What To Know About Charitable Bequests

What To Know About Charitable Bequests – You can bequeath almost any asset you desire, whether that be to a charity or to various other beneficiaries. Plus, your options go well beyond financial assets such as cash, stocks and bonds. Real estate is a transferrable asset as well, and your properties might even make up the bulk of your estate. 

However, the potential list of possibilities is more extensive, including tangible personal objects such as jewelry, furniture, automobiles, stock certificates held in book entry form, checking accounts, money market accounts and artwork.

Note that non-probate accounts, such as many insurance accounts or retirement accounts, cannot be passed through a will, though they can often be designated to named beneficiaries directly.

If you allocate any portion of your estate to a charity, you will find a vast set of potential objects for your generosity. Some focus on education, ranging from elementary schools and secondary schools to colleges, while others support religious groups of all creeds. Museums, heritage sites, medical research foundations and animal welfare sites are perennial popular candidates for bequests as well.

When you prepare your will, make sure you identify the bequest. For financial assets, the amount — say $50,000 of your pretax estate — must be defined as well. That said, it may be preferable to state a percentage rather than an exact dollar amount. Otherwise, if the amount you allocate toward a charity ends up being greater than anticipated, the value might end up wiping out the rest of the estate, with the unintended consequence being that your family or unrelated heirs will receive little to nothing after your passing.

Be sure to specify the charity’s name, street address and employer identification number. This is important as is, but it is especially imperative in the event there are several other charities with a similar name, if not the exact same name.

However, be aware of the fact that some charities have scammed donors by using names that are easily confused with nationally regarded and legitimate organizations. A few of the most evil offenders include Kids Wish Network, the Cancer Fund of America and the American Breast Cancer Foundation, among others.

Don’t hold the bequest too close to your chest

There are important reasons behind the suggestion that you talk through your charitable estate plans with both your heirs and the charity itself. In general, it is advisable to discuss an estate plan during your lifetime with family members. That way, there will be no surprises when they take a look at the directives of the will after your passing. 

Family members who believe they have been unfairly omitted from your will may challenge the estate on the standards or grounds of mental incapacity and undue influence. They might try to reason that if the will is declared invalid, they themselves should become replacement recipients under the rules of intestacy.

It is wise to alert the charity to your plans, too. First, are you sure the bequest itself will truly prove useful to your chosen organization? Perhaps it lacks the expertise to deal with the storing or disposal of a piece of artwork.

Can the charity really use your beloved old car? Does it need your exquisite wedding dress? Before you bequeath inappropriate objects, ask the organization whether said items hold any benefits. 

Second, it is often helpful for charities to receive a heads-up regarding significant bequests that come their way. This is because a notice of sorts can help them with their own financial planning and administrative processes.

Third, charities as well as other beneficiaries may actually disclaim a bequest. They might do so if they conclude that your kindness could place an undue burden on them or fall outside the scope of their purposes and mission. 

Alternatively, the prospect of probate litigation might arise alongside associated costs. Could the bequest be regarded as controversial? Might it pose negative publicity for the charity? If the charity renounces, your finest intentions will be thwarted.

In most cases, your bequests do not need to be complicated. However, make sure you consult with your legal or financial advisers so you can be certain that your charitable goals are achieved on your behalf after you are no longer here.

Copyright, 2022

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William Hayes

As an attorney in private practice in Los Angeles County, California William Hayes provides extensive estate and tax planning services to individuals and businesses in Los Angeles, Pasadena, Glendale, Burbank and surrounding communities. Attorney Hayes’ primary focus is to help clients avoid probate, protect their assets, and provide for the security of their loved ones with a well-crafted estate plan. He believes in giving each client the time needed to explain his or her needs and wishes and then dedicates his efforts toward making the client’s desires clear in their final estate plan.

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