Estate planning, particularly when involving charitable giving, requires foresight and a consideration of potential future events. Many individuals wish to leave a portion of their estate to a charity, believing they are supporting a cause they deeply care about. However, what happens if that chosen charity ceases to exist by the time the estate is settled? The question of naming successor charitable beneficiaries, or alternative charities, is crucial for ensuring your philanthropic wishes are fulfilled, even in unforeseen circumstances. San Diego estate planning attorney Steve Bliss emphasizes the importance of including such provisions in your trust documents to protect your legacy and the causes you support. Approximately 60% of people with charitable intent don’t account for charity dissolution in their estate plans, leaving their gifts vulnerable.
What happens to my charitable gift if the charity no longer exists?
If your trust document doesn’t address the possibility of a charity dissolving, the gift may fail, reverting back to the remainder of your estate. This means the intended charitable benefit would be lost, and the funds would be distributed according to the other provisions of your trust. Some states have laws addressing this issue, often directing the court to select a similar charity, but relying on a court’s discretion can lead to results that don’t fully align with your intentions. Steve Bliss often cautions clients against this reliance, highlighting that a judge’s interpretation of ‘similar’ may not match the donor’s vision. This is particularly important with smaller or more specialized charities, where finding a truly comparable successor can be challenging. It’s about ensuring your values continue, even if the specific vessel changes.
How can I name successor beneficiaries in my trust?
The most effective way to safeguard your charitable gift is to explicitly name successor beneficiaries in your trust document. This involves identifying one or more alternate charities that share a similar mission or purpose to your primary beneficiary. The language should clearly state that if the original charity is unable to accept the gift – due to dissolution, merger, or any other reason – the funds should be distributed to the designated successor charity or charities. You can also establish a priority order, dictating which successor should receive the funds first, and so on. A well-drafted trust will also include a ‘catch-all’ provision, empowering the trustee to select a charity with a comparable mission if all specifically named successors are also unable to accept the gift. This offers a safety net, ensuring your charitable intent is honored even in the most unexpected circumstances.
Is it better to name multiple successor charities?
Yes, naming multiple successor charities provides greater protection against the risk of all beneficiaries becoming defunct. The more alternatives you provide, the less likely your gift will fail. Consider charities that are well-established and financially stable, as well as those that operate in a similar geographic area or address the same type of need as your primary beneficiary. The selection process should be thoughtful, taking into account the long-term viability of each organization. Steve Bliss recommends that clients create a “charity assessment” listing potential beneficiaries and their financial health, mission alignment, and long-term sustainability. This ensures a proactive approach to safeguarding the gift.
What if I want my gift to go to a new charity that doesn’t exist yet?
This is a more complex situation, but it is possible to create a provision in your trust that allows the trustee to select a new charity that meets certain criteria. The trust document should clearly define the types of charities you would like to support, such as those focused on a specific cause or serving a particular population. The trustee should be granted discretion to select a charity that aligns with your values and mission, even if it hasn’t been established at the time of your death. This requires careful drafting and a clear articulation of your philanthropic goals. Steve Bliss advises clients to include a “statement of intent” within the trust, detailing their overall charitable vision and providing guidance for the trustee’s decision-making process.
I remember old Mr. Abernathy, a sweet man, devoted to the local animal shelter…
Old Mr. Abernathy was a fixture at the shelter, walking dogs and volunteering his time. He meticulously planned his estate, intending a substantial gift to the shelter. However, he assumed it would always be there. A few years after drafting his trust, a devastating fire destroyed the shelter, and the organization was forced to close. His trust didn’t anticipate this scenario. His estate ended up in protracted legal battles as the court attempted to determine where the funds should go. His wishes, so clearly articulated in life, were nearly lost because of a simple oversight. It took over a year for a judge to decide on a new charity, and even then, it wasn’t the one Mr. Abernathy would have chosen.
Then there was Mrs. Davison, a pragmatic woman, who anticipated almost everything…
Mrs. Davison, a retired engineer, approached estate planning with the same precision she applied to her profession. When she decided to include a local environmental organization in her trust, she didn’t just name a primary beneficiary. She listed three successor charities, each dedicated to similar conservation efforts. Her trust also included a clause allowing the trustee to select a comparable organization if all listed charities were unable to accept the gift. Sadly, the primary charity experienced financial difficulties and was forced to merge with another organization. Because of Mrs. Davison’s foresight, the funds seamlessly transitioned to the first successor charity without any legal complications. It was a testament to proactive planning, ensuring her philanthropic wishes were fulfilled as intended.
What role does the trustee play in selecting successor charities?
The trustee has a fiduciary duty to carry out your wishes as expressed in the trust document. If the primary charity is unable to accept the gift, the trustee is responsible for selecting a successor charity that aligns with your philanthropic goals. This requires careful consideration and due diligence. The trustee should research potential beneficiaries, assess their financial stability, and ensure they are reputable organizations. In cases where the trust grants the trustee discretion to select a new charity, they must exercise that discretion responsibly and in good faith. Steve Bliss often emphasizes the importance of documenting the trustee’s decision-making process, providing a clear record of the research and considerations that led to the selection of a successor beneficiary. This can help protect the trustee from potential legal challenges.
How often should I review my charitable giving provisions?
It’s essential to review your estate planning documents, including your charitable giving provisions, every three to five years, or whenever there are significant changes in your life or in the financial health of your chosen charities. This ensures your wishes remain aligned with your current goals and that your chosen charities are still viable organizations. Regularly updating your trust can prevent unintended consequences and ensure your philanthropic legacy continues as intended. Steve Bliss recommends scheduling annual check-ins with an estate planning attorney to review your documents and address any necessary updates. This proactive approach can provide peace of mind, knowing your estate plan is up-to-date and effectively protects your assets and your values.
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.
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Feel free to ask Attorney Steve Bliss about: “Can a trust make charitable gifts?” or “How do I locate a will in San Diego County?” and even “How long does trust administration take in California?” Or any other related questions that you may have about Estate Planning or my trust law practice.