Leaving Estate To Charity

by Karen L. Brady

Fortune Magazine reported that Paris Hilton’s grandfather was leaving his estate to charity. A few years ago, Warren Buffet revised his estate plan to provide for most of his wealth to go to the Bill and Melinda Gates Foundation.

A number of our clients, although they aren’t Hiltons, Buffets, or Gates’, also choose to leave their estates to charity. I’m always happy to see this happen, but I’m sometimes unpleasantly surprised by the attitudes of the charities. When we settle a trust or probate an estate, we are required to notify the charity that it is a recipient of the estate.

Fair enough. But some charities can’t seem to recognize that they won’t be receiving the money right away. In the case of a probated estate, we’ll almost always advise a personal representative to wait one year from the date of death before making those distributions. That wait is to ensure that all the creditors of the estate “come out of the woodwork” and don’t surprise us with a bill that needs to be paid after we’ve given all the assets away.

So, we advise charities of this at the beginning. Still, before the year is up I get regular calls or letters asking me the status of the probate and when the charity can expect its money. Those are a great deal more annoying than the charities that are gracious and grateful.

Still, more frustrating are the charities that receive a gift for a specific purpose and then don’t use it for that purpose. A classic example seems to be The Robertson Foundation case. In that dispute, the heirs of the Robertsons are trying to make Princeton University give back funds the Robertsons gave back in 1961. The heirs claim that Princeton is not using the funds for the specific purposes that the Robertsons gifted the funds.

I can’t speak to the specifics of Princeton and the Robertsons, but it always bothers me when charities agree to receive funds for one purpose and then divert it to another. Some charities can be very high-handed about it. I wonder how much thought they give to how these actions affect potential donors. I, for one, keep a list of charities that I think don’t respect donors and will discuss my experiences with clients who consider gifting to those charities.