NEWS

TRUST AND ESTATES – BEQUESTS TO CHARITABLE FOUNDATIONS

September 02, 2016

Michael J. Rankin reports a recent case where the Court declined to permit a decedent’s testamentary bequest to a charitable foundation because the foundation was not formed prior to the decedent’s death. 

The decedent’s Will, dated December 16, 2008, included a charitable bequest to a foundation in his family’s name.  However, the attorney who drafted the Will advised the decedent at the time of preparing the Will that the decedent had to form the foundation in order for the gift in his Will to pass to it.  Decedent was further informed that if the foundation remained unformed at the time of his death, the charitable bequest would lapse and go to the Estate’s residuary beneficiaries. 

The decedent passed on March 10, 2013, and the charitable foundation did not exist at that time.  However, the Executor of the decedent’s Estate attempted to create the foundation in an attempt to act in furtherance of the Will.  The residuary beneficiaries of the Estate objected to the Executor’s actions and sought an order from the Court determining that the charitable bequest to the family foundation had lapsed. 

The Court found that decedent was on notice from the time of the Will’s execution in 2008 until his death in 2013, that unless he formally created the foundation, the money would pass to the residuary beneficiaries.  As such, the Court declined to permit the testamentary bequest to a foundation that never existed. 

Estate planning does not end upon executing your Will. Periodic review of your Will is important to confirm it is up to date and corresponds with your wishes.  In this case, the charitable bequest failed due to the testator’s inaction.  If planning to bequest all or a portion of your Estate to a charity, confirmation as to whether the charity has been formed or remains in existence is needed.  If not, you run the risk of a court determining that the bequest has lapsed.  

Please contact Michael J. Rankin if you have any questions or need any assistance in connection to this subject.