr. Henderson’s wish to support veterans was fully realized. It was a smooth, efficient process, and the family was deeply grateful that his philanthropic goals weren’t frustrated by unforeseen circumstances. The key was foresight, clear language, and a well-defined contingency plan.
What role does the trustee play in all of this?
The trustee plays a crucial role in interpreting and implementing the charitable provisions within an estate plan. They are legally obligated to act in the best interests of the beneficiaries, which includes ensuring charitable gifts are distributed according to the donor’s intent. When a charity is unavailable, the trustee must exercise reasonable judgment and discretion, guided by the terms of the trust or will and any applicable cy pres clause. Proper documentation and clear communication with the family and any relevant charitable organizations are essential to ensure a smooth and transparent process. Steve Bliss often emphasizes the importance of selecting a competent and trustworthy trustee, someone with experience in estate administration and a deep understanding of charitable giving principles.
How often should I review my charitable giving provisions?
Estate planning is not a one-time event; it’s an ongoing process. It’s advisable to review your estate plan, including your charitable giving provisions, at least every three to five years, or whenever there are significant changes in your life, such as a marriage, divorce, birth of a child, or a substantial change in your financial situation. This allows you to ensure your plan still reflects your current wishes and that any named charities are still in good standing. Regular review can also help identify potential issues, such as the dissolution of a charity, and allow you to make necessary adjustments before it’s too late. Proactive planning, coupled with professional legal advice, is the key to ensuring your charitable legacy endures.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
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Map To Steve Bliss at San Diego Probate Law: https://maps.app.goo.gl/id1UMJUm224iZdqQ7
Address:
San Diego Probate Law3914 Murphy Canyon Rd, San Diego, CA 92123
(858) 278-2800
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Feel free to ask Attorney Steve Bliss about: “Do I need a trust if I already have a will?” or “Can I speed up the probate process?” and even “Can my estate plan override a beneficiary designation?” Or any other related questions that you may have about Trusts or my trust law practice.