putting a charity in my will

Wills & Trusts- Leaving Money to a Charity (Part 2)

Legal IQ Tips: Estate Planning

Do you intend to leave your favorite non-profit money in your Will or Trust?  Does your Estate Plan leave money to an organization?

Leaving money to an organization that you have worked with or feel connected to is a noble thing to do.  Many of my clients enjoy doing this, as they are nervous to give money they may need for their own care, during their lifetime, but are happy to donate some of their Estate, once they have passed on. It’s always wonderful if you can help support an organization monetarily, so that organization can continue to do their good work.

If you haven’t already, take a look at my last post for some other helpful tips on additional “things to think about” when leaving money to an organization.

3.  WHO/WHAT organization are you ACTUALLY trying to leave your money to?  

This seems like a pretty straight forward question, but it is really important to understand. 

There are many organizations that are; subsets of larger organizations, local chapters, or that don’t operate their own budget or spending.  Similar to my earlier point on “how does the organization spend its money” you really need to understand how the organization you intend to leave your money to OPERATES and if it works with an “umbrella” or national organization.  If you don’t understand the relationship, your money may end up somewhere you didn’t intend.

For example, I learned of a situation where an individual left money to a local animal shelter.  The individual was generous in their donation and intended for the money to be put aside so the shelter could build a much-needed new facility. 

The issue here was that the animal shelter was a municipal shelter, not a private shelter.  What does that mean? It means the town; owns it, operates it, and sets the budget for the shelter.  

By leaving the money to the shelter, in the manner it was left, the individual unknowingly left the money to the town.  While the money would be used to help the shelter/animals, the town was the entity who was to determine how the money would be spent at/for the shelter.  In hearing about the situation, I learned that there was much concern that the money was going to be used for the day to day operations, rather than as the individual intended.  That rather than this money being set aside, with other money raised, to build a new facility, this money would be used for food for the animals and salaries for workers.

While these are all well and good expenses, and necessities for keeping the shelter running, it’s not what the individual intended their money to be used for.  This situation is really unfortunate.  If the donor better understood WHO they were leaving the money too, and/or, in what manner they were leaving the money, their money would have been used as they intended. 

In this situation, the individual could have possibly left the money to a “Friends of the Town’s Animal Shelter”.  This organization would have been a more appropriate choice, in this situation, as that organization would have been able to manage the money and utilize it for the exact purposes the donor intended. 

There are lots of examples I am made aware of regarding money left for one intended purpose but due to the organization it was left to, and that organization’s relationship or structure, the money not being used, as intended. It’s concerning and upsetting, especially because I know that with a little bit of research and a good Estate Planning Lawyer, this could have been avoided. 

With all that said, there are no right or wrong answers on the above topics.  Understanding an organization’s makeup is just another area you should consider when you think about leaving money in your Estate Plan.  Working with an Estate Attorney will allow you to address these questions and better ensure your money is used for what you intended.

More to come on this topic.  In the meantime, if you have any questions or need any help, don’t hesitate to contact me.  I focus my Rhode Island based practice in everything from simple Wills to complicated Trusts.

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Wills & Trusts- Leaving Money to a Charity (Part 1)

Legal IQ Tips: Estate Planning

Do you intend to leave your favorite non-profit money in your Will or Trust?  Does your Estate Plan leave money to an organization?

Leaving money to an organization that you have worked with or feel connected to is a noble thing to do.  Many clients enjoy doing this, as they are nervous to give money they may need for their own care, during their lifetime, but are happy to donate some of their Estate, once they have passed on. It’s always wonderful if you can help support an organization monetarily, so that organization can continue to do their good work.

That said, my next two posts are going to focus on some “things to think about” when leaving money to an organization.

1.       Will that organization be here when you are gone? 

It’s a tough thing to think about, but it’s a reality.  Some of the smaller non-profits may not have the means or experience to last 10+ years.  In my experience, while good intentions may be there, the organization may not be around. 

When picking organizations to leave money to, I ask my clients to really think hard about this.  If there is concern in this area, I often advise them that; (1) it may not be best to leave money, (2) they may want to consider leaving a smaller part of their Estate, (3) empower someone to donate the money on your behalf, and/or (4) they should have a specific “back up” plan, if that organization is no longer around.

For example, one of my clients wanted to leave a sum of money to a non-profit horse foundation.  The organization is new and small. There was some concern that the organization may not be around in 20-25 year.  While my client felt compelled to leave the money, we setup an appropriate plan in case the organization was no longer operating. 

For this particular client, we made the choice to leave the money to the specific organization unless the organization was no longer in operation.  If the organization was no longer in operation, the client named a friend, who would be in charge of taking the money, set aside in this bequest, and directed the friend to donate to another organization which worked with retired working horses.  It would be left up to the named individual to choose the organization, but this allowed the money to end up where my client intended, instead of just lumping back into the rest of her Estate, which was set to go to family members.   

2.       What does the organization spend it’s money on?

When you choose to leave money to an organization, you should do your due diligence to understand what the organization spends it’s money on.  I often advise my clients that local organizations, rather than large national chapters, might be better suited them for their Estate Bequest.  I encourage my clients to ask questions about where money is spent and understand long term strategic growth plans for the organization.  Depending on the size of the donation being left, it might make sense to meet with the Executive Director or Development Officer or Board of Directors.  Understanding how donated money is spent by the organization will help you to ensure that the money you left will be used for the purposes you intended.

For example, I had a client who originally thought they were going to leave a sum of money to a national foundation.  After some research, they quickly realized that less than $0.15 of each dollar donated would go to help the individuals in need.  Much of the money goes to salaries and operations.  While salaries and operations are important, this client wanted to make a greater impact on the lives of the needy through direct giving and therefore opted to choose a local, RI based organization, with a similar mission, to leave that portion of her Estate to. 

That all being said, there are national organizations that do wonderful work and use donated money to support their cause.  I just advise my clients to understand what the organization of their choice spends their money on. 

There are no right or wrong answers on the above topics.  These are both just areas you should consider when you think about leaving money to an organization via your Will or Trust.  Working with an Estate Attorney will allow you to address these questions and better ensure your money is used for what you intended. 

More to come on this topic.  In the meantime, if you have any questions or need any help, don’t hesitate to contact me.  I focus my Rhode Island based practice in everything from simple Wills to complicated Trusts.

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