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The charitable bequest is the most common means chosen to leave assets to qualified charitable organizations and institutions at death. This is because it is so widely known as a vehicle for property transfer.
Whether a simple bequest of cash or a plan that creates trusts for family wealth management while also benefiting a nonprofit recipient, the will is one of the most flexible gift planning tools.
A will that includes one or more charitable recipients is basically no different from other wills. To be valid, the information it contains and the method in which it is executed must qualify under applicable state laws.
The proper name: Charitable institutions may sometimes share the same or very similar names. They may even be located in the same city or state. For this reason, when drafting a will that leaves property to a charitable entity, care must be taken to fully identify the intended recipient of the property.
It may also be useful to include the most recent known address.
Legal Name: Romanian League in Defense of Animals
Current address: PO Box 4674 Crofton MD 21114
Tax ID: # 32-0176929
Romanian League in Defense of Animals is a 501(c)(3) registered nonprofit.
The use of the property: As in bequests to individuals, testators often choose to specify a particular use for their bequests. What is known as “precatory” language may be used to express a preference, or wishes may be stated in such a way that leaves little room for the recipient to determine use.
Most charitable bequests are left to the charitable entity “for the general purposes of the organization in the discretion of its board.” Since it may be many years before the funds are received and the needs of the organization may change in many ways, most donors choose to allow maximum flexibility for the use of the funds bequeathed.
If a donor wishes to restrict the use of a bequest, it is in the best interest of all involved to discuss the intended use with authorized representatives of the institution before the execution of the will.
Limits on the size of charitable bequests: Some states may impose limits on the amounts that can be left to charitable beneficiaries in certain situations.
A charitable bequest may be structured in many ways. A person may choose to leave a specific dollar amount, particular real or personal property, a percentage of the estate, all or a portion of the residue of the estate following the satisfaction of other bequests or a combination of the above.
In the case of a smaller bequest, it is usually best to simply state a specific dollar amount. This is particularly useful in the case of a highly liquid estate that will be reviewed on a regular basis.
If a person is considering a larger bequest or if the estate will be composed primarily of relatively illiquid assets, it may be best to choose another method of satisfying charitable intentions.
A donor may choose to leave a particular real property, whether a home, farm or rental property, to a charitable beneficiary. It may be left outright, or a life estate may be granted to a surviving spouse or other relative or friend.
Great care should be taken to properly describe the intended property and the interest bequeathed if it is not the entire ownership interest. In the case of tangible personal property such as jewelry, automobiles, and other assets, all aspects should be carefully considered before making such assets the subject of a charitable disposition. Such gifts may create disputes and unnecessary friction among charitable and non-charitable heirs.
A specific bequest of intangible personal property such as stocks and bonds may not be the best choice. The value may have increased or decreased to a point where it no longer represents the intention of the testator.
In the case of any gift of property, language should be included that expresses the wishes of the testator if the property has been disposed of prior to death.
Perhaps the most common method of leaving charitable bequests is through residuary clauses.
After providing for relatives and friends, many testators will specify that all or a portion of the residue of their estate be distributed to one or more charitable organizations or institutions. As a result, loved ones are cared for first and charitable wishes follow, if this is the testator’s desire.
Many people choose to leave a set percentage of the residue of their estate for specified charitable uses. This approach offers a correcting mechanism in case the estate should unexpectedly increase or decrease in value.
Some may choose to bequeath a percentage of their estates according to the tenets of their religious beliefs.
A spouse and/or children may be entitled to specific percentages of an estate that may not be encroached upon by charitable dispositions. Such restrictions rarely impose barriers in the typical situation, but state laws should be examined if one or more charitable bequests that amount to a substantial portion of an estate are contemplated.
Other than the considerations outlined above, there are generally no limits on the amount of property which may be left for charitable purposes through a will.
Click to download Sample Language Bequest document:
For additional questions, please contact us:
Mary Duffy phone: 917-854-6580 email: maryduffy@rolda.org
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